Can I make key staff sign an NDA before they hear the business is for sale?

An owner may want one or two senior people on side early, to help prepare the business, but fear a leak before the sale is public. A confidentiality agreement is one option. This page covers the agreement itself. For when to tell staff, see how do I tell my employees I am selling.

What the agreement can cover

The Canadian Intellectual Property Office lists non-disclosure or confidentiality agreements, and confidentiality clauses in employment agreements, among the ways to keep valuable business information secret. Ask your lawyer what a pre-announcement agreement should name and who may be told what.

Check what they have already signed

Before asking for something new, read the employment agreement and any policy the person has already accepted. It may already contain a confidentiality clause that reaches the sale. Ask your lawyer whether a second document adds protection or only creates a dispute about which one governs.

Whether you can require it

No source reviewed for this page says whether an employer may require staff to sign a confidentiality agreement, and this page says nothing either way. Ask an employment lawyer about the limits where you are, including what you can offer in return and what happens if the person declines.

Staff information goes to the buyer too

If a buyer asks for staff records, privacy statutes may apply. Alberta’s Personal Information Protection Act defines personal employee information as personal information reasonably required by the organization for establishing, managing or terminating an employment or volunteer-work relationship, or managing a post-employment or post-volunteer-work relationship, but not personal information unrelated to that relationship. British Columbia’s defines employee personal information as personal information collected, used or disclosed solely for the purposes reasonably required to establish, manage or terminate an employment relationship, but not personal information that is not about an individual’s employment. Each Act sets its own business-transaction conditions (Alberta section 22, British Columbia section 20). Ask your lawyer what those require before any records leave the business.

If the secret gets out

CIPO says a trade secret lasts as long as it is kept secret, that once it is made public it loses its business value and legal remedies become complex, and that enforcing it is the owner’s responsibility. In Alberta, the Limitations Act (s.3(1)) gives a defendant who pleads the Act as a defence immunity if the claimant does not seek a remedial order within 2 years after the date the claimant first knew, or in the circumstances ought to have known, that the injury had occurred, that it was attributable to the defendant’s conduct and that it warrants bringing a proceeding, or within 10 years after the claim arose, whichever expires first, subject to subsections 3(1.1) and (1.2) and sections 3.1, 3.2 and 11. Elsewhere, check the rules where you are. Writing about a buyer, not staff, BDC says it is customary to sign a confidentiality agreement to pursue discussions with the seller.