International Employment Lawyer quotes Michael Powner on the upcoming NDA law change

Confidentiality clauses or NDAs can legitimately be used by employers to protect their confidential information (intellectual property and trade secrets for example) both during and after employment. These provisions are generally included in employment contracts but also in settlement agreements on termination.  New confidentiality terms may be introduced to prevent disclosure of the settlement's existence, circumstances surrounding the termination of employment or any derogatory comments about the parties. Properly drafted, these clauses benefit both sides: employees can move forward with a financial package and without fear of reputational harm, while employers can ensure that sensitive termination details remain undisclosed, preventing reputational damage and setting unwanted precedents. Confidentiality is often a crucial factor in settlement negotiations, with both parties potentially unwilling to settle without it.

However, the #MeToo movement brought to light widespread inappropriate use of NDAs which sought to prevent victims of sexual misconduct reporting complaints about acts which in many cases constituted criminal offences. Various government consultations and regulatory bodies have since weighed in on the issue with the Solicitors’ Regulation Authority (SRA) publishing a warning notice in 2018 (updated in 2024) reminding solicitors of their obligations when advising on the use of NDAs and providing guidance on what would constitute inappropriate or improper use of NDAs.

Set to enter force later this year, section 17 of the Victims and Prisoners Act 2024 aims to prevent the reported misuse of non-disclosure agreements (NDAs) to silence victims of crime. 

While an employee can already break an NDA to contact law enforcement agencies, from 1 October 2025 businesses in England and Wales will no longer be able to restrict a victim – or someone who reasonably believes they are one – from speaking to relevant regulators, healthcare professionals, legal advisers, or victim support services. 

Michael Powner, Employment Partner, comments on the change for International Employment Lawyer:

The direction of travel in this regard has been clear for some time. Employers have been under a duty to take reasonable steps to proactively prevent sexual harassment in their organisations since October last year. The government’s flagship Employment Rights Bill will further strengthen this duty by requiring employers to take all reasonable steps to prevent sexual harassment, including third-party harassment on any unlawful basis.

"This will involve fostering an environment where victims feel safe and supported in coming forward, ensuring that their disclosures are handled appropriately and respectfully. This law will now ensure that where employers get this wrong, they will face sanctions in the employment tribunals and will not simply be able to pay employees out and hide behind an NDA and thereby permit criminal behaviour to perpetuate.

Read the full piece in International Employment Lawyer here (subscription required).