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16.07.2025

Would you settle a dispute with an employee without a confidentiality agreement?

Most settlement agreements include confidentiality provisions which prevent either party from talking publically about their dispute or how they have resolved it. 

That makes sense: the employer doesn't have to admit liability for what has happened, or is alleged to have happened, and the employee can walk away, usually with enough money to tide them over until they find another job. The parties avoid having to air their differences in public, and it reduces the stress and uncertainty about whether they will win or lose. And, if they are represented, reaching a settlement reduces the amount they need to spend on legal fees.  

That's got to be a good thing. Yes? Well not according the Women and Equalities Committee, or campaigners who have advocated to ban non-disclosure agreements (NDAs) following the Harvey Weinstein scandal.

The Women and Equalities Commission produced a report in 2019: The use of non-disclosure agreements in discrimination cases which concluded that NDAs were being misused to cover up discrimination and harassment. More recently it called for NDAs to be banned in the music industry to tackle sexual harassment and discrimination. The previous government said it would regulate to prevent some of the abuses identified, but was kicked out of office before that could happen.

Despite not saying anything about banning NDAs in its manifesto, or in the original Employment Rights Bill, the government has now tabled an amendment to that Bill which will prevent NDAs being used in the context of discrimination and harassment claims. 

How will the ban work?

New wording will be added to the Equality Act 2010 which will: 

‘make any provision in an agreement between an employer and a worker void in so far as it purports to preclude the worker from making an allegation of, or disclosure of information relating to, relevant harassment or discrimination, or the employer’s response to [it]'.  

It won't therefore ‘ban’ NDAs. But if they are included, neither party will have to comply with them. That means, for example, that an employee who has signed a settlement agreement and obtained compensation can speak about what has happened to them (or they allege has happened to them). They can't be sued and won't have to pay back any money they've received. 

The rest of the document will remain valid, so the employee couldn't, for example, bring a claim against you which you've settled via the agreement. 

You will be able to include some enforceable confidentiality provisions in the same agreement provided these relate to other potential claims (such as unfair dismissal or holiday pay) and the clause is properly worded. 

What types of claims are included in the ‘ban’? 

‘Relevant harassment or discrimination’ covers most types of discrimination, including direct, indirect and discrimination arising from disability. For reasons that aren't immediately obvious, it doesn't include the failure to make reasonable adjustments or victimisation.

Harassment covers all types of harassment set out in the Equality Act, but not harassment under the Protection from Harassment Act. Nor will it cover bullying unless it’s related to a protected characteristic and is actionable under the Equality Act. 

It covers discrimination and harassment perpetrated by you as the employer and by those people you employ or engage.

What sorts of allegations are protected?

This word hasn't been defined and, as currently drafted, is likely to include allegations that you've rejected and believe to be without merit, but could also cover those that aren't made in good faith. 

What does the employer’s 'response' mean? 

That word also isn't defined but is wide enough to include what investigation you undertook into the allegations raised and the decisions you reached about these. The employee will also be able to tell other people that they have entered into a settlement agreement with you and how much compensation they had received for the discrimination/harassment elements of their actual or potential claim. They will also be able to talk about and name the individual/s involved.

Are there any exceptions to the ban?

The draft legislation does give the government the option of excluding some agreements from this ban, via separate regulations. It hasn't given any indication of what this might look like and it's difficult to second guess what it might have in mind. 

That said, the Irish goverment introduced similar legislation last year which expressly exclude the following agreements:

  • Those which have been reached via an official mediation scheme, and 
  • Those where the employee has asked for confidentiality clauses to be included. 

In terms of the second option, the employee must have initiated the discussion and obtained independent legal advice about the confidentiality provisions. That advice has to be in writing and must be paid for by the employer. Even then, there's a get out clause for the employee as they have a 14 day cooling off period which allows them to change their mind, keep the money and talk about what has happened to them.

It's possible that the government will introduce similar exceptions.

How will this differ from exceptions that already apply to settlement agreements?

These fall into two broad categories. 

Any clause in a settlement agreement which seeks to prevent an employee from making a protected disclosure (blowing the whistle) is void and can't be enforced under s43J of the Employment Rights Act. 

Agreements that are drafted by solicitors, or signed off by them, have to comply with a warning notice issued by our regulator - the SRA. It considers that NDAs have been ‘improperly used’ if they prevent or deter an employee from:  

  • Co-operating with a criminal investigation or prosecution
  • Reporting an offence to a law enforcement agency  
  • Reporting misconduct, or a serious breach of regulatory requirements
  • Making a protected disclosure under the Public Interest Disclosure Act 1998
  • Making any disclosure required by law; and
  • Telling professional advisors (such as legal or tax advisors and medical professionals and counsellors) who are bound by a duty of confidentiality.

Most agreements also allow the employee to disclose information about the settlement to their partner and to close family members provided they agree to keep, what they've learned, to themselves.

The provisions in the Bill clearly go much further than this and will give the employee free rein to discuss the circumstances which have led up to the settlement agreement. 

Who is covered?

Agreements covering allegations made by employees and workers are covered. Workers are defined as those working under a contract whereby the individual undertakes to do or perform personally any work or services for another party to the contract who is not a client or customer of any profession or business undertaking carried on by the individual. 

The government may extend this to include people on work experience or training and, potentially, to an even wider group of people working under different types of contract, such as independent contractors. However, that will be left to separate regulations.  

When will this come into force?

We don't know. These provisions weren't included in the government's roadmap and it's very difficult to predict with any certaintly when these amendments are likely to come into force. I'd expect the government to decide via regulations which agreements are likely to be excepted from the ban first. If I'm right about that, the government will have to slot it in around a lot of other work required under the Bill. I'd have thought it won't get to this until next year.  

What we do know, is that the changes won't be retrospective. So it won't affect the enforceability of any confidentiality clauses you enter into before the law changes.  

There are other provisions that are coming into force before then that will also impact on NDAs. s17 of the Victim and Prisoners Act 2024 comes into force on 1 October 2025. Any agreement that purports to stop a victim of crime from disclosing certain information to a person responsible for enforcing the law (such as the police and the H&S executive) won't be enforceable. 

In addition, s1 of the Higher Education (Freedom of Speech) Act 2025 will put FE providers under a duty to ensure they do not enter NDAs with students, staff, members or visiting speakers who allege they have been harassed, or have been victims of sexual misconduct. If they do, the agreements will be void.

Comment

Unless substantial amendments are made to the draft wording to the Bill, banning DNAs may cause more problems than it solves. Most employers don't enter into settlement agreements to hush up systemic failures in their organisation. The Harvey Weinsteins of this world with the power and the money to force their victims into silence are, fortunately, few and far between. 

Banning NDAs is likely to disincentivise employers from reaching mutally agreeable terms with staff who have raised allegations of harassment or discrimination. Employees who wish to raise issues, will have to bring claims in the employment tribunal and be prepared to go all the way to a hearing. Even those who have the stamina and money to do that will be challenged by the current wait times for hearings (which are routinely over a year and often longer). Their lives will be effectively be put on hold.  How many will decide to not to say anything, or abandon good claims rather than run the risk that they could lose at tribunal? 

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