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Non-disclosure agreements have featured highly in press headlines recently. But do employers need them?

Most settlement and compromise agreements (bringing employment to an end) include a non-disclosure clause; effectively an NDA. The main objective of such a clause, invariably, is to maintain motivation of retained staff. The idea that a “difficult” employee may have received a payment in order to leave can be de-motivating to dedicated and committed employees. It is therefore common to include words such as the following in a settlement agreement:

The Employer and Employee agree that they will keep the existence and terms of this Agreement confidential with the exception of disclosure to immediate family or relevant professional advisers.

Those NDAs hitting the press headlines recently are those primarily relating to allegations of sexual impropriety, harassment or discrimination. Employment may, or may not, be ended, but often the objective of such an agreement is to protect the reputation of a senior person in the organisation or the organisation itself. They may be signed whether or not the allegations are justified because simply revealing those allegations can cause damage.

Settlement agreements can include wording such as:

The Employee hereby agrees that she will not make or publish any adverse, untrue or misleading statement or comment about the employer or any employee of the company.

However where serious allegations have already been made (or are anticipated) then employers should take specific legal advice.

Notwithstanding that a NDA can protect individuals and organisations, it doesn’t remove the moral, and often commercial, obligation on Directors to tackle sexual impropriety, harassment or discrimination using the disciplinary procedure. Those whose names have been in the press headlines recently should take note.

This blog is for general guidance only.

Malcolm Martin FCIPD

Author Human Resource Practice