What is the current situation?

Non-disclosure agreements (NDAs) are commonly used in settlements – for example, confidentiality clauses within settlement agreements are a form of NDA.

At present, NDAs are only prohibited in limited circumstances, including where they relate to whistleblowing disclosures and certain issues involving victims of criminal conduct.

So what’s changing and when?

The Government has recognised that employers need to continue using NDAs to protect confidential business and commercial information. However, its intention is to prevent NDAs from being misused to silence workers who wish to speak about harassment or discrimination.

Under the Employment Rights Act, employers will no longer be able to rely on an NDA to prevent a worker from making allegations of harassment or discrimination. NDAs will also be ineffective in stopping a worker from speaking about the employer’s response to those allegations, or how the employer handled the matter once concerns were raised.

This includes, for example, situations where an employer failed to investigate an allegation properly or where a worker received a poor performance review as a result of raising concerns.

While the detail is not yet entirely clear, it is likely that third-party harassment claims will be covered. There is also some uncertainty as to whether all forms of victimisation will fall within the scope of the changes.

These reforms will also extend to non-disparagement clauses (clauses that prevent parties from making negative comments about one another). This means that a worker will not breach a non-disparagement clause by speaking about harassment or discrimination, or the employer’s response to it, even where the comments could be considered disparaging.

Taken together, these changes will have a significant impact on how harassment and discrimination complaints are settled, as well as on the confidentiality wording commonly used in contracts, settlement agreements and workplace policies.

The Government has confirmed that it will consult on these proposals, and it is not yet clear when the changes will come into force. Although it is anticipated that some exceptions may apply (for example, where an NDA is requested by the worker), the detail is expected to be set out in regulations.

What you need to do

The timing of some actions will depend on when the legislation is finalised and brought into force. However, employers can begin preparing now by:

• Reviewing and updating HR policies and practices, including template settlement agreements and standard confidentiality wording.

• Taking proactive steps to reduce the risk of harassment and discrimination in the workplace by addressing concerns promptly, thoroughly and sensitively.

• Regularly reviewing anti-harassment, bullying and equality policies, and ensuring managers receive appropriate training.

• Considering how current approaches to settlement discussions and negotiated exits may need to adapt in light of the new restrictions.

The more effectively harassment and discrimination risks are managed, the less likely an employer will need to rely on NDAs in the first place.

How Bhayani Law can help

Bhayani Law advises employers on the practical and legal implications of changes to employment law, including the evolving use of NDAs. We can support you by:

• Reviewing and updating settlement agreement templates and confidentiality clauses.

• Advising on compliant approaches to resolving harassment and discrimination allegations.

• Updating workplace policies and providing tailored guidance on risk management.

• Supporting managers and HR teams with training and best-practice advice.

• Advising on sensitive exit negotiations in light of the new legal framework.

If you would like to discuss how these changes may affect your organisation, Bhayani Law is here to help.

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You don’t have to face the changes alone. Whether you need quick input or ongoing support, we can help you however works best for your business.