In Confidence: The Role of Confidentiality in an Employment Relationship
General / 25 June 2015
The intricacies of employment and mediation-mandated confidentiality agreements have recently been in the public spotlight after former Conservative Party leader Colin Craig remarked that, if a confidentiality agreement with his ex-press secretary were to be lifted, then the public could finally find out what had or “had not” actually happened between them, in the recent case involving Craig.
A confidentiality agreement clause or CA (also referred to as a Non-disclosure agreement or NDA) is a vital aspect of most employment agreements. A confidentiality agreement will also often be part of any employment settlement agreement between parties to resolve their employment relationship problems or dispute.
In most cases, confidentiality agreements are signed between two parties in order to protect any type of proprietary information or trade secrets from being leaked to the public.
However, confidentiality agreements can also cover non-public business information and information pertaining to the everyday activities of a business. In the case of Mr Craig and his former press secretary who had made sexual harassment allegations against him, the confidentiality agreement which he breached had been agreed to as part of a mediated settlement.
The length and duration of confidentiality agreements can vary but by and large most agreements bind the parties for life and prohibit either party from discussing events, people or trade secrets that they discovered whilst working at a particular employer or learnt during mediation.
What the Craig case has made ever more evident is how important it is for employers to ensure they have a legally sound confidentiality provisions included in their employment agreements which protect all parties from potentially harmful information that could be released by disgruntled employees and employers alike, following an employment-related problem or dispute.
Mr Craig has breached the CA by discussing events and information which were protected by the CA he had signed. Now his former press secretary wants to do the same to defend her position, yet she is worried that the Conservative Party may sue her for the breach of the CA. There have been a number of cases appear before the Courts for alleged breach of confidentiality agreements following mediation and the Courts are able to issue a penalty if this occurs.
There are two typical uses for confidentiality agreements for an employer.
It is common for employers to get their employees to sign a CA as a condition of employment. The purpose of such an agreement is to assure the employer that their employees won’t communicate or disclose the employer’s confidential information to anyone, particularly a competitor.
The CA should specify what information cannot be disclosed and should include information such as the employer’s business affairs, financial or commercial arrangements, clients or any other persons dealing with the employer as well as technical information relating to any product, business activity plan or process which the employer currently uses or is considering using in the future. CA’s can also prohibit an employee from discussing any confidential information that they have heard at the work place (even where such confidential information is not the property of the employer). As an example, an employee may discover some potential confidential information from a customer or a supplier.
There is a risk that a poorly worded CA in an employment agreement may not protect an employer in Court, so it is really important that you take the time to consider what information you want to be protected by a CA and ensure it is specified in any employment agreement. The necessity of having a CA as part of any agreement reached through mediation is to encourage parties to be able to speak freely and frankly safe in the knowledge that their words cannot be used against them in subsequent litigation if the dispute is unable to be resolved.
In the case of Mr Craig’s breach of the CA, he ‘selectively’ chose to abide by certain clauses set out in the agreement and deliberately breached others in order to, in his words, protect his ‘good name’ and it will be interesting to see if Mr Craig’s actions result in further legal action by the Conservative Party and/or his former press secretary.
In order to avoid for these things to happen in your business, it is important for employers to implement confidentiality agreements when drafting of employment agreements and to make sure that their employees know their obligations pertaining to these agreements. Communicate to your employees the importance of abiding by their confidentiality agreements and not disclosing any potentially harmful information about their employer or its employees.
Furthermore, if there is any form of silver lining that can be garnered from this recent case involving Conservative Party’s Colin Craig and the dispute with his former press secretary, it is how vital the inclusion of a CA clause in an employment agreement so as to avoid any potential damage in the future.
Janet Copeland is uniquely positioned to assess your business needs and advise you whether or not your business should be considering including a CA in your employment agreements. We can help you tailor specific CA provisions into the original employment agreement in order to help protect you and your business from any form of future dispute regarding confidentiality in the workplace. After a comprehensive review of your business and the nature of your employment agreements, our lawyers are specialised in establishing concise and clearly drafted CA provisions for your business.
Please don’t hesitate to contact us if you are concerned about confidentiality breaches in your workplace or if you are interested in finding out more about how to employ an effective confidentiality agreement clause in your standard employment contracts.
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Disclaimer: We remind you that while this article provides commentary on employment law topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek guidance from your employment lawyer for any questions specific to your workplace.