NDA or not to NDA that is the question
Non-disclosure agreements (NDAs) more commonly referred to as “gagging” or confidentiality clauses, have long been a standard feature of settlement agreements in employment disputes. They often can serve a legitimate purpose, particularly where employers want to protect confidential business information but since “Me Too” have come under increasing scrutiny where they are used to silence workers from speaking out about harassment and discrimination and the law is rapidly changing to deal with these types of situations.
Not worth the paper they are written on
In October 2025, the Victims and Prisoners Act 2024 came into force which renders void any contractual provision to the extent that prevents a victim of crime, or someone who reasonably believes themselves to be a victim of crime, from making certain protected disclosures to specified categories of people. In practice, this means NDAs cannot prevent disclosures to the police/law enforcement, lawyers, regulators, and the courts amongst others. Since 6 April this year, sexual harassment is now expressly included as a disclosure capable of amounting to a protected disclosure for the purposes of whistleblowing legislation and as such, any contractual term which seeks to prevent an employee from making such a protected disclosure is void and unenforceable.
Are more restrictions on the horizon?
While the precise provisions of the relevant legislation is currently undergoing consultation, the Employment Rights Act 2025 is expected to go even further and significantly restrict the use of NDAs more generally as regards harassment or discrimination on any grounds. The ban on NDAs also covers the disclosure of information relating to the employer’s response to an allegation of harassment and/or discrimination and extends to disclosures about conduct by third parties.
What is the exception?
It is widely anticipated that there will be regulations covering “excepted agreements” where the ban does not apply and these will likely include provisions requiring independent advice and a cooling off period. The planned implementation date for these provisions is a yet to be determined date in 2027.
Why does this matter?
For many employers, the attraction of settlement has always been that it provides certainty. A well-drafted agreement can resolve claims, control risk, manage reputations and avoid the time and cost of litigation. In more sensitive cases, an NDA has often been seen as part of that package, offering an additional layer of confidentiality around the dispute.
That approach is now under pressure. The direction of travel is that clauses seeking to prevent a worker from speaking about harassment or discrimination will be restricted, and in many cases void altogether. Employers will therefore need to distinguish more carefully between legitimate confidentiality protections dealing with commercial matters and provisions that could unlawfully restrict disclosure of discrimination and harassment.
What is likely to change in practice?
Settlement agreements are not disappearing. Employers will still be able to settle claims, pay compensation, and secure waivers of liability. What is changing is the scope of the confidentiality language that can safely be included in the agreement.
In practice, that means employers may need to:
- Narrow confidentiality clauses so they focus on commercial information rather than allegations of discrimination and harassment.
- Remove or revise wording that could be read as preventing disclosure of harassment or discrimination.
- Include clearer carve-outs for legal advice, protected disclosures, regulators, medical professionals, and support bodies.
- Review standard templates to ensure they comply with the new rules once the detailed regulations are in force.
The key point is that settlement will remain available, but it will need to be drafted with greater precision.
Will employers still settle?
A key question is whether employers will still settle. Probably yes, but some will be more cautious and Settlement is still often the most efficient way to manage risk, avoid tribunal proceedings, and draw a line under a dispute. Those commercial drivers have not changed but what we may see is a change in employer appetite in cases where confidentiality was previously a major part of the attraction. If an NDA can no longer be used to keep allegations private in the way some employers may have hoped, that may affect the terms they are prepared to offer, or the point at which they are willing to settle. For example one driver for early settlement is reputational protection – if that is not as readily available, employers might be more likely to rely on their deeper pockets to push an employee to sue. We will have to wait and see.
The practical message for employers
The safest approach is to review settlement templates now, before the new rules are fully bedded in. Employers should also make sure managers and HR teams understand that NDAs are not a tool for silencing complaints, but a narrow part of a broader settlement strategy and that what is key is taking all reasonable steps to prevent the discrimination and harassment from happening at all.
It is also sensible to think about complaint handling earlier in the process. A well-managed investigation, a measured response, and realistic settlement discussions are likely to be more effective than relying on broad confidentiality wording at the end of a dispute.
Final thought
The reforms do not remove the usefulness of settlement agreements and the scope of excepted agreements remains to be seen. However, the reforms will almost certainly reshape how settlement agreements should be used. For employers, the focus now needs to be on compliant drafting, careful case handling, and a more transparent approach to resolving workplace complaints.
For employees, the changes are likely to mean greater freedom to speak about harassment and discrimination, even where a settlement has been reached.