Are NDAs legally binding in the UK? A guide for employers

Hiring in the UK? The majority of employers rely on non-disclosure agreements, commonly called NDAs or confidentiality clauses, to keep sensitive information confidential and protect themselves from harm. But while they’re prolific, the British government has kept a close eye on their use. In 2019, it started considering a crackdown on the use of confidentiality clauses to intimidate people from reporting sexual harassment, assault, or discrimination to authorities such as police or healthcare professionals. 

So, are NDAs legally enforceable in the United Kingdom? How do you properly use them to protect yourself and your company while still remaining compliant with the law? Read on to learn more about using confidentiality clauses in the British workplace.

(Note: our guide is for informational purposes and isn’t intended to provide legal advice.)

What is an NDA?

Simply put, NDAs (also called non-disclosure agreements), confidentiality clauses, and confidentiality agreements, are used to protect your sensitive and/or proprietary information when you have to share things about your business with others. They can be used in a variety of contexts: You might sign one before hiring a financial advisor or lawyer to provide advice on your business, and you’ll likely ask employees to sign an NDA before being hired. This will prevent whoever you’re sharing information with from giving valuable information to, say, a competitor and harming your business.

Are non-disclosure agreements enforceable in the UK?

The short answer? Yes, NDAs are enforceable in the UK–so long as they are being used for legitimate business purposes and not as so-called “gagging clauses” that would prevent employees from reporting serious issues, such as harassment, to the proper authorities.

Here are a few basic tidbits you should know when you’re drawing up an NDA in the UK:

• NDAs can cover both recorded information–such as confidential documents—and ideas you share in meetings. Be specific and narrow in the purpose of your NDA when drawing up the document. You can always edit it and widen the scope later.
• The UK government hasn’t yet passed legislation that protects employees from signing “gagging clauses” that would prevent them from disclosing information in the event of a serious issue, such as an assault, discrimination, or harassment, to the proper authorities, like the police. However, it is keeping a close eye on NDAs and has cracked down on anyone who tries to get an employee to sign a gagging clause.

4 things you need to know about non-disclosure agreements in the UK

1. There are different types of NDAs

There are two different types of NDAs in the UK:

• Mutual NDAs are used when both parties are sharing sensitive information that needs to be kept confidential.
• One-way NDAs are used if you’re the only party disclosing sensitive information. In some circumstances, a one-way NDA will need to be executed as a deed. This isn’t hard to do, and the UK government advises against drawing up a mutual agreement instead to try to avoid extra steps.

2. Confidentiality agreements are usually only viable for 3 to 5 years

When you’re drawing up an NDA, it’s crucial to specify how long it will be viable. In the UK, it’s common for NDAs to last for three to five years, after which time the information can be freely shared with others. Only certain types of information can be kept confidential forever, including, but not limited to:

• Expertise that cannot be patented
• Lists of your customers
• Some personal data

Remember: In the UK, after information is public–regardless of how it happens—the NDA cannot be legally enforced.

3. There are legal differences between Scotland, Northern Ireland, and England and Wales

The United Kingdom is actually made up of three separate legal systems: Scotland, Northern Ireland, and then England and Wales together. So, be specific about which country you’re referring to, especially if you and your employee or contractor are based in different nations. You’ll need to specify which region’s laws your NDA follows and which court system would take on your case in the event of a lawsuit.

4. If you’re dealing with a public authority, you need to make sure your information is safe from Freedom of Information requests

If your business involves a public authority in the UK, such as a university, be aware these organizations have to make certain information public if they receive a Freedom of Information request. This could include your information if you don’t specifically state in the NDA that the data you’re sharing with the authority needs to be kept confidential no matter what.

When would an employee or contractor sign a confidentiality agreement?

It’s most common for employees and contractors in the UK to sign an NDA during the onboarding process or when they start a new work contract– although it’s up to you. Some employers even include the NDA as a confidentiality clause in a new hire’s offer letter. Whichever you choose, the most important thing is that you have them sign the NDA before you share any sensitive information with them.

Frequently asked questions about non-disclosure agreements in the UK

Are NDAs enforceable in the UK?

NDAs are considered legally binding contracts in all four of the countries that make up the United Kingdom. To ensure your sensitive information is protected by the NDA, it’s best to be very specific about what’s covered. And, you need to remember that once information is publicly known—regardless of how it became public—the NDA isn’t enforceable anymore.

Be aware that the UK government is keeping an eye out for employers who misuse NDAs and turn them into “gagging clauses” that intimidate employees into being quiet even though harassment, discrimination, and other criminal behavior is taking place at the company. It’s even considering passing legislation that would change the ways employers can use NDAs.

Is my confidentiality agreement enforceable no matter where I am in the UK?

No. The UK has three separate legal systems: Scotland, Northern Ireland, and England and Wales together. It’s crucial to be specific about which individual country’s laws and court system your NDA is governed by.

Are NDAs enforceable overseas?

The short answer is yes, NDAs are enforceable overseas. Before signing the agreement, both parties should decide which country’s laws apply to the contract and which legal jurisdiction would hear the case in the event of legal action. The choice is up to you, but keep in mind that many factors can affect the enforceability of an NDA, including differences in laws and legal systems, cultural norms, and public policy considerations.

What information can be covered by a non-disclosure agreement?

The UK government is relatively vague when it comes to exactly what’s covered by an NDA. Generally, non-disclosure agreements cover information that’s confidential or proprietary. This can include the following:

• Trade secrets and proprietary information, such as designs, technology, formulas, and know-how that give a business a competitive advantage and are unique to a company
• Customer information, such as lists of contact information, buying history, and customer preferences
• Financial information, including budgets, bank statements, forecasts, cash flow information, and sales figures
• Intellectual property, such as trademarks, copyrights, and patents
• Employee information, like employees’ personal data, their annual wages, and performance evaluations

Any information that's publicly known or part of the public domain cannot be covered by an NDA. Furthermore, NDAs cannot be used to silence employees who have either experienced or witnessed what could be constituted as criminal activity at their company.

When should you use an NDA?

Non-disclosure agreements are commonly used in the UK in the following situations:

• You’re sharing financial information about your business with a potential investor or partner
• You’re hiring a solicitor to take care of your company’s legal affairs
• When you’re sharing ideas for your business or presenting new products or technology to partners, employees, investors, and potential buyers
• When you’re hiring a new employee or contractor who will inevitably have access to sensitive and/or proprietary information, including information about your customers

Rippling makes it simple to create and send out an NDA as part of a job offer package.

What are the major components I should include in my UK NDA?

The following is a brief overview of the main components to include when drafting an NDA in the UK. It should cover the following:

• A definition and explanation of the specific information that, by signing the agreement, the other party cannot disclose.
• The times when it’s okay for sensitive information to be shared. This is important, because sometimes employees need to share what would be confidential information with each other to get work done, so the NDA should be as specific as possible to keep the business flowing smoothly while ensuring confidential information is protected.
• How long the NDA will remain in effect (typically, in the UK, NDAs are enforceable for three to five years).
• Which law and court jurisdiction apply to the contract. This information will be necessary if a legal issue arises.
• A breach remedies clause that ensures you can claim damages and pursue legal action if the other party breaks the terms of the NDA.

Frequently, NDAs also include other clauses, such as a non-compete clause (which we’ll explain in the next section) or a no transaction obligation clause, which essentially states that even though two parties have shared information and are in talks to do business together, they don’t actually have to enter into a contract with each other.

Is an NDA the same as a non-compete agreement?

No, it’s not. Simply put, a non-compete clause prevents an employee from trying to compete with your company once they no longer work for you. It strictly prohibits them from using trade secrets, knowledge, skills, and business opportunities they acquired while they worked for you and using them against you, either by joining an existing competitor or by starting their own company.

This contractual agreement isn’t indefinite: Typically, they last one to two years after the employment relationship is over. And, often, employers include non-compete agreements as a clause in the NDA.

Is a confidentiality agreement ethical?

Yes, when they’re used for legitimate business purposes, such as protecting employers by ensuring employees, contractors, potential business partners, and other individuals, such as financial advisors and solicitors, don’t share confidential information with competitors.

However, as mentioned earlier, NDAs have come under the microscope in the UK over the last four years. One of the most public cases was that of Philip Green, the CEO of well-known retail company TopShop. Back in 2018, Green came under fire for using non-disclosure agreements to silence his employees, many of whom experienced sexual harassment, were subject to racial abuse, and found themselves on the receiving end of unethical and unlawful behavior. This high-profile case was just one of several that spurred Parliament’s MPs to take a closer look at employers who twisted NDAs until they became “gag orders”.

Benefits of non-disclosure agreements in the UK

NDAs protect companies from the harm that can come from having their confidential information and proprietary assets shared with competing businesses. Here are a few of the benefits in further detail:

• NDAs provide legal protection. They are legally binding documents that prevent employees, business partners, financial advisors, and other similar parties from disclosing confidential information, trade secrets, and other proprietary information to another party. They also provide legal protection of intellectual property, financial information, customer data, and a host of other important information.
• You have legal recourse in the event of an unauthorized disclosure. Without an NDA, if, say, one of your employees got a job with a competitor, they could freely share information that could help that company compete with you. With an NDA in place, however, you have the right to seek damages and other remedies should the agreement be broken while it’s still enforceable.

What happens if an NDA is breached?

In the UK, companies are legally allowed to sue if the other party breaks the NDA. They’re also allowed to obtain an injunction if they have legitimate reasons that the contract is about to be breached. The penalties for breaking an injunction are severe in the UK and could mean jail time and hefty fines for the offender.

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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.