The use of confidentiality clauses within settlement agreements is part and parcel of everyday employment law. Confidentiality clauses will usually attempt to prevent employees that have already terminated their employment from disclosing certain pieces of information to outside parties. In the era we live in, the beneficiaries of these types of agreements may attempt to use them to prevent their exposal to civil or criminal legal peril and of course if used in the wrong way, these types of agreement could also became open to abuse.
Confidentiality clauses in settlement agreements often cover issues that an employee may become aware of during their employment, such as trade secrets and other general confidential information they may come into contact with during their employment. Other types of information that that may be relevant would be sensitive financial information about their employer, their future business plans or even sensitive customer details.
Settlement agreements and the confidentiality clauses that are contained within them are not valid if the person agreeing to the settlement agreement has not been advised by an independent solicitor. To that end, it is in an employer’s interest to make sure that any employees who they want to bind into a settlement agreement or other confidentiality clause are properly advised. It is usually the case that an employer offering a settlement agreement to an employee that is leaving, will contribute a set amount so that the employee can go and instruct their own solicitor or a solicitor that they find themselves to advise them.
Whilst each and every agreement will be drafted differently to reflect the needs of the individual parties, it is important to remember that an employer cannot stop an employee making certain specific disclosures after their employment has ended or even during their employment. The law also protects those that are still employed and have made a disclosure from suffering any negative treatment for having done so.
In line with section 43B of the Employment Rights Act 1996, the specific disclosures that employers cannot prevent their employees from making are those that are made in the genuine belief that: –
- a criminal offence has been committed, is being committed or is likely to be committed,
- any legal obligations are being breached,
- a miscarriage of justice has occurred, is occurring or is likely to occur,
- the health or safety of any individual has been, is being or is likely to be endangered,
- the environment has been, is being or is likely to be damaged, or
- any of the above is being deliberately concealed or likely to be concealed.
This covers a wide range of topics and usually have to be done in a certain way and to certain individuals but it is important to remember that employers cannot prevent their current or former employees from doing so by contractual agreement. This is however a complex area of law and you should make sure to choose a solicitor wisely to advise you when agreeing to a settlement agreement.
If you have been asked by your employer to agree to a settlement or are an employer looking for advice on drafting settlement agreements, then arrange to speak to a specialist member of our employment team today.