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A clause in a settlement agreement asking the employee not to disclose the fact, existence or terms of the agreement is a common feature. But do those clauses really work?

Drafted well, the confidentiality clause is lawful and reasonable. But to achieve a workable agreement the wording needs to take into account the following:

Protected disclosures

Make clear that nothing in the confidentiality clause prevents the exiting employee from ‘blowing the whistle’. If it looks like you’re attempting to stop them from blowing the whistle the clause and possibly the entire agreement will be unenforceable.

Likewise, don’t expect to be able to prevent the exiting employee from working with authorities, including the police, about the matters covered by the agreement (even about any already known claims, grievances or issues).

Carve out exceptions

Make it clear that the exiting employee isn’t prevented from discussing or raising specific issues with you. Although there’s no legal requirement to do this, including wording along these lines helps with the enforceability of the wording.

Protecting well-being

Call out that exiting employees can speak about the terms of their agreements with professionals including medical, therapeutic, counselling, legal or financial support services.

Get in touch if you’d like to discuss reviewing your template settlement agreement to support with the enforceability of confidentiality clauses. 
This update is accurate on the date it was published, but may be subject to change which may or may not be notified to you. This update is not to be taken as advice and you should seek advice if anything contained within affects you or your business.