Confidentiality Clauses In A Settlement Agreement
A confidentiality clause is one of the standard inclusions of a Settlement Agreement. However, they can be difficult to pin down due to the nature of what might and what might not extend the terms too far and are deemed exaggerated and unrealistic. In the circumstances where a confidentiality clause is too severe it can become very difficult to legally enforce, as over prohibiting in these cases can become a ‘gagging’ order, which is illegal.
Standard Terms Of Inclusion
The confidentiality clause of a Settlement Agreement should contain the following:
The employee must not divulge any legitimate trade secrets or private business matters to any third party that they have ascertained during their employment. This includes sensitive information and client/customer information and data.
An employee must also adhere to rules of privacy regarding what the Settlement Agreement contains, its existence, and terms and conditions, apart from when acquiring the lawful advice from their chosen legal advisor, discussing their entitlements with their immediate family, or where an obligation to an organisation such as the HMRC is demanded. Where an employee discusses matters with their family then those members of the family are also then bound by the same confidentiality as laid out in the Settlement Agreement. All items contained by the Settlement Agreement will be important and sensitive to the employer who will want to keep matters private, especially those regarding compensation amount and other sensitive areas of their business practices.
The employee must also agree to refrain from passing any derogatory comment regarding their employer, their employer’s business, or relating to other employees. This will generally be a reciprocated clause binding the employer to the same restraint from making such comments, remarks or accusations about the employee.
Enforcing A Confidentiality Clause
The confidentiality of details contained and covered by a Settlement Agreement is in the best interests of both the employer and employee concerned. As long as the agreement is lawful, by being created according to the correct legislation, and followed strictly by both parties, the clause will protect each of them from further consequences after the termination of the employment role.
If the employer attempts to instigate confidentiality terms that are unbefitting and preventative of information being released that holds a legitimate public interest then the clause will be rendered void and is no longer enforceable in the eyes of the law. A clause becomes void if it is regarded as an obstruction or infringement of an employees right to make a protected disclosure. This is commonly known as whistleblowing and is covered under the Public Interest Disclosure Act (PIDA) 1998. The act allows employees to make a protected disclosure against an employer if the information in question is seen as reasonable and relevant to public interest.
Common Mistakes Made When Signing Off On Confidentiality Clauses
Be sure to understand exactly what you must keep confidential. This will often cover more than you expect so read the agreement carefully to be sure you aren’t likely to breach the agreement through personal ignorance.
It is far too easy to bad-mouth an ex-employer after a termination. Tension will run high and emotions will be vulnerable. It pays to remain professional in all conversations about your ex-employer, as you may not be sure the networks of the people around you when airing any grievances. There will possibly be a list of those who you are not allowed to communicate with but again, without knowing of the links between them and the business being protected the wrong information can easily land in the wrong hands. A breach of the derogatory behaviour term can violate the whole agreement and you may have to return part or all of the compensation you received.
Many employees aren’t aware that they can also apply for a non-derogatory behaviour clause. If other members of the business have held disputes with the terminated employee they can also be included in the agreement. In situations that could be damaging to your future employment or from defacement or character assassination, employees have the right to protect themselves. There are limits to inclusions but appropriate steps can be taken to prevent unwanted behaviour from being damaging in future affairs.
You should never assume that all family members or a future employer has the right to know about information in the agreement. Sharing information with anyone but your partner or spouse can be seen as a breach of confidence, especially to a new employer whether they operate within the same industry or not.
In a world where we share everything on social media it should go without saying that this is the very last place you should disclose any information regarding sensitive business particulars or emotional upset against an employer — nevertheless, too many still do and have suffered the consequences. Even if you believe privacy settings will keep the information within a limited audience this is still a huge breach of your contract. Never share anything of this nature on social media.
A settlement agreement should not be taken for granted once an employee has received their settlement compensation. It shouldn’t be seen that a clean break has been made from the previous employer as the agreement holds the employee liable for their future behaviour. Your employer has the right to pull you up and raise action against you at any point once the agreement has been signed. If a breach of confidentiality causes a situation that results in your employer making a loss of profit or capital or losing a client, they can hold you responsible and make you liable for the financial losses caused to the company.
Breach of the agreement is a criminal offence under data protection laws. This means that any employee found guilty of such a breach is subject to prosecution in a court of law. You may be liable for an injunction, damages for losses and all costs of both sides, including your employer’s solicitor and associated legal fees. Fines and costs can lead into the thousands so you should think very carefully before making the smallest disclosure of any area pertaining to your contract.
Another common mistake is that an employee can’t raise any issue with or about their previous employer once they have signed the agreement. The deliberations regarding confidentiality are often complicated but not a full block on the movement of information. The best course of action to take if you feel a situation may be arising where you are to be requested or feel it important to reveal sensitive or important information is to consult your legal advisor or professional solicitor. They will guide you on all matters of what is fair, what you are and aren’t entitled to disclose, and who to.
Do You Need Guidance On A Settlement Agreement Or An Issue Arising From A Confidentiality Clause?
Our specialist team of employment solicitors are at hand to offer informative and independent advice and guidance for any employment law situation. We specialise in the careful handling of Settlement Agreement cases with sensitivity and understanding. We understand how difficult any dispute with an employer can be so stand by our commitment to a respectful, considerate, professional and positive outcome in every project we undertake.
You can call on 0161 82 11 559 or contact us by clicking here for an initial consultation regarding all of your employment concerns. We offer complete and full advice in easy to understand terms to help establish the most likely outcomes for your case in a relaxed and pressure free environment.