Non-Disclosure Agreement and Clauses used with the intention of preventing employees (and ex-employees) talking about discrimination will (finally) be made unlawful under the latest amendments made to the Employment Rights Bill as it has passed through the House of Commons and the House of Lords.
There have long been calls for reforms to the use of non-disclosure agreements (NDAs), especially where they prevent disclosures about sexual harassment. The Women and Equalities Committee recommended that the law should change back in 2019 and there has been much campaigning to outlaw these “gagging clauses”. The position of the campaign groups has been that employers have been using these clauses to permit harassment to continue unabated. The previous (Conservative) government did not take the recommendation forward and (until now), the Labour government’s proposals concerning NDAs have been unclear.
The government has, on 7 July 2025, inserted a new clause 22 into the Employment Rights Bill which will in turn insert a new section 202A into the Employment Rights Act 1996. This amendment has come after the recently published timetable roadmap and so it is not clear to us when this change may be brought into effect.
So what is going to change?
The amendments, if passed, will make any provision in any agreement between an employer and a worker void in so far as it purports to preclude the worker from making an allegation of, or disclosure of information relating to, relevant harassment or discrimination, or the employer’s response to the harassment or discrimination or making of the allegation or disclosure (section 202A(1), ERA 1996). The ban will not apply to “excepted agreements”.
The most common situation that these types of clauses are used are in circumstances where an employee is exiting the business under the terms of a Settlement Agreement. What is not absolutely clear is whether this new law will apply to Settlement Agreement because there is not (at this time) any definition of what an “excepted agreement” actually is. However, when announcing this change, the government has stated that:
“If passed, these rules will mean that any confidentiality clauses in settlement agreements or other agreements that seek to prevent a worker speaking about an allegation of harassment or discrimination will be null and void. This will allow victims to speak freely about their experiences and their employer able to support them publicly.”
Similar arrangements have already been implemented in Northern Ireland (in 2024). They have included the term “excepted agreements” and have set out in their legislation that an excepted agreement is an agreement that is:
- made at the request of the employee;
- on which the employee has received independent legal advice in writing, before entering into the NDA; and
- the advice must be provided for at the reasonable expense of the employer.
Clearly, there could be some difficulties (sometimes) in identifying when a request made by a worker is a genuine request.
Impact of the changes
Some commentators and lawyers have criticised the changes, stating that it will discourage employers from settling when the background events and circumstances involve harassment and discrimination. The position some are taking is that employers will be less willing to pay to settle. Currently, if they do so, they have complete peace of mind that there will be no claim and there will be no further complaint or potential complaint or bad publicity. With the underlying risk that alleged events may be made public this could discourage employers from settling (or settling at a level acceptable to the claimant) which will result in more instances of individuals having to resort to litigation and less agreed settlements.
There is some logic to this argument. However, it is also evident that the the current system clearly isn’t working. There remain frequent reports of incidents of sexual harassment which then, upon further investigation reveal that many others have complained previously but exited the organisation and been subject to NDAs thereby preventing disclosure and investigation of matters and the continuation of the unhealthy status quo – the harasser simply continues harassing.
It would appear from a recent CIPD survey that employers would not object to the change – albeit there would appear to be a general lack of understanding on their use and impact.
In their September 2024 report (“How employers are tackling bullying and harassment at work”), the CIPD stated that when dealing with allegations of sexual harassment:
- nearly one in two employers (48%) would support the introduction of a ban in the use of NDAs in cases of harassment and discrimination.
- just over a fifth (22%) of employers use NDAs.
- over a third do not know whether they do use NDAs or not.
- just under two thirds of employers (65%) didn’t know the extent of their use in their settlement agreements.
- if dealing with allegations of sexual harassment, while over a third don’t know.
This would suggest that employers are either relying on template agreements that they do not fully understand or are not having the full effect of the settlement agreement explained to them by their legal advisers.
Our Employment Law team will keep you informed of developments as this progresses.