For years, a standard confidentiality clause in a settlement agreement has done exactly what employers wanted: it closed the file quietly and kept the details private. Under the Employment Rights Act 2025, that's about to become a lot less reliable for one specific category of dispute.
The reform makes an NDA void to the extent it tries to stop a worker speaking about relevant harassment or discrimination, or about how the employer responded to relevant harassment or discrimination, or how an allegation of it was handled. "Relevant" covers direct and indirect discrimination, discrimination arising from disability, failure to make reasonable adjustments, gender reassignment discrimination, pregnancy and maternity discrimination, and harassment including sexual harassment under the Equality Act 2010. It isn't retrospective. It only applies to agreements entered into after the measure and its supporting regulations come into force, which is expected during 2027, so existing settlement agreements signed before then aren't affected.
Here's the part that actually matters for how you draft agreements going forward. The reform doesn't ban confidentiality clauses covering harassment and discrimination outright. It creates a category of "excepted agreements" that remain valid if they meet specific conditions, based on the government's proposals to date. Expect requirements along these lines: the worker must receive independent written advice from a relevant adviser explaining the terms and their effect before signing; the worker must then confirm in writing that they actually want to enter into the agreement, rather than simply having it presented to them; a cooling-off period, likely around 14 days, during which the worker can withdraw without penalty; a written copy of the signed agreement provided to all parties; and the agreement can only cover harassment or discrimination that has already happened, meaning you can't use an NDA to pre-emptively silence someone about something that hasn't occurred yet. Any confidentiality obligation is also expected to be time-limited, with a maximum duration under discussion.
None of this affects confidentiality clauses used for their traditional, legitimate purpose: protecting trade secrets, commercial terms, or other genuinely sensitive business information that has nothing to do with a harassment or discrimination allegation. Those clauses are untouched. The risk is specifically for anyone relying on broad, catch-all confidentiality wording to close down harassment or discrimination complaints without following a proper process.
Before this comes into force, it's worth getting ahead of it.
- Audit your current settlement agreement template and separate the confidentiality provisions that relate to trade secrets and commercial information from those touching harassment or discrimination
- Build the excepted agreement conditions into your template now, so independent advice, written confirmation and a cooling-off period become standard practice rather than an afterthought
- Make sure any harassment or discrimination confidentiality clause is limited to matters that have already happened, not drafted to cover future conduct
- Brief HR and any managers who handle exits on why this distinction matters, so nobody defaults to the old one-size-fits-all wording
Settlement agreements that rely on outdated confidentiality wording won't hold up the way employers expect once this reform lands. Get your template reviewed now. Call Neathouse Partners on 0333 041 1094 or visit neathousepartners.com.
General Guidance Only. Not Legal Advice.
For more info see settlement agreements and how to use them effectively
