Non-Disclosure Agreements: Finding The Right Balance

By Saxon Norgard, Associate Editor 12 Jul 2019
Credit: Unsplash.

The use of non-disclosure agreements or ‘NDAs’ must be balanced with the importance of allowing whistleblowers to disclose information in the public interest, writes Saxon Norgard.

What Is A Non-Disclosure Agreement?

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Non-disclosure agreements or ‘NDAs’ are legally binding contracts in which one person agrees, usually in return for money, to not disclose particular information.

These agreements are widely used, but have proved controversial in recent years. For example, Tom Watson has recently criticised the Labour Party’s use of NDAs to silence staff members from speaking out about allegations of anti-semitism. The reported use of these agreements by powerful men like Harvey Weinstein to prevent victims of sexual assault from speaking out has also been criticised in the #MeToo era.

So What’s The Problem?

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There are, of course, many circumstances where the use of an NDA is not only desirable but legitimate. If an employee wishes to leave their current job to join a competitor, it is perfectly valid for them to be required to sign an NDA to protect their former employer’s trade secrets.

The difficulties arise in situations where NDAs are used by people or institutions in a position of power to silence those who possess information of public value. It is important for the public to know if a company has failed to protect their employees from sexual harassment, or if a politician has failed to meet the standards expected of them, and it seems wrong that money can be used to keep this information confidential.

One might ask why anyone would ever sign an NDA in the first place – surely they can simply refuse to take the money, and speak out whenever they wish? However we must bear in mind the power imbalances that often exist in cases where NDAs are used. If an employee is asked by their employer to sign an NDA in relation to an incident of harassment, it will often be very difficult for the employee to refuse. They may wish to continue in their job, or need a positive reference from their employer to find new work. In the case of Harvey Weinstein, it is not difficult to see how the actresses he assaulted felt compelled to sign NDAs in order to prevent their careers from being ruined.

Finding The Right Balance

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The question is one of public interest: is it in the public interest for a powerful individual or institution to prevent a person from disclosing information that has public value?

At present, the law in the UK treats NDAs as binding contracts which can only be escaped in limited circumstances – such as if a person is forced to sign the NDA under threat of violence. Otherwise, the person will be forced to keep the relevant information confidential, or else suffer a severe financial penalty. In many cases the information required to be confidential can be far-reaching, preventing the individual from disclosing the fact that they have signed an NDA, or from saying anything at all that might damage the reputation of the other party.

Although there is an exception meaning NDAs cannot prevent a person from sharing information which is classed as a “protected disclosure” under the Public Interest Disclosure Act 1998, it is difficult to know when a disclosure qualifies, and a person reading a gagging clause in their NDA might not know it is unenforceable. NGOs, legal experts, and unions say that the lack of clarity around whistleblower protections (including whether sexual harassment is covered) has led to a lack of awareness among employees about their rights – meaning they may not be benefitting from them.

In my opinion, the current state of the law does not achieve an appropriate balance between protecting confidentiality and upholding freedom of expression, particularly in cases where the information in question is of interest to the public. Public outrage at the misuse of NDAs may have had an effect in discouraging their use. However, the courts should be given discretion to allow whistleblowers to speak out in appropriate cases without fear of reprisal.

Featured image: Maria Krisanova/Unsplash

About The Author

Saxon Norgard Associate Editor

Saxon is one of RightsInfo's volunteer Site Editors and a future trainee solicitor in London. Originally hailing from Australia, his interests lie in family law, international affairs and human rights.

Saxon is one of RightsInfo's volunteer Site Editors and a future trainee solicitor in London. Originally hailing from Australia, his interests lie in family law, international affairs and human rights.