Non-Disclosure Agreement (NDA)
A legally binding contract that obligates a party to keep certain confidential information secret and not disclose it to third parties.
What is a Non-Disclosure Agreement (NDA)?
An NDA (also called a confidentiality agreement) is a legal contract between two or more parties that establishes a confidential relationship. The party (or parties) signing the agreement promise not to disclose specified confidential information to third parties without authorization.
What are the types of NDAs?
NDAs come in three forms:
- Unilateral NDA: One party discloses information; the other is bound to secrecy (most common in employment)
- Bilateral/Mutual NDA: Both parties share confidential information and are mutually bound
- Multilateral NDA: Three or more parties are involved, with at least one disclosing and others bound to confidentiality
How are NDAs used in employment?
Employers use NDAs to protect trade secrets, client lists, proprietary processes, financial data, and product roadmaps. They are typically signed at onboarding but may also be signed before sharing sensitive information during recruitment. NDAs at termination (often part of severance agreements) have come under increased scrutiny for their use in silencing harassment and misconduct complaints.
Are NDAs always enforceable?
Not always. Courts may reject NDAs that are overly broad, cover publicly known information, restrict an employee's right to report illegal conduct, or constitute unconscionable restraints on employment. In the US, the Speak Out Act (2022) limits NDAs in sexual harassment and assault cases.
Written by Adithyan RK