STOPPING THE GAG REFLEX

The government has launched a new consultation under its “Make Work Pay” agenda aimed at preventing the misuse of non‑disclosure agreements (NDAs) in cases of workplace harassment and discrimination. The consultation follows the Employment Rights Act 2025, which makes clear that NDAs cannot be used to silence workers about such issues. The consultation closes on 8 July 2026, with reforms expected to come into force in 2027.

What Is Being Consulted On?

The government is seeking views on how limited, lawful NDAs, known as “excepted agreements”, should operate in practice. Key proposals include:

• Stricter conditions for enforceable NDAs, including a requirement that the NDA is genuinely requested by the worker and supported by independent legal advice

• A potential cooling‑off period (currently proposed at 14 days), allowing workers to withdraw from an NDA without penalty

• Clear rules on “permitted disclosures”, meaning workers must still be able to speak to lawyers, medical professionals and other designated bodies, regardless of NDA wording

• Possible expansion of the regime beyond employees and workers to include some self‑employed individuals.

Importantly, the proposals do not restrict NDAs used to protect legitimate commercial interests, such as trade secrets or confidential business information.

What Does This Mean for Employers?

If implemented, the reforms are likely to:

• Increase scrutiny of settlement agreements and confidentiality clauses

• Lengthen and complicate exit negotiations in sensitive cases

• Require employers to review and update template contracts and settlement documents where NDAs are to be used

• Place greater emphasis on managing cultural and reputational risk.

An unintended consequence of the proposed changes may be that employers are less inclined to settle claims if the employee exercises their right not to request an NDA.

Next Steps

Employers should take this opportunity to audit existing NDA use, review internal processes for handling complaints, and consider responding to the consultation where appropriate.