Non-disclosure agreements (NDAs) are important legal tools used to protect confidential information in business relationships. Whether you’re sharing sensitive client or partner data, proprietary technology, sensitive market information, or internal processes, you will likely be asked to sign an NDA to ensure information stays private. But what happens if that agreement is breached? Even inadvertently letting the cat out of the bag can have serious consequences ranging from legal action and financial penalties to lasting reputational damage.
So, what happens when an employee breaches the terms of that NDA? In response to a NDA breach, employers need to act quickly and carefully to limit damage and protect their interests. In this blog, we explain what steps to take if your organisation breaches an NDA, even accidentally. From identifying the breach to understanding legal remedies, enforcing contracts, and preventing future risks, we walk you through everything you need to know. It shouldn’t replace formal legal advice, of course, but it might prove helpful in protecting your business from risk.
What Is a Non-Disclosure Agreement (NDA)?
Despite being slightly discredited in the media recently, non-disclosure agreements are still widely used in business. An NDA is a legal contract that prohibits individuals from sharing or disclosing confidential information. Businesses use NDAs to protect sensitive business data, such as financial information, trade secrets, customer lists, and strategic plans. Employees are typically asked to sign NDAs during onboarding or project initiation. Signing them is often the first step in creating open, transparent working relationships.
Common NDA Breach Scenarios
Employees can breach NDAs in many ways, not all of them deliberate or malicious. It is easy to break an NDA inadvertently due to a lack of care or foresight. Both scenarios are serious, however, and require a prompt and appropriate response.
Here are some examples of breaking a confidentiality agreement we have come across over the years.
- Sharing confidential data with friends and family through unguarded conversation in a social setting.
- Inadvertently posting confidential information on social media, typically through a poorly thought-through LinkedIn update or post.
- Leaving sensitive documents or files in an accessible place, such as an open-plan office, client site, or even on public transport.
- Forwarding protected information to a personal email address for processing out-of-hours or at home.
- Deliberate leaks during an employee dispute, redundancy or a poor-leaver scenario.
- Data ‘hacks’ that occur through unsecured systems and poor cybersecurity.
It is possible to guard against all the above through policing a robust data protection policy in your organisation. The value of protecting sensitive information and the impact of breaching an NDA should be covered in your employee contracts and ongoing performance management. Obligations related to NDAs and corporate confidentiality should be clear and transparent for all staff.
Legal Consequences of Breaching an NDA
Should an employee of yours breach an NDA, the consequences can be both legal and operational. Depending on the nature of the NDA, breaches can prove expensive as you may be liable for legal costs and consequential losses that result.
Breaches also come with reputational damage. Are you a trustworthy business? Will other clients or partners work with you? Sharing confidential information can also disrupt your internal team. It’s hard to feel comfortable once there’s been a breach of trust.
NDAs are typically civil matters, but may result in court injunctions to stop further disclosure or enforce damages. Sometimes, breaching an NDA may intersect with data protection legislation and become a criminal matter.
The consequences of breaching an NDA are always serious and require prompt action to minimise any negative impacts.
Is an NDA Legally Enforceable in the UK and Ireland?
Enforceability depends on various factors, including the agreement’s scope, duration, quality and appropriateness to the matters at hand. For example, an NDA typically must have the following features to be considered watertight.
- Clearly and specifically define what constitutes confidential information.
- Be reasonable in scope and duration.
- Not infringe on statutory rights (e.g., whistleblower protection)
- Be signed voluntarily and with consideration
An NDA drafted too broadly or without proper context may be challenged in court. That’s why precise, fair wording is crucial. If you have concerns about an NDA you’re asked to sign, it is essential to get impartial legal advice.
What to Do If You’ve Breached an NDA
If your business breaches an enforceable NDA with a third party, such as a client, investor, or partner, it is crucial to admit the breach responsibly.
This means contacting the other party as soon as possible, ideally in writing, acknowledging the issue and outlining the steps you have taken to contain it. It pays to be transparent without, of course, disclosing further sensitive information. Your task is to reassure the damaged party in any breach that you take the matter seriously. To help, it is worth offering to cooperate with their legal team as required. Early action and transparency help preserve trust and reduce the risk of escalation.
Consulting an NDA solicitor is highly advisable before reaching out, however, to avoid making mistakes and inadvertently making matters worse.
Once you’ve contacted the affected party, further activities may include discreet investigation and evidence gathering. Understanding how the breach occurred is essential, and you may need to take steps to limit further exposure. You may also need to consider disciplinary or legal action against the employee or employees responsible for the breach. This might vary from a simple cease and desist letter to dismissal for misconduct. In all cases, this must be managed in line with your HR policies and employment law.
How to Prevent NDA Breaches in Your Business
As you’d expect, prevention is better than a cure when it comes to breaching non-disclosure agreements. Here are steps employers can take to minimise the risk of NDA breaches.
- Get legal advice before signing NDAs to ensure they are appropriate and enforceable.
- Have robust and up-to-date confidentiality and data protection policies, and reference them in employee contracts and performance management.
- Provide confidentiality training for your employees during onboarding and ongoing development.
- Limit access to sensitive information based on a ‘need-to-know’ basis.
- Monitor IT systems, including email, data transfer, and communication, especially for remote and hybrid workers.
Proving you have appropriate safeguards and practical processes in place strengthens your position if a breach occurs.
Protect Your Business with Strong NDA Practices
An employee NDA breach can cause severe business disruption. However, with the right agreements, processes, and response strategy, you can minimise any negative consequences and get on with your business.
Whether you are looking to take action following a breach or implement preventative policies across your team, we are here to help. Our expert NDA solicitors already work closely with employers across the UK and Ireland to protect their businesses. Why wait for a breach to cause lasting damage when you can implement preventive steps today?
At Jamieson Law, we support employers with all matters relating to Intellectual Property (IP) & Confidentiality and advise on handling NDA breaches as part of our employment and commercial legal services. Our fixed-fee approach means you get clear, cost-effective legal support when needed.
