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Posts Tagged ‘non-disclosure agreement’

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

 

 

 

Government rejects ban on NDAs in sexual harassment cases

Posted on: May 20th, 2024 by Natasha Cox

In March 2024, the Treasury Select Committee delivered its’ report entitled ‘Sexism in the City’. As part of the enquiry, the committee found a ‘shocking’ prevalence of sexism and misogyny towards women working in financial services, and recommended a total ban on the use of non-disclosure agreements (NDAs) and clauses in all harassment cases.

In its response to the Select Committee’s recommendations, the UK government has now pushed back against a move to ban NDAs, saying that they would already ‘most likely’ be unenforceable when reporting a crime to the police. In the Government’s opinion the law therefore does not need to go any further.

As part of the rationale for this decision, the government said, “When it comes to sexual harassment and discrimination, it is important to recognise that individual circumstances vary. The government consultation on ‘Confidentiality clauses: measures to prevent misuse in situations of workplace harassment or discrimination’ in 2019 also heard evidence that many employees who sign a settlement agreement at the end of their employment with an organisation value the inclusion of confidentiality clauses, as they allow them to move on and make a clear break.” It added that an NDA would also be unenforceable if it sought to prevent a worker making a protected disclosure about wrongdoing to a prescribed person for whistleblowing purposes.

This move means that employers will be able to continue using NDAs in most common situations where a crime is not involved. It is important to remember, however, that other laws and guidance already exist on how NDAs should be used. These include  best practice guidance from the Equality and Human Rights Commission and Acas guidance for employers, as well as the Solicitors Regulation Authority’s warning notice on NDAs. In addition, all employers regulated by the Financial Conduct Authority must include a clause in any NDA making it clear that it does not prevent a protected disclosure.

Get in touch if you require further guidance on the use of NDAs in relation to allegations of harassment by employees.