A gag clause is a contractual agreement which stops employees from sharing confidential information about the organizations in terms of its operations, future innovations, physical and intellectual assets. A gag clause is usually mentioned with whistleblowing, it is especially created to prevent employees from sharing what is being done within the organization.

It is important that organizations include this clause as part of their contractual agreements in order to ensure that private information is not shared to their competitors.  A gag clause is therefore an essential agreement to be included when recruiting any new staff member.