Proposals to tackle the misuse of non-disclosure agreements, particularly where used to prevent people speaking out about harassment and discrimination, have been released by the government.
The changes included in the new Employment Rights Act 2025 (ERA), and now subject to a public consultation, form part of a wider push to strengthen worker protections and “end a culture of silence” around inappropriate behaviour at work.
Kerrie Hunt, Partner in Thrings’ Employment team, takes a look at the consultation and why, for employers, HR teams and business owners, this is a timely opportunity to review the practical use of non-disclosure agreements (NDAs) – often referred to as settlement agreements in a workplace context – and confidentiality clauses.
What would the proposals change?
Importantly, the law is not banning the use of settlement agreements, which would continue to have a legitimate role in protecting commercially sensitive information and resolving disputes - but instead would stop them being used to conceal specific types of wrongdoing.
Key points under consideration include:
- Banning clauses that silence victims – This includes those facing harassment or discrimination. This is already set out in the ERA and means that any confidentiality clause seeking to prevent disclosure of such conduct will be rendered void.
- A carve out for ‘Excepted Agreements’ – subject to certain conditions this may allow for NDAs to stand in limited circumstances and the criteria and safeguards around these are a key part of the consultation.
- Clarifying what permitted disclosures can be made – Even if an Excepted Agreement is signed, this would outline who individuals are allowed to speak to in some circumstances (for example, regulators, police, legal advisers and support services).
- Extending protections beyond employees and workers – This would potentially cover agency workers, students/trainees on work experience placements, and the self-employed.
- Strengthening enforcement and guidance – The changes would provide clearer drafting requirements and expectations on employers when using confidentiality clauses.
Why this matters and what you can do
Confidentiality clauses are a standard feature of settlement agreements and can serve a useful purpose in protecting business interests and resolving disputes efficiently.
The government’s direction of travel with these proposals is, however, clear with the intention of separating legitimate confidentiality and the suppression of specific types of misconduct.
For employers, the risks are both legal and reputational and it is important they consider not just the legal compliance nature of the changes but also the cultural perspective.
While the consultation is ongoing, some practical steps worth considering include:
- Review template settlement agreements – Check existing confidentiality wording. Does it clearly set out what can be disclosed, and to whom? Consideration should be given to redrafting any overly broad or unclear clauses that are more likely to be challenged.
- Avoid “blanket” confidentiality clauses – A one-size-fits-all approach is increasingly risky so start tailoring clauses to the circumstances and ensure they do not attempt to restrict legally protected disclosures such as whistleblowing or reporting criminal conduct.
- Focus on process, not just paperwork – How settlement discussions are handled matters. Pressure, poor communication or lack of transparency can already undermine protection in tribunal proceedings.
- Train managers and HR teams – Those involved in negotiations should understand the limits of confidentiality and the importance of handling sensitive issues appropriately.
- Take a step back on culture – If settlement agreements are being used frequently in certain areas of the business, it may be worth asking why. The consultation reinforces the importance of addressing root causes, not just managing exits.
Kerrie Hunt said: “The government’s proposals signal a continued tightening of the rules around settlement agreements. For employers, the message is straightforward: confidentiality clauses should protect legitimate business interests – not prevent individuals from speaking about wrongdoing.
“Taking time now to review your approach, and seeking legal advice to assess your risk levels, will help ensure your business is prepared for what is likely to be a significant shift in this area of employment law.”
Thrings’ Employment lawyers are experienced in dealing with business matters that affect the workforce and has acted for both employers and employees from start-ups and SMEs all the way to multinational corporations across a wide range of employment matters. To find out how they can help strengthen your polices, and solve your disputes, please get in contact.
