Ask the Expert: Settlement agreement, what is a confidentiality clause with Katie Ash

Katie Ash

22 March 2017

Expert employment solicitor Katie Ash explains and answers some questions around employment contracts.

  1. What is a confidentiality clause?
  2. What happens if you break the confidentiality clause?

Settlement agreements, what is a confidentiality agreement?

A Non-disclosure agreement (NDA), also known as a confidentiality agreement (CA), is a legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes but wish to restrict access to or by third parties. Most settlement agreement will have some form of confidentiality clause within the agreement and it is a contract through which the parties agree not to disclose information covered by the agreement.


What is meant by the confidentiality clause?

Okay, so the confidentiality clause may take two forms in the settlement agreement it may state or impose and general confidentiality about all of the company, the employers business contacts suppliers, customers, all of that kind of thing so that's one element that there might be, the clause that says you must keep everything confidential in terms of our business. And then they'll be a confidentiality clause about the agreement itself and that can be a quite far reaching depending on the terms of the agreements as its drafted so it might be you can't talk about the fact that you have got an agreement. You can't tell anyone what’s in the agreement and you can't tell anyone about circumstances leading up to all the negotiations leading up to the agreement. So it's very important that you understand the consequences and the remit of the confidentiality clause because normally, if you breach then there may be an argument about repaying the monies that you have received.

What happens if you breach the confidentiality clause?

Not just the confidentiality clause but there may be other clauses in there but if you breach the agreement, then that’s a breach of contract and actionable as a breach of contract and the employer can sue for damages flowing from the breach which they will normally argue is the monies you have received under the agreement.


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