What is the current situation?
Non-disclosure agreements (NDAs) are often used as part of settlements - for example, a confidentiality clause in a settlement agreement is an NDA. Currently, NDAs are only prohibited when it comes to allegations of whistleblowing and certain issues around victims of criminal conduct.
So what’s changing and when?
The Government has acknowledged that businesses need to use NDAs to protect sensitive business and commercial information, but its aim is to prevent employers from misusing NDAs to silence workers about harassment and discrimination.
Under the Employment Rights Act, an employer will not be able to use an NDA to stop a worker from making harassment or discrimination allegations. It also won’t be able to stop the worker talking about the employer’s response to the harassment or discrimination, or how it responded when the allegation was made (for example, if the employer has failed to investigate an allegation, or if the employer gave a poor performance review as a result of an allegation). It is not completely clear, but third-party harassment claims are likely to be included. There is also some uncertainty around whether all types of victimisation are covered.
The change will also apply to non-disparagement clauses (clauses in an agreement that prevent both parties making derogatory comments about the other). This means that a worker will not be breaching a non-disparagement clause if they talk about harassment or discrimination, or an employer's response to it, even if this is in disparaging terms.
These changes will have a significant impact on the settlement of harassment and discrimination allegations, as well as the wording around confidentiality which is used in contracts and policies.
The Government plans to consult on these proposals and it is currently unclear when they would take effect. Although it is likely that the legislation will permit some exceptions (for example, if the NDA is requested by a worker), this detail is likely to be set out in regulations.
What you need to do
The timing of some of these actions will depend on when the detail of the new laws is finalised and when the changes come into force. However, you can start to plan now:
- Update your HR policies and practices (including template settlement agreements) regarding the use of NDAs and confidentiality wording.
- Take preventative measures to reduce harassment/discrimination risks within your organisation including dealing with any concerns that are raised by workers promptly, in a thorough and sensitive manner. In particular, review your anti-harassment/bullying and equality policies regularly and ensure that your managers are properly trained. The better you are at managing risks relating to harassment/discrimination, the less likely you are to have to rely on an NDA.
- Think about how you could adapt the approaches you currently take to reaching a settlement/negotiating an exit with a worker.
How we can help
The Employment Rights Act will limit how NDAs and non-disparagement clauses can be used in cases involving harassment or discrimination. Employers will need to rethink how they manage complaints, investigations and exits, with far greater emphasis on prevention and fair process.
Our HR and legal experts can help you adapt your approach. We can support you with:
- Policy and template review: Reviewing HR policies, contracts and template settlement agreements to ensure confidentiality wording reflects the new restrictions.
- Rethinking settlement and exit approaches: Supporting HR teams to adapt how disputes and exits are handled where NDAs can no longer be relied on in the same way.
- Managing harassment and discrimination risk: Helping you to strengthen preventative measures, so issues are addressed early and less likely to escalate to settlement discussions.
- Investigation and response processes: Reviewing how complaints are handled to ensure investigations are thorough and timely.
- Manager training and confidence: Supporting managers to understand what they can and cannot rely on, how to respond appropriately when concerns are raised, and strengthening their leadership capability through practical development such as our Team Leader Development course.
- Culture and behaviour assessment: Helping you to assess whether workplace culture and reporting routes encourage issues to be raised and addressed properly.
Additional support and resources
Stay informed and prepared by signing up to our email updates, where we’ll share confirmed changes and key dates as they come into force. Members can access up-to-date guidance, template policies and letters in our HR & Legal Resources section, and our expert team is on hand to answer questions or provide practical support, whether or not you are a Make UK member. You can also contact our ERA enquiry line.
To see the planned changes at a glance, download our free Employment Rights Act planner for clear timelines and practical next steps. If you’d like a deeper insight, ask about our Audit and Impact Assessment - a structured review to help you understand your levels of risk, prioritise actions and plan with confidence.