Transaction agreements typically contain a confidentiality clause that requires a staff member to keep the existence and terms of a transaction confidential. Employers often consider this clause to be essential to prevent the agreement from being known to all. This should, they hope, prevent reputational damage and deter other employees from asserting claims (with or without pay) in the hope of securing a financial agreement. In the case of a confidential settlement agreement, the number of persons having access to the terms of the agreement is limited. In addition to the parties and their lawyers, the families of the parties and, possibly, a tax administration may have information about the case. With regard to the settlement agreement, all documents relating to the case should either be returned to the parties or destroyed. In addition, the parties should not acknowledge the existence of such documents. Notwithstanding the risks, confidential settlement agreements can protect a client`s interests and result in a result that is favourable to all parties involved. By being aware of the ethical risks, lawyers can help prevent a dispute from being revived after it has been resolved. As part of a confidential settlement agreement, defendants typically insist on a confidentiality clause to guard against further litigation. A case that will be successfully tried can be a signal to other parties that they should also consider filing a complaint. By concealing the details of the agreement with a confidentiality clause, the chances of imitation lawsuits will be limited.

This case highlights the problem of the application of confidentiality clauses in a transaction, especially when the payment of the transaction is made at the same time (which is normally the case) and the breach of confidentiality occurs after payment. If this happens, it can be difficult to quantify the financial loss (if any), so an innocent ex-employer can remain without damages. Since proving damages for breach of confidentiality tends to be difficult, settlement agreements can set out remedies such as lump sum reimbursement, rights of omission, fees, and/or attorneys` fees…