From NDAs to non-competes: The shrinking scope of commercial confidentiality

BPP bar student Catherine Chow explains why once-standard commercial clauses are under increasing legal and regulatory attack

Confidentiality has long been a cornerstone of commercial law. Businesses rely on non-disclosure agreements (NDAs), non-compete clauses, and restrictive covenants to protect trade secrets, maintain market advantage, and prevent the misuse of sensitive information. For decades, these tools have been treated as a standard feature of employment contracts, commercial transactions, and service agreements alike. But that is changing.

In a landscape increasingly shaped by transparency and public interest, these once-routine clauses are facing scrutiny from regulators, courts, and even the public. This shift matters not just for Human Resources departments or in-house counsel, but for all commercial lawyers tasked with drafting ethical and enforceable contracts.

NDA overload and public pushback

NDAs are everywhere. They feature in employment contracts, consultancy agreements, mergers and acquisitions, and early-stage business negotiations. They are often signed without much thought or resistance. But their proliferation has attracted growing criticism, particularly when NDAs are used not to protect commercial value, but to silence whistleblowers or conceal misconduct.

In the UK, the #MeToo movement catalysed a critical reappraisal of how NDAs are used. In 2019, the House of Commons Women and Equalities Committee published a report highlighting “routine and extensive misuse” of NDAs in harassment and discrimination cases. The Equality and Human Rights Commission followed with guidance discouraging their use in settlements that aim to deter individuals from making protected disclosures.

Though these are soft-law instruments, they signal a clear regulatory direction. NDAs must not be used to suppress lawful disclosures. Even in commercial contexts, lawyers must now ask whether the NDA they are drafting might one day be scrutinised not just in court, but in parliament or the press.

Courts are also playing their part. In Linklaters LLP v Mellish [2019], the claimant sought an injunction to prevent a former employee from disclosing allegations of misconduct under an NDA. Although the matter settled before judgment, the case prompted urgent debate about the limits of confidentiality when it comes into tension with public interest. These developments serve as a wake-up call, confidentiality is no longer an automatic right, it must be earned and justified.

Non-competes under fire

Non-compete clauses, often included alongside NDAs, are also under intense scrutiny. Their purpose is straightforward: to stop a departing employee from taking valuable know-how to a competitor or setting up shop in direct competition. But critics argue that these clauses stifle innovation, limit employee mobility, and entrench economic inequality.

In 2023, the UK government proposed limiting post-termination non-compete clauses to a maximum of three months in employment contracts. While this proposal has yet to become law, it reflects a growing view within policy circles that such clauses are frequently unnecessary and excessive. The reform would not affect restrictions imposed via garden leave or confidentiality clauses, but it would substantially reduce the time during which an individual could be prevented from pursuing alternative work.

Across the Atlantic, the US Federal Trade Commission (FTC) has gone further, proposing a near-total ban on non-compete agreements. The FTC argues that removing such restrictions could increase wages by nearly $300 billion annually and unlock greater competition across multiple sectors. If implemented, the rule would affect roughly one in five American workers and send a powerful message to the global legal market.

The rise of judicial minimalism

Even where restrictive clauses remain technically lawful, courts have adopted a more minimalist and pro-freedom approach. Clauses that are too broad, too vague, or drafted without careful thought risk being struck out entirely.

In Tillman v Egon Zehnder Ltd [2019], the Supreme Court held that a non-compete clause which prevented an employee from holding even a minority shareholding in a competitor went too far. Although the employer argued the offending language could be severed, the Court rejected this on grounds of overbreadth and lack of justification. The message is clear that employers must narrowly tailor restrictions, or they risk invalidating the whole clause.

In commercial disputes more broadly, clauses that purport to restrict disclosure of “any information” are now seen as inherently suspicious. Courts expect parties to justify why certain information needs to be protected, and for how long. Proportionality is no longer just a principle of public law, it is now a practical drafting standard.

Balancing act: protecting secrets without overreaching

Commercial lawyers now face a delicate balancing act. On the one hand, clients still want robust protection of intellectual property, sensitive negotiations, and business strategy. On the other hand, society’s tolerance for blanket secrecy has diminished. This tension is playing out across employment, corporate, and commercial law.

These are the strategies that seem to assure future-proof drafting:

• Be specific: Instead of protecting “all confidential information”, define categories (e.g., client lists, pricing models, proprietary software) and state why disclosure would cause harm.
• Justify duration: fLong-lasting restrictions should be tied to commercial realities. If sensitive information becomes public or obsolete within six months, don’t impose a two-year NDA.
• Limit geography and scope: For non-compete clauses, a nationwide restriction rarely makes sense for junior employees. The narrower the clause, the more likely it is to be enforceable.
• Build in exceptions: Expressly permit disclosures required by law or regulation, or made in the public interest (e.g. whistleblowing).
• Educate the client Many clients will still ask for aggressive boilerplate. It is a lawyer’s job to explain why enforceability may require restraint.

What’s next?

We are witnessing a cultural and legal shift in how commercial confidentiality is understood. Once treated as a private matter between contracting parties, NDAs and non-competes are now seen as mechanisms with significant social implications. They intersect with free speech, labour mobility, and public accountability.

This means lawyers must adopt a more holistic lens when drafting confidentiality provisions. The days of “one-size-fits-all” clauses are over. What’s needed instead is careful legal craftsmanship, guided by not only the client’s interests but by wider regulatory, ethical, and reputational considerations.

Conclusion

Commercial confidentiality isn’t going anywhere but it’s changing shape. The tools of protection that once lived in the shadows are now front and centre, subject to judicial analysis, public debate, and political reform. Junior lawyers must not treat NDAs and non-competes as afterthoughts. They are no longer just legal wallpaper, they are risk zones, red flags, and potential flashpoints.

Draft with care, clarity, and conscience. Because the next clause you write might not just protect a client — it might define your case.

Catherine Chow is a bar student at BPP University in London with a strong interest in corporate and commercial law. She enjoys exploring how legal frameworks shape business practice and is particularly interested in the evolving role of regulation and risk management in modern commercial transactions.

The Legal Cheek Journal is sponsored by LPC Law.