Confidentiality clause in a settlement agreement

Thinking About a Confidentiality Clause in a Settlement Agreement?

While confidentiality clauses are not a legal requirement in settlement agreements, they are extremely common—and for good reason. These clauses can help protect sensitive information and ensure both parties maintain discretion following a dispute.

However, before you agree to a settlement agreement that includes a confidentiality clause, it’s essential to fully understand what you’re committing to—and the potential consequences if you breach its terms.

To guide you through this important decision, the expert solicitors at Freeman Jones Solicitors have outlined everything you need to know below.

What Is a Confidentiality Clause in a Settlement Agreement?

A typical confidentiality clause in a settlement agreement requires both parties to keep specific information private. This might include:

Trade secrets
Internal business information not publicly known
Details obtained during the course of employment
The terms and existence of the settlement agreement itself

These clauses often prevent employees from discussing the agreement with colleagues, friends, or external parties. In some cases, limited disclosure may be permitted, but only with prior written consent from the other party.

It’s worth noting that the exact wording and scope of a confidentiality clause will depend on the circumstances of the agreement and the nature of the information involved.

What Happens If a Confidentiality Clause Is Breached?

Breaching a confidentiality clause can have serious consequences. If either party discloses protected information without permission, the other may have grounds to claim compensation for any resulting losses.

For example, revealing a trade secret could harm a company’s competitive edge. The affected party may bring a breach of contract claim through the Employment Tribunal or County Court, which can be costly, time-consuming, and damaging to your reputation.

To avoid this, it’s critical to understand your obligations and stay fully compliant with the terms of any confidentiality agreement you sign.

Are Confidentiality Clauses Enforceable?

Yes, confidentiality clauses are generally enforceable under UK law. Courts recognise the legitimate need for businesses to protect sensitive information. However, they cannot be used to prevent the disclosure of unlawful conduct—such as whistleblowing related to illegal activity.

Protect Confidentiality with Freeman Jones Solicitors

Confidentiality clauses play a vital role in many settlement agreements. They help protect both employers and employees by keeping sensitive details secure and maintaining trust on both sides.

At Freeman Jones Solicitors, we offer a comprehensive settlement agreement service, including: