Non-Disclosure Agreements (NDAs): A New Era of Transparency for Employers

In the employment landscape, Non-Disclosure Agreements (NDAs) are undergoing a fundamental re-assessment. Once viewed as standard elements of settlement agreements, NDAs — particularly those tied to allegations of sexual misconduct or discrimination — are now under intense scrutiny.

Legal Landscape

The UK government through its proposals in the Employment Rights Bill has committed to introducing statutory reforms aimed at curbing misuse, with proposals that will likely include:

• A limit on enforceability: NDAs will not prevent individuals from reporting criminal activity, harassment, or discrimination to the police, regulatory bodies, or legal professionals.
• A necessity for clear language: Agreements will need to be free of complex language and use plain and clear English to ensure employees understand what they are/ are not agreeing to.
• A requirement for mandatory legal advice: Individuals must receive independent legal advice that covers the limitations of the NDA.

Risks for Employers

Although the Employment Rights Bill has not yet reached its final stage of amendments and the final details are still to be confirmed, Employers who continue to rely on broad or restrictive NDAs after the law has changed are likely to risk:

• Legal challenges: Tribunals may strike down NDAs deemed unreasonable or coercive, particularly if an individual was not properly advised.
• Regulatory action: Certain regulators now expect employers to demonstrate transparency and accountability in how they handle workplace complaints.
• Reputational damage: The use of NDAs to suppress misconduct allegations can generate significant public backlash, harming employer brand, investor confidence, and staff retention.

What Employers Should Do

To stay compliant and manage risk, we are advising employers to:

1. Review their existing NDA and settlement agreement templates and remove clauses that could be interpreted as suppressing victims or obstructing lawful disclosures.
2. Use clear, balanced language. Ensure confidentiality clauses are narrowly drafted and do not imply that employees are forbidden from reporting wrongdoing.
3. Educate HR and management to understand the legal limits and reputational implications of NDAs.
4. Provide a fair and open process to encourage trust and reduce future claims or whistleblower complaints.

While NDAs will continue to serve a valid purpose, particularly in protecting commercially sensitive information, their use must now be approached with care.

If you require any advice in respect of the issues raised in this blog, we can help you. Sills & Betteridge Employment Law Team provide specialist representation and advice from their large network of offices in Lincolnshire, Yorkshire and the East Midlands. For details of the team, their specialisms and contact details please see here.