Considering including a confidentiality clause in a settlement agreement? Confidentiality in settlement agreements may not be a legal requirement, but they’re still incredibly common in this type of legal contract.
Before you sign a settlement agreement with a confidentiality clause, however, it’s important to understand exactly what you’re agreeing to as well as what happens if you breach these terms.
To help you make this decision, the qualified solicitors at Freeman Jones Solicitors explain everything you could want to know about confidentiality clauses in settlement agreements below.
What is the standard confidentiality clause in a settlement agreement?
The typical confidentiality clause in a settlement agreement stipulates that both parties shall agree to keep certain information confidential. This information is often in the form of trade secrets, information that isn’t considered general public knowledge, or information that has been received directly as a result of working for the business.
These confidentiality clauses tend to also prevent the employee from discussing their settlement agreement with colleagues. In some circumstances, one party may be able to allow the disclosure of certain information if they’ve received prior written consent from the other concerned party.
The exact extent and contents of these clauses will naturally vary on a case-by-case basis depending on the nature of the settlement agreement.
What happens if you breach confidentiality in a settlement agreement?
If an employee or employer breaches confidentiality in settlement agreements, then the wronged party will have legal grounds to seek compensation for any losses suffered as a result of this action.
For example, the disclosure of a sought-after trade secret could be detrimental to the continued success of a business. The wronged party can seek compensation by bringing a claim of breach of contract against the party in breach, which often results in taking them to Employment Tribunal or Country Court.
Time-consuming, expensive, and potentially damaging to your reputation, it’s best to avoid tribunals by not breaching confidentiality in settlement agreements at all costs.
Are confidentiality clauses enforceable?
Yes, confidentiality clauses are often enforceable as UK courts recognise the need for businesses to protect certain information. However, confidentiality clauses aren’t enforceable if they’re being used to prevent an employee from disclosing information relating to illegal activities.
Keep it confidential with Freeman Jones Solicitors
Confidentiality clauses are often an essential part of many settlement agreements as they help to reduce the risk of unauthorised information becoming public knowledge. Used to protect employees and employers alike, their importance shouldn’t be overlooked by either party.
Our settlement agreement services include everything from providing expert settlement agreement advice for employees to helping employers create comprehensive and legal-binding contracts. Whether you need support with professional negotiation or clear answers to various settlement agreement queries, we can help.
If you want to learn more about our settlement agreement services, please don’t hesitate to book your free, no-obligation, 20-minute consultation.
We also welcome visitors, so please feel free to visit us at any one of our offices – you can find a Freeman Jones Solicitor branch in Chester, Liverpool, Warrington, and Wrexham!