Search and find what you need faster.

Posts Tagged ‘employment law; non-disclosure agreements; NDAs; legal update’

Ban on non-disclosure agreements: victory or vanity?

Posted on: July 9th, 2025 by Natasha Cox

The government’s press release of 8 July 2025[1] sets out its proposal to amend the Employment Rights Bill (‘ERB’) to introduce a statutory ban on employers using non-disclosure agreements (‘NDAs’) in cases where an employee alleges harassment, sexual harassment or discrimination.

While the ERB already contained a variation to the Employment Rights Act 1996 to extend the scope of whistleblowing legislation to include allegations of sexual harassment, this new amendment could completely rewrite the rules on how employers deal with claims of harassment and discrimination by employees. But is it really the glorious victory campaigners make it out to be?

What is an NDA?

In employment law, NDAs are most commonly used in the form of a confidentiality clause. They are found in a number of employment-related documents, including contracts of employment.

It has also been standard practice for some time that settlement agreements entered into between employers and employees (either on termination of the employee’s employment or as part of the settlement of an ongoing Employment Tribunal claim) include a confidentiality clause preventing the disclosure of the existence of the settlement agreement. Crucially, they also prevent the disclosure of the circumstances leading up to the settlement agreement. This has traditionally been one of the biggest benefits for employers, allowing them to minimise the risk of adverse PR arising from Employment Tribunal claims. So why would the government take that benefit away?

The government’s rationale

The current proposal is not to ban NDAs in their entirety. However, their use will be severely curtailed in that they will be barred in cases of discrimination and harassment. 

There are existing mechanisms in place that restrict the use of NDAs. For example, any attempt to prevent an employee from making a protected disclosure under whistleblowing legislation (for example reporting a criminal offence to the authorities) is unenforceable. There has also been non-statutory guidance published by the Equality and Human Rights Commission[1] in place since 2019 on the use of confidentiality agreements in discrimination, harassment and victimisation cases. However, these protections have been criticised as too weak and that is why the government has tabled this amendment to the ERB. Campaigners say that NDAs have been misused for too long, ‘silencing’ victims of discrimination and harassment by preventing them from speaking about their experiences in the workplace. High profile cases such as that of Zelda Perkins (an ex-assistant of Harvey Weinstein) who has fought the NDA she signed for the last eight years, highlight why campaigners felt this change was needed.  

Effect on settlement agreements

If passed, the ban will mean that any NDAs that seek to prevent an employee disclosing an allegation of harassment, sexual harassment or discrimination will be unenforceable.

While this change will affect the use of NDAs in any employment documentation, the change will be most keenly felt in relation to settlement agreements.

These agreements have an important place in settling employment disputes, providing certainty and closure for both employees and employers. There is a risk that the government’s proposal will place employees at a disadvantage because employers may be less inclined to enter into settlements when they no longer have the comfort that the circumstances complained of, and any settlement reached, will remain confidential. This may force employees to pursue their claim via the Employment Tribunal, a process which is expensive and arduous, particularly due to the extreme delays within the Tribunal service. For these reasons, the government is unlikely to achieve its aim of ensuring that employees are no longer forced to suffer in silence because instead they may be forced to either walk away with nothing, or simply ‘put up and shut up’.

That said, if the ban on NDAs does come into force, settlement agreements will remain an important mechanism for employers in dealing with employment disputes because:

  • With the current Tribunal backlog, the average time from issuing a claim to a final hearing is over a year (and more commonly, over 18 months in cases of discrimination). This means that seeing cases all the way through the Tribunal process will result in significant legal costs.
  • In addition, litigation is distracting and time consuming, sucking up resources that could be used elsewhere.
  • Key witnesses may have left the business prior to a final hearing, meaning the company won’t be best placed to defend itself.
  • The ERB is a significant overhaul of employment legislation and creates several ‘Day 1’ rights for employees, including protection against unfair dismissal, which will further increase the wait time for Employment Tribunal claims.
  • In matters not involving allegations of harassment, sexual harassment or discrimination, the ban has no effect.

When will this be implemented?

The government’s July 2025 roadmap for implementing the ERB[2] describes a phased approach to implementation. Some changes will take effect on the day the ERB is given Royal Assent, while others will take effect from April 2026 and October 2026. It is not yet known when this amendment, if passed, will take effect, but it would be no later than 2027.

Get in touch if you require further guidance on the use of NDAs or in relation to allegations of harassment, sexual harassment or discrimination.

[1] Government Press Release: Press release: Ban on controversial NDAs silencing abuse

[2] Implementing the Employment Rights Bill – Our roadmap for delivering change

 

 

 

Regulatory update on the use of non-disclosure agreements

Posted on: August 23rd, 2024 by Hugh Dineen-Lees

On 6 August 2024, the Solicitors Regulation Authority (SRA) updated its warning notice to solicitors on the use of non-disclosure agreements (NDAs).  In essence, an NDA is any agreement/contract or clause within a wider agreement/contract under which is it agreed that certain information will be kept confidential between the parties.

In the employment law context, NDAs are typically found in settlement agreements. These are used by employers to settle employment tribunal claims, either after proceedings have been initiated, or as a way of securing the employee’s agreement not to bring claims in the future.

The SRA first published the warning notice in March 2018, following concerns arising from the #MeToo movement that settlement agreements containing NDAs were being used to prevent the reporting of misconduct to the relevant criminal and/or regulatory authorities, in particular, sexual misconduct.

The warning notice was revised in November 2020 to make clear that inserting other types of clauses which discouraged the reporting of incidents could also amount to a breach of the SRA’s regulatory Principles and Code of Conduct. Now the SRA has further updated the warning notice, which although aimed at solicitors, is useful for employers to be aware of when they are thinking of offering an individual a settlement agreement containing an NDA.

In particular, employers ought to consider:

Is an NDA required? The SRA states NDAs “should not be used routinely” and ACAS guidance highlights that careful consideration should be given to the need for NDAs on a case-by-case basis. Only use NDAs when they are genuinely needed. Be especially careful in cases where the employee has raised complaints that could constitute criminal conduct, or conduct warranting regulatory investigation and/or action. Template or ‘off the shelf’  agreements are not likely to be appropriate, so take specific advice in each and every case.

Time limits: Solicitors should challenge unreasonable time limits proposed by the opponent to ensure the individual’s solicitor has sufficient time to take instructions, advise and respond. Be wary, as an employer, of setting unreasonable deadlines and always ensure the individual has enough time to take proper legal advice.

Funding: Consider whether the typical contribution of £500 plus towards the employee’s legal fees is fair and reasonable in the circumstances, particularly if the employee has raised serious allegations that could constitute criminal conduct, or conduct warranting regulatory investigation and/or action.

Please contact our specialist employment team if you need further guidance on employment tribunal claims or settlement agreements and non-disclosure agreements.