They’ve been condemned and demonised, yet non-disclosure agreements are still commonplace. Are they as bad as the headlines suggest? And what will it take to regulate them? People Management spoke to BLM employment partner Andrew McDonald for his thoughts.
Andrew explains, employers typically use an NDA when they don’t want to risk settlements becoming common knowledge in case of ‘copycat’ claims from other employees. “They also don’t want adverse publicity and reputational damage where they’ve settled without admission of liability,” he says. The chances are that many companies may never have an NDA cross their path but, for those that do, the increased scrutiny they have recently been afforded means the stakes are far higher.
And for businesses that don’t have access to a legal professional to assist with drafting them, Andrew also highlights that for a confidentiality agreement to be upheld, it should make it clear that the parties keep the settlement itself and the terms of the settlement confidential, as well as the circumstances leading to the settlement, but still allow the employee to report criminal matters to the police, make a protected disclosure or report the matter to a regulator.
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