Employers hiring contractors and employees in Spain may rely on non-disclosure agreements (NDAs) to protect sensitive company information and trade secrets. However, though NDAs may be common, they are complicated legal documents and, in Spain, both European Union and Spanish laws govern their enforceability. What’s more, NDAs cannot cover illegal activity, stop whistleblowers, or silence workers who have experienced harassment, discrimination, or abuse.
Employers may ask: Are NDAs enforceable in Spain? How can NDAs protect a company and its global employees? This guide will cover this and more.
(Note that this guide is only for informational purposes, and isn’t intended to provide legal advice. Consult a legal professional for further questions.)
What is an NDA?
A non-disclosure agreement (NDA) is a legal contract that prohibits one or more parties from sharing proprietary or confidential information with third parties. NDAs can also enforce against leaks caused by carelessness.
While NDAs are used in a variety of contexts, in the workplace these written agreements are typically used to protect a company’s trade secrets and other private information from competitors. Companies commonly have employees, contractors, and consultants sign an NDA, also known as confidentiality agreements. Prospective business partners or merging companies may also sign NDAs.
Are NDAs enforceable in Spain?
Yes, Spanish courts often consider NDAs enforceable, and the Supreme Court of Spain and Court of Appeal of Barcelona have protected trade secrets. NDAs also fall under the region’s Personal Data Protection Law. However, NDAs must meet requirements for being reasonable and of legitimate business interest. NDAs must be:
- Reasonable. NDAs can’t place an undue burden on an individual to keep information confidential.
- Specific. The NDA needs to clearly define the kind of information that's confidential and the time frame during which it cannot be disclosed.
- Not outside the public interest. Certain information can't be covered by an NDA, including illegal activity.
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3 things you need to know about NDAs in Spain
1. There are different types of NDAs
In Spain and in other European countries, there are two types of NDAs you're most likely to encounter:
- Mutual NDAs, also known as bilateral or two-way NDAs, are a type of agreement where all parties in the NDA are contractually bound to share certain information with one another, but no one outside the agreement. Mutual NDAs are often part of mergers, acquisitions, and similar kinds of business deals.
- Non-mutual NDAs, also known as unilateral NDAs, work one way, requiring one party in the agreement to receive sensitive information without leaking or sharing it with anyone else. These types of NDAs are more common in employer-employee relationships, and are often signed by a new employee when they are hired.
Additionally, there are multilateral agreements. These contracts are similar to bilateral agreements but, in the case that there’s more than two parties involved, these NDAs both commit and protect everyone.
2. There are essential components to make NDAs enforceable
NDAs should always be written agreements—a verbal NDA may not be enforceable. For US-based companies working with Spanish workers and contractors, it’s recommended to draft the agreement in both English and Spanish. While NDAs should be written specifically to the company and its unique confidentiality needs, NDAs should always include the following to be comprehensive and enforceable:
- Clear indication of the parties involved. This should include their names and roles, including who will be sharing and receiving confidential information (i.e. the disclosing party and the receiving party) and who they will be sharing such information with.
- Definition of confidential information. This should include the general topic of information covered by the NDA, as well as the scope of information that's covered. For example, is written information considered confidential but oral information is not?
- Restrictions on disclosure and use. Define how confidential information is shared between those in the organization or who is permitted to have the information.
- Exclusions from confidentiality. If there are any cases when parties in the NDA are allowed to disclose confidential information, those should be included in the contract. (Note: Once information is made public, it is no longer considered confidential.)
- Terms of the agreement. How long does the NDA last? For employment NDAs, they typically last for the duration of the working relationship, but they can last longer. In Spain, this element of the NDA agreement is critical. If the duration of the NDA is unspecified, either party may be able to terminate it at any time.
- What will happen if the NDA is breached. It's a good idea to include provisions that outline any injunctions, damages, or other consequences for breach of contract. Mention the governing law and jurisdiction for any violations. Because the Spanish court systems can consume a great deal of time and effort (more on that below), you may consider alternative dispute resolution mechanisms, such as arbitration.
In Spain, the civil code creates a legal duty to negotiate and act towards the other party in good faith. When drafting an NDA, remember that it should be fair and not create an undue burden on the other party.
It’s considered best practice in Spain to have each party initial the bottom right hand corner of each page in addition to signing their legal name and writing the date at the end of the document.
3. Spanish laws also protect confidential company information
Though NDAs can help keep information safe, European and Spanish law already provides some protection for employers:
- Data Protection Law. This law commits those interacting with personal data and files, whether they’re employees or organizations, to professional secrecy. (Note that this law is multifaceted. It also protects employees from being unfairly monitored and protects customers from having their data misused.)
- Spanish Trade Secrets Act. This act grants an economic right over secret information that has commercial value due to being secret. The owner of the information must do due diligence to protect the secrecy. Trade secrets may cover know-how, information, sales methods, consumer profiles, strategies, supplier or client lists, manufacturing processes, and more.
When would an employee or contractor sign an NDA?
It's common for Spanish employees and contractors to sign NDAs during their onboarding or when they start a new work contract. An NDA may also be included as a confidentiality clause in a new hire's offer letter or employment contract.
Frequently asked questions about NDAs in Spain
Are NDAs enforceable in Spain?
Yes, NDAs are legally binding contracts in Spain. However, employment laws and other regulations that affect NDAs can change, altering the ways they can be used by employers. Always research current regulations and consult with a legal professional.
Are NDAs enforceable overseas?
The enforceability of a non-disclosure agreement (NDA) in Spain overseas depends on the specific terms of the agreement, as well as the laws of the country where the NDA is being enforced.
In general, an NDA that is valid and enforceable in Spain will be enforceable in other countries that recognize NDAs and enforce foreign judgments. However, there are many factors that can affect the enforceability of an NDA in a foreign jurisdiction, such as differences in legal systems, cultural norms, and public policy considerations.
What information can be covered by an NDA?
Confidential or proprietary information can be covered by an NDA in Spain. This includes:
- Trade secrets and proprietary information. This can include things like manufacturing processes, formulas, designs, and technology that are unique to a company and provide a competitive advantage.
- Financial information, including confidential financial statements, budgets, sales figures, pricing structures, and projections.
- Customer information, like customer contact information, purchasing history, and preferences.
- Employee information. This can include information about employees, such as their salaries, job duties, and performance evaluations.
- Intellectual property, which can include patents, trademarks, copyrights, and other types of intellectual property.
Any information that's publicly known or part of the public domain cannot be covered by an NDA. Per European law, NDAs cannot prevent whistleblowers from disclosing criminal activity by a company.
When should you use an NDA?
Common situations to use an NDA in Spain include:
- When an invention or business idea is being presented to a potential partner, investor, or employee
- When financial information is being shared with a potential partner or investor
- When a new product or technology is being shown to a prospective buyer
- When sensitive company information is shared with an employee, contractor, or consultant
- When access to proprietary or confidential information is given to employees, contractors, or consultants
- When customer information is shared with employees, contractors, or consultants
Rippling makes it simple to create and send out an NDA as part of a job offer package.
Is an NDA the same as a confidentiality agreement?
Yes. Non-disclosure agreements may be called confidentiality agreements (CAs), confidential disclosure agreements (CDAs), proprietary information agreements (PIAs), or secret agreements (SAs). In Spanish, NDAs are known as acuerdo de confidencialidad.
Is an NDA the same as a non-compete agreement?
No. An NDA is different from a non-compete clause or non-solicitation agreement. While both types of agreements are used to protect a company's interests, they serve different purposes.
A non-compete agreement is a contractual agreement between an employer and employee that restricts the employee from engaging in certain competitive activities for a specified period of time after leaving the company.
The purpose of a non-compete agreement is to prevent a former employee from taking knowledge, skills, and business opportunities acquired during employment and using them to compete with your company.
Though Spanish Labour Legislation doesn’t regulate non-competes, case law has considered them valid. However, employees must agree to non-competes, and non-competes can’t last more than two years from termination for technicians and six months for other types of workers. What’s more, the employer must have a commercial interest in the non-compete (meaning there has to be a competitive reason for the agreement) and the employee must be paid adequate compensation in return. Consideration can take the form of payment, a signing bonus, a promotion, or other benefits.
Is an NDA ethical?
Yes, NDAs are generally used to protect employers by preventing contractors and employees from sharing trade secrets and other proprietary information with competitors.
However, NDAs should not be misused. Companies cannot use NDAs to protect illegal activity. NDAs can’t be used against whistleblowers and, moreover, the EU’s Whistleblowing Directive requires companies in Spain to have reporting channels and protective measures for whistleblowers.
Benefits of NDAs in Spain
An NDA can help protect employers' confidential information and proprietary assets, which can be crucial to a company's success in today's highly competitive business environment. Benefits include:
- Legal protection for confidential information, trade secrets, and other proprietary information that is disclosed to another party
- Prevention of unauthorized disclosure of confidential information by requiring the recipient to keep the information confidential and not to disclose it to third parties
- Legal recourse to seek damages and other remedies under the terms of the agreement if a recipient of confidential information breaches the NDA
- Protection of intellectual property, such as patents, trademarks, and copyrights
What happens if an NDA is breached?
The penalties for breaching an NDA can vary, depending on the severity of the breach, what penalties are outlined in the NDA, and whether the breach violated any laws. But an NDA is a legally binding contract, so any breach means legal action can be taken against the violating party.
Because there are no rules for calculating damages under Spanish law, you would have to determine the amount you consider legitimate. A judge may reduce the amount if it’s considered disproportionate with the loss. Moral damages are rarely awarded for NDA violations; amounts should be determined by the valuation of the damages and projected loss of profit.
Often, a penalty serves as punitive damages (awarded as punishment for reckless or malicious behavior) to avoid proving actual loss. This could be expressed as indemnification (compensation) in lieu of damages. Yet, even in this scenario, the courts can, again, reduce punitive damages.
There’s also the possibility of injunctive relief—which is when the courts step in to prevent an act, such as the continued divulgence of secret information—but getting this in Spain can be difficult. Parties requesting the injunction typically must post a bond or financial guarantee and must also prove urgency; even then, there’s no guarantee of the injunction being granted. Court proceedings can also take a very long time in Spain, which can be an issue amid critical breaches of confidentiality. Alternative dispute resolution mechanisms, such as arbitration, may speed up the process, saving time and money.
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Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.