Startups must prepare for NDA law changes due next week

From 1st October, new laws will come into effect that alter the power of non-disclosure agreements or NDAs.

The law is an update of the Victims and Prisoners Act 2024; and is relevant to anyone who “…has suffered harm as a direct result of being subjected to conduct which constitutes a criminal offence in England and Wales.” 

The changes are centred upon crime, and in particular, make it explicit that the victim of a crime (or someone who believes that they are a victim of a crime) does not have to be bound by an NDA when it comes to reporting.

Businesses need to pay heed, though, too, as this also has ramifications for those who regularly use NDAs to protect their IP. 

What are the changes?

The law now clarifies the list of “permitted disclosures”. These are disclosures that can be made to a specific list of people by the victim of a crime. The Ministry of Justice adds: “There does not have to be a formal investigation or a conviction for someone to be a victim of crime or to reasonably believe they are a victim of crime.”

The list includes the Police or “other bodies which investigate or prosecute crime”; qualified lawyers and a victim’s close family. For businesses, it is essential to note that this list also includes regulated professionals and regulators. 

How do they affect businesses?

The changes mean that if someone within a business believes themselves to be a victim of a crime, they can report their concerns, whether or not they have signed an NDA. 

For businesses, it is important to note that the list of organisations that can be approached includes:

• The Health and Safety Executive
• Competition and Markets Authority
• Environment Agency
• Gambling Commission
• Financial Conduct Authority
• Information Commissioner’s Office
• Serious Fraud Office

Businesses can continue to use NDAs – and for many businesses, these are key to protecting their innovations – but they just need to be aware that there is now a limit to their level of protection.

How can businesses prepare for the changes?

Firstly, businesses should make sure that they understand the changes; and then look at their NDAs to ensure that they reflect the new rules. 

This isn’t a blanket ban, so action doesn’t need to be onerous; but businesses can use the Government resources accessible through their Companies House WebFiling account to review and update any templates they use as NDAs for employees and collaborating ventures. Accurate wording to reflect the changes is important here so that all parties understand their rights. 

For those businesses that haven’t, this is also a chance to make sure that trademarks and patents are up to date. It might also be the time to check that all of the relevant information is connected to your GOV.UK One Login ahead of the switch to this platform from the Companies House WebFiling platform on 13th October.