Beyond the Employment Rights Act – Consultation on non-disclosure agreements relating to relevant harassment or discrimination

The use of non-disclosure agreements (“NDAs”) in employment contracts or settlement agreements has attracted some criticism. In response to this, section 202A of the Employment Rights Act 2025 (ERA) will introduce legal restrictions on the use of NDAs relating to workplace discrimination and harassment. 

Specifically, section 202A will void any provision in any agreement (including but not limited to an employment contract or settlement agreement) between a worker and their employer that prevents the worker from speaking out about relevant harassment or discrimination unless the NDA qualifies as an “excepted agreement”.  For these purposes, relevant harassment or discrimination is harassment or discrimination carried out (or alleged to have been carried out) by the employer or a fellow worker; or where the victim (or alleged victim) of the harassment or discrimination is the worker entering into the NDA or their fellow worker (in these circumstances the harassment/discrimination could have been suffered at the hands of a third party). 

Even where an NDA does qualify as an excepted agreement, any provision in the excepted agreement that prevents disclosure to a specified description of person for a specified purpose in specified circumstances (a “permitted disclosure”) will still be void.  Section 202A facilitates the introduction of regulations specifying the persons to whom, the purposes for which, and the circumstances in which, such permitted disclosures may be made.   Finally, section 202A also empowers the government to extend the scope of the section 202A prohibition so that it does not just apply to workers (for example, it could be extended to contractors).     

The government has now launched a consultation, which remains open until 8 July 2026, on the following matters:

• the conditions that must be satisfied for an NDA to be an excepted agreement;
• to whom permitted disclosures can be made; and
• whether the rules relating to NDAs in these circumstances should apply not just to agreements entered into with workers but also agreements with others (for example, certain categories of self-employed person).

The conditions that need to be satisfied for an NDA to qualify as an excepted agreement

The government’s aim is to give workers a greater say in whether they want an NDA and a clearer understanding of what they are agreeing to. To support this, the consultation proposes that the following conditions will need to be satisfied for an NDA to qualify as an excepted agreement:

• the worker must have received independent written advice from an independent adviser;
• the worker must have expressed their preference in writing to enter into an excepted agreement, following the receipt of independent advice;
• there must be a cooling off period during which the worker can decide to withdraw from an NDA;
• a written copy of the excepted agreement must be provided to all parties;
• an excepted agreement can only relate to an incident which has already taken place; and
• (possibly) the excepted agreement must be time-limited. 

The requirement for independent advice

The consultation paper proposes that before entering into an excepted agreement the worker must have received independent written advice from an independent adviser on the terms and effect and legal limitations of the proposed confidentiality agreement.  The written advice should also explain the legal limitations of the NDA (for example, that the NDA cannot prevent a worker from co-operating with a criminal investigation or prosecution; from reporting an offence to the police or other law enforcement agency; or from making a protected disclosure under whistleblowing legislation or any disclosure required by law or under the permitted disclosure regime described below).  It is also proposed that the excepted agreement will need to name the adviser, who will be required to have indemnity insurance.

Employers will be familiar with this approach as it largely mirrors the requirements for a binding settlement of UK statutory claims. As such, this type of condition is unlikely to be unduly problematic for employers.  If a settlement agreement is being negotiated at the same time (or the confidentiality terms are incorporated into the settlement agreement), there is no reason why the same person cannot act as independent adviser in relation to both the settlement of statutory claims and the NDA. 

Consideration is being given to extending the definition of an independent adviser to ACAS conciliators (the current legislation does not apply to ACAS facilitated COT3 agreements).

The worker must express a written preference to enter into an excepted agreement, following receipt of independent advice

The government’s belief is that an excepted agreement should only be entered into with the worker’s clearly stated informed consent. It is not proposed that the preference should follow a particular format, merely that it must be in writing.

The government is seeking views on whether the employer should be permitted to suggest confidentiality or whether an excepted agreement requires the initial step to be taken by the worker.  The government is concerned that allowing an employer to initiate relevant discussions increases the risk of coercion. 

It is to be hoped that the government agrees that the employer should be allowed to propose an excepted agreement.  The dynamic nature of settlement discussions may mean the original source of a particular proposal is unclear, with an attendant risk for the employer that an apparent excepted agreement could subsequently be challenged. Further, where an NDA is to be a key element of settlement discussions, those discussions may be jeopardised where the employer cannot directly address the point until it has first been raised by the worker.  The other conditions that will attach to excepted agreements, including the requirement for independent advice, should provide sufficient protection against coercion.             

The excepted agreement should include a cooling off period

The government proposes that an excepted agreement should be required to include a cooling-off period for the worker to withdraw from the agreement without penalty within 14 calendar days of it being entered into.

The rationale for this proposal is a concern that workers may not have adequate time to consider and reflect on the implications of an excepted agreement even though they have received independent advice. 

A potential difficulty with this approach is that confidentiality provisions are frequently included in settlement agreements.  The government has therefore asked for views on whether a cooling-off period should be required only in respect of the confidentiality provisions of a settlement agreement. However, confidentiality provisions often form part of broader settlement terms, and the employer may be unwilling to make a payment (or part of it) under the agreement if the worker withdraws from confidentiality terms.  This could mean that settlement agreements relating to relevant harassment or discrimination are at risk of being re-opened.  If this proposal is introduced, employers will need to recognise the risk that a dispute might be re-opened after an apparent settlement has been reached and will need to make sure that, for example, any payments are deferred until after the cooling off period has ended.        

The government has also raised the following further options for structuring a cooling off period:

• whether the worker should be allowed to waive the cooling off period;
• whether a shorter cooling off period of 7 or 10 days might be preferable;
• whether instead of a cooling off period workers be provided with a review period (i.e. a period to consider the terms of an NDA before they agree to it); and
• whether workers should be given both a review period and a cooling off period.

A written copy of the excepted agreement should be provided to all parties

Although commonly provided, there is currently no requirement for a worker to be given a copy of the agreement they have signed, and there are several high-profile cases where this has not happened.  It is clearly important that a worker should be able to refer back to an NDA and check their understanding of its terms. 

The government is therefore proposing that it be made a condition of an excepted agreement that a written copy (in a format acceptable to all parties) is provided to all parties.

This appears to be an uncontentious proposal.   

An excepted agreement can only be entered into in relation to an incident which has already taken place

The purpose of this proposal is to make it clear that an excepted agreement cannot be used to prevent a worker from speaking out about harassment and discrimination that may occur in the future.  This seems a sensible condition, as a “pre-dispute” NDA would clearly run contrary to the policy objectives underpinning the introduction of section 202A.   

An excepted agreement should be time-limited

The government has raised as a potential condition a requirement for an excepted agreement to stipulate a maximum time period during which confidentiality obligations can remain in place.  The government appears to be open-minded as to whether a condition of this nature is required and, if it is, whether the time-limit should be left to agreement between employer and worker or whether regulations should impose a maximum time-limit for confidentiality obligations (the example given in the consultation is three years).

The employer perspective on this is likely to be that the other proposed conditions provide sufficient worker protection and that there is no need to impose a time-limit.           

Permitted disclosures 

Section 202A makes clear that even where a worker has entered into an excepted agreement, the NDA cannot prevent them from speaking to specified persons about relevant harassment and discrimination.

As well as the right to make disclosures in the circumstances described above, the government is also proposing that, notwithstanding an excepted agreement being in place, disclosures should be permitted to any person with law enforcement functions; a qualified lawyer or registered foreign lawyer; an individual entitled to practice a regulated profession or tax advisor; an individual or organisation who provides a service to support victims; a regulatory body (so that, for example, a worker will be able to share information with regulators for the purpose of making a disclosure or co-operating with an investigation); ACAS, or similar bodies; certain types of trade union representative; and close family members.  The list may be extended to include prospective employers and friends and wider family.   

Employers will therefore need to appreciate that an excepted agreement cannot be used to prevent appropriate disclosures about relevant harassment and discrimination. Settlement agreements often already record that employees are permitted to make certain disclosures – for example to regulatory bodies, advisers and (sometimes) family members – so the principle may not be new to many employers.

Application of the NDA rules to persons other than workers

The government has not offered a steer on this question and is merely seeking views on whether the protections offered by section 202A should apply to individuals working for someone who is not their employer, such as agency workers or seconded staff.   

What should you be doing now?

The government has confirmed that the new NDA regime applicable to relevant harassment and discrimination will come into force in 2027, although no specific date has yet been confirmed.  Once it does, the process for entering into a relevant NDA will become more involved and the permitted disclosure regime means that it will be more difficult for employers to use excepted agreements to seek to restrict public disclosure for reputational reasons. 

Some of the proposed conditions for an excepted agreement are sensible.   However, any requirement that an excepted agreement can only be entered into at the instance of the worker may make it much harder for employers to secure an NDA for relevant harassment and discrimination (although a worker might request an excepted agreement if they perceive that it gives them leverage to negotiate a more generous settlement).  It is likely that there will be a requirement for a cooling off period for such NDAs, which means that employers will need to be alive to the possibility that agreed settlement terms (which could in practice relate to the whole agreement and not just any NDA provisions), can be re-opened, even if only for a relatively short period.  Payment timings will need to be adjusted accordingly.   

If you would like to discuss in further detail any of the points raised in this blog post, please get in touch with your usual Freshfields contact.