Apart from the obvious what do Stormy Daniels, the TV drama The Split and Harvey Weinstein have in common? Answer: non-disclosure agreements. Non-disclosure agreements have been getting a bad press recently. According to Donald Trump “These agreements are …very common among celebrities and people of wealth.” Not for the little people then, but that’s where he is wrong. Without them the legal system would grind to a halt from overload.
In employment law non-disclosure agreements are better known as compromise agreements and are a regular part of an employment lawyer’s tool-kit. They will generally contain a confidentiality clause whereby one or both parties agree to keep the fact and the terms of the agreement confidential.
Compromise agreements are used to settle disputes between parties without admission of wrongdoing. That’s why Donald Trump can now admit to the non-disclosure agreement but deny the sexual encounter. In the employment world, in return for a sum of money an employee signs an agreement compromising all or some of their putative claims against the employer and generally both parties agree to keep the fact and the terms of the settlement confidential
To be enforceable the agreement has to be in writing; it should be signed by both parties; it should set out in precise terms what is being waived; and the employee should be given the opportunity of obtaining independent advice on the meaning of the agreement before signing. The independent legal advice does not necessarily have to come from a lawyer, it can be given by a union representative/employment expert.
It is true to say that when negotiating the terms of a compromise agreement the parties tend to focus on the financial aspects and the discussion around the confidential nature of the agreement can often be an afterthought. Where confidentiality is an issue, it can and should be made clear in the agreement itself what can and cannot be disclosed and it is usual nowadays to include a clause carving out a protected disclosure from any confidentiality obligation.
Jacqui Kelly, Mediator and Trainer in Employment Law 