Non-Disclosure Agreement (NDA) CBA Tip Sheet

(Disponible uniquement en anglais)

Understanding NDAs 

A non-disclosure agreement (NDA) is an agreement that restricts the sharing of specific information. It may be a standalone agreement, or it may be a clause in a contract or settlement agreement.

The use of NDAs has become commonplace. NDAs are now included almost as a default in employment contracts and settlement agreements.

What’s the problem with NDAs?

Initially, NDAs were used as tools in employment contracts to protect trade secrets (i.e. intellectual property). The extension of the use of NDAs to (for example) settlement agreements for cases of abuse and harassment, however, has been identified as a problem by those affected by the NDAs.

In 2023, the Canadian Bar Association (CBA) passed a resolution to discourage the use of NDAs to silence victims¹ and whistleblowers in cases of discrimination, abuse and harassment.² The CBA resolution also recommended lawyers advocate for legislative changes to prevent the misuse of NDAs. The CBA resolution promotes the fair and proper use of NDAs to protect intellectual property (Resolution 23-05-A).

At the CBA meeting in which the resolution was passed, the CBC reported that “lawyers expressed frustration of hearing stories of perpetrators protected by NDAs going on to perpetuate abuse and escape accountability.”³

NDAs can have the effect of suppressing the truth by enabling ongoing problematic or toxic behaviour in workplaces, volunteer organizations, community organizations or other institutions. NDAs allow perpetrators to continue their behaviour with impunity. Prohibiting victims or whistleblowers from telling their story or discussing their experiences can negatively affect their mental and physical health and could prevent them from being able to seek support.⁴ In a survey, 93% of people who signed an NDA reported an impact on their mental health.⁵

NDAs can also disadvantage victims or whistleblowers by making it impossible for them to explain a job departure, affecting their future employment opportunities.⁶ NDAs may also prevent someone from explaining their heightened reaction to certain workplace events and incidents which can in turn create other workplace issues.

Women, and women with multiple intersections of lived experience, are disproportionally harmed by things like sexual harassment at work,⁷ as well as pregnancy and maternity discrimination. They are also disproportionally harmed by the knock-on negative effects of NDAs. Two-spirit, trans, nonbinary and gender-nonconforming people also experience high rates of harm based on their gender identity. In a recent 2024 study, Mark Gough has reported heavier use of NDAs against racialized workers.⁸

Best practices for NDAs

When advising Complainants:⁹

• NDAs should not automatically be included as a standard term of a settlement agreement or a pre-requisite of an employment contract. Instead, a case-by-case, trauma-informed and complainant-centric approach to the resolution of complaints should be taken, that considers whether and to what extent any information should be kept confidential, with the complainant’s preferences canvassed.¹⁰ Ensuring complainants have the support and freedom to speak about their experiences is crucial for systemic change.¹¹
• Complainants should be advised of the possibility that a one-sided protective confidentiality clause can protect their privacy (usually critical for complainants and common throughout many civil and criminal processes) without being compelled to protect the other side in “exchange.”
• In assessing the scope of the NDA, consider whether the information the NDA is being sought to keep confidential is already known by others and what information is limited to the complainant.
• An acceptable NDA should, at the very least, allow for parties to speak about their lived experience with healthcare professionals, therapists, spiritual advisors, cultural elders, financial and legal advisors, immediate family members, support friends, and any other designated individuals.
• Advise the Complainant that they have no legal obligation to publicly expose wrongdoers in order to protect potential future impacted persons. Whether there is a moral duty to protect others and the decision whether to attribute weight to a moral duty is a matter of personal choice for the Complainant alone. A trauma-informed approach should be taken when having conversations with Complainants regarding the practical consequences of an NDA for non-parties, especially where the complainant is traumatized and/or psychologically injured.
• Ensure NDAs are not used to prevent individuals from reporting illegal activities, cooperating with investigations, or making protected disclosures. Protected disclosures would include reports to criminal and regulatory authorities. Protected disclosures do not automatically invoke privilege. In specific instances, where authorized by law, protected disclosures can override privilege, including solicitor-client privilege.
• Avoid provisions that restrict individuals from speaking to a prospective employer about why they left their previous place of employment.
• Ensure informed consent:
  • Ensure that the party signing the NDA fully understands its terms and implications. This includes providing the NDA in plain language and, if necessary, translated into the party's preferred language.¹²
  • Use clear, plain language to ensure all parties understand the terms of the NDA. Clearly outline what disclosures are permitted and to whom​.¹³
  • Ensure that the complainant retains a copy of the settlement agreement containing an NDA.
  • Ensure the person knows that NDAs cannot legally prevent them from reporting criminal activities or making protected disclosures under whistleblowing laws.
  • Ensure the complainant understands the critical legal distinction between receiving compensation for being harmed and receiving compensation for future silence (ie. an NDA).
  • Ensure the complainant has sufficient time to consider signing the NDA.¹⁴
• Independent legal advice (ILA):
  • During settlement negotiations, it is crucial that the person who made the allegations has access to independent legal advice and sufficient time to understand their rights and the terms of any confidentiality agreement. Mediators or conciliators should also provide information about accessing legal advice and support services to ensure that the person can make an informed decision​.¹⁵
  • ILA should include advising alternative ways of protecting the Complainant’s confidentiality.¹⁶ This will also help counter the widespread misunderstanding that the only way a complainant can protect their privacy is to agree to a mutual, permanent NDA.

When advising individual Respondents, employers or organizations:

• Recognize that NDAs should not automatically be included as a standard term of a settlement agreement or pre-emptively in an employment contract, services agreement, or volunteer agreement in circumstances involving allegations of abuse or harassment.
• Take a case-by-case, trauma-informed approach to the resolution of complaints, considering whether and to what extent any information should be kept confidential. Ensure you are aware of the Complainant’s position and concerns.¹⁷ Balance your client’s interests (such as protecting reputation, privacy rights of individuals in the organization, and confidential information) against the Complainant’s interest in speaking about their experience.¹⁸
• In assessing the scope of the NDA, consider whether the information the NDA is being sought to keep confidential is already known by others and what information is limited to the complainant.
• Review and consider applicable legislation relating to the use of NDAs and disclosure obligations, including legislation specifically related to NDAs, laws protecting individuals against retaliation, and your professional obligations to promote the rule of law and protect public safety.
• Identify and clearly articulate your client’s concerns and interests when drafting an NDA. Assess the actual risks and determine whether a broad NDA is necessary or whether a more precise agreement with specific exceptions would suffice. Consider whether it is sufficient to include a confidentiality agreement covering only the quantum of the settlement.
• Consider and ask questions about the impact of the NDA on your client. For example, agreements that are tailored to the circumstances of the case help avoid unnecessary legal risks and promote a healthier workplace culture.¹⁹ Also consider how the NDA applies if your client is asked to provide references or information to a prospective employer.
• Act ethically and responsibly when negotiating NDAs, particularly when the Complainant lacks legal representation. Avoid conduct that raises an appearance of taking advantage of the Complainant or aggressive negotiation tactics (such as imposing unreasonable time limits or a “take it or leave it” approach to settlement).²⁰
• Encourage both parties to discuss the terms of the NDA openly and articulate the terms that align with their needs and concerns. Negotiations may include narrowing the scope of confidentiality or including mutual non-disparagement clauses to ensure fairness​.²¹
• If you determine that an NDA is reasonable and necessary:
  • Introduce the terms early in settlement discussions, rather than including the term in a written settlement after the monetary and other terms have been negotiated. Recognize that an NDA is a term that needs to be negotiated; it is not a standard term.
  • Limit the scope of the NDA to specific information and agree upon a reasonable duration. This approach helps mitigate the long-term impact on the individual's ability to share their experiences​​.²² 
  • Ensure that the NDA does not limit any party from referencing materials which are already publicly available.
  • Review the NDA to avoid unenforceable terms, such as penalty clauses that impose automatic damage or automatic return of funds.
  • Clearly outline what disclosures are permitted and to whom​.²³
• Promote informed consent and independent legal advice:
  • Take appropriate steps to enable the party signing the NDA to understand the terms and implications. This includes providing the NDA in plain language and, if necessary, translated into the party's preferred language.²⁴
  • Allow reasonable time for the party to seek ILA.
  • Consider including reimbursement to enable the Complainant to obtain ILA for the NDA.
  • If the parties are engaged in a formal mediation process, ask the mediator to provide information about accessing legal advice and support services to ensure that the person can make an informed decision.²⁵

Appendix A: Principles for appropriate NDA’s

The following considerations should be made when drafting an NDA:

• NDAs should be as narrowly drafted as possible in the circumstances;
• The NDA should never be able to be interpreted to prohibit disclosure to support persons. Some support persons will have professional obligations to keep information confidential. Other support persons need to understand that the complainant is under an obligation to keep information confidential and agree themselves to keep information shared confidential. Support persons would include: healthcare professionals, therapists, spiritual advisors, cultural elders, legal and financial advisors, immediate family members, support friends, and other designated individuals. As many exempted categories as possible should be included.
• NDAs should not bind successors, or anyone other than the signing party.
• Non-disparagement clauses should not be utilized to simply create an NDA but be called a non-disparagement clause.

Appendix B: Examples of Broadly worded NDA’s

The following clauses are examples of NDA clauses that are likely to be overly broad when used in the context of abuse and harassment::

Example 1

“Employee is prohibited from disclosing….the terms or existence of this agreement…permitted under express covenant of confidentiality to Employee’s counsel and professional advisors in order to calculate the amount of or receive advice on income tax….

Employee is prohibited from disclosing…any personal private or confidential information regarding any Company employee….Employee is prohibited from disclosing Employee’s allegations of wrongdoing against Company and the Releasees….this paragraph prohibits Employee from emailing about or posting any information regarding Employee’s allegations or this Agreement on social media…

Employee further agrees not to aid, assist or encourage any person asserting claims against the Company…Employee may state only “I can’t talk about it”. A breach of this confidentiality paragraph will be deemed to be a material breach of the Agreement and will entitle Company to recover liquidated damages in the amount of $20,000 for each occurrence of breach.”

Example 2

AND FOR THE SAID CONSIDERATION, we hereby covenant and agree not to disclose the fact, terms and conditions of this Full and Final Release to any third party other than our legal and financial advisors and our immediate family, except as may be required by law. We further covenant and agree not to comment in any adverse fashion on, and to refrain from making any disparaging or derogatory remarks about any Releasee or to join or assist in the making of any oral or written communication disparaging any Releasee or its business practices. We further covenant and agree not to voluntarily participate in any claim by any person or entity against any Releasee.

Example 3

AND FOR THE SAID CONSIDERATION, the Releasors hereby agree that the facts and terms of this settlement and the Full and Final Release are confidential and will receive no publication or disclosure, directly or indirectly, except to their respective financial and legal advisors and as required by law. The Releasors shall not otherwise, directly or indirectly, in any manner whatsoever, disclose or cause or permit the disclosure whatsoever of the facts and terms of this settlement and Full and Final Release. The Releasors further agree that the confidentiality obligations set out in this Release are reasonable and necessary to protect the legitimate interests of the Releasees.

Exmple 4

1. Apart from a neutral statement that all matters between the Parties have been resolved, the Applicant agrees that she will refrain from making any statements whatsoever in respect of all matters between her and X in any way connected to the matters addressed in these 2020 Minutes of Settlement including, without limitation, in any way related to:
   1. the Underlying Application,
   2. 2016 Minutes of Settlement,
   3. the Contravention Application,
   4. the terms of these 2020 Minutes of Settlement, including the terms of the Agreements,
   5. any attachments to these 2020 Minutes of Settlement, including the Full and Final Release and Indemnity attached as Schedule “A”,
   6. any discussions leading up to these 2020 Minutes of Settlement.
2. The Applicant agrees that she will keep the terms of these 2020 Minutes of Settlement, including, without limitation, the key terms of the Agreements and any attachments to these 2020 Minutes of Settlement (including the Full and Final Release and Indemnity), as well as any discussions leading up to these 2020 Minutes of Settlement, the Agreements and the Full and Final Release and Indemnity, completely confidential, and that she will not make any disclosure to anyone other than the Applicant's legal advisors.

Appendix C: Identifying and Avoiding Aggressive Negotiation Tactics

Navigating an NDA negotiation requires recognizing the tactics that create pressure and the potential for confusion, especially for unrepresented parties. Understanding these tactics is important to ensure fair representation and discussion of the issues relating to the use of NDAs. Counsel for all parties should be aware of these tactics and work towards negotiating NDAs in good faith.

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