Consultation Launched on NDA Ban

Background

In recent years, there have been various legislative moves to restrict the use of NDAs. Notably, the Victims and Prisoners Act 2024 which brought in changes last October, preventing victims and witnesses of crime from making certain disclosures to specified bodies for certain purposes, and is set to be amended further under the Victims and Courts Bill.

As we wrote about previously (see here and here), the ERA 2025 seeks to effectively ban the use of NDAs where they prevent a worker from reporting or sharing certain information about relevant harassment or discrimination, save for in certain circumstances where an NDA is deemed to be an ‘excepted agreement’. The effect of the ban would be to render void the NDA to the extent that it seeks to prevent such disclosures, but it would not entirely nullify the NDA.

The provisions will apply in respect of confidentiality clauses which purport to prevent a worker making an allegation or disclosure of information relating to an act (or acts) of relevant harassment or an employer’s response to either (i) the relevant harassment or discrimination itself or (ii) the making of an allegation or disclosure of information relating to the relevant harassment or discrimination.

‘Harassment or discrimination’ for these purposes is limited to harassment and discrimination under the Equality Act 2010, and will be captured where (i) it consists (or is alleged to consist) of conduct by the worker’s employer or another worker of that employer, or (ii) the person alleged to be the victim of the harassment or discrimination is a worker of the employer (so it would, for example, include acts of alleged harassment or discrimination done by a third party, or workers of any group company).

The prohibition will apply to any agreement between an employer and a worker of the employer, and so would, as currently drafted, cover confidentiality clauses in both employment contracts and settlement agreements.

Certain powers are reserved to the Government under the ERA 2025 to make regulations to except certain agreements where the ban won’t apply (‘excepted agreements’) and to extend the scope of the prohibition to cover individuals beyond employees and workers.

As so much of the detail has been left to regulations, how this would operate in practice has remained largely opaque. However, the Government’s consultation which opened on 15 April 2026 gives an indication of the Government’s direction of travel.

Consultation

The consultation aims to gather information on the scope of the ‘excepted agreements’ and what safeguards should be in place to prevent workers being coerced into agreeing an NDA in those excepted circumstances. It also looks at whether the prohibition should be expanded to cover additional groups of people beyond the category of worker.

Although the details are subject to change, overall it seems that the Government is seeking to find a balance between flexibility and worker protection. It has emphasised that this is not an outright ban on all NDAs, and NDAs can still be used to protect confidential information, such as trade secrets and sensitive commercial information. Nevertheless, the proposed changes are likely to have a significant impact on how employers respond to allegations in scope of the new provisions.

“Excepted Agreements”

One of the main aspects of the consultation is determining the scope of what would be an ‘excepted agreement’. The consultation considers several key points which will be of relevance to employers:

• New procedural safeguards before a relevant NDA can be agreed – The consultation suggests that in order for the NDA in such an excepted agreement to remain valid, there will be an increased focus on process. These proposed conditions largely align with current best practice, at least for settlement agreements, so may not be a big shift in practice, particularly for sophisticated employers, but may make settlement agreements (and other agreements containing NDAs) more time-consuming, complex, and costly to negotiate. The worker will (i) need to take independent advice (from a lawyer or from ACAS) on the terms and effect of the NDA and the “legal limitations of the proposed confidentiality obligation” and be given that advice in writing and (ii) following receipt of that advice, the worker must confirm in writing their agreement to the NDA. As noted, this is not too far removed from what is common practice for settlement agreements, as workers are required to take legal advice on the terms and effect of the settlement agreement, which should include advice on the confidentiality provisions, and that advice will generally be in writing. Helpfully too, the consultation suggests that the Government is not proposing that employers will need to cover the cost of the independent advice – although this is a point the Government is asking for views on in the consultation paper. What is a big change, however, is that the rules will cover any NDA between an employer and a worker, even if outside of a settlement agreement, where there is not currently any requirement for the worker to obtain independent advice. For example, under the Government’s proposed approach, an employee would need to get independent advice if an NDA which could cover relevant discrimination or harassment was included in an employment contract. This could be a significant new process for employers, which could slow down and increase the administrative burden of hiring and other processes.

• Employers may still be able to suggest an NDA is included in an agreement – The consultation is exploring the possibility that employers may still be able to suggest an NDA be included in an agreement (such as a settlement agreement), and the employer suggesting an NDA would not automatically prevent that NDA being a valid excepted agreement. Prior to this consultation, there was a concern that a relevant NDA would be incapable of being an excepted agreement if the employer suggested it. However, this is not fixed, and the Government also asks for views on whether NDAs can only be valid where suggested by the worker. The latter approach could have unintended consequences and make settlements less likely in practice, for instance if a worker is not aware that an NDA is an option as part of a settlement negotiation, or if employers are less willing to suggest settlement due to the prohibition on suggesting an NDA as part of those settlement terms.
• A cooling off period for NDAs – The Government is seeking views on whether there should be a ‘cooling off’ period of as much as 14 days where the worker can withdraw from the NDA, even after receiving independent advice, confirming their agreement, and signing the agreement, all “without penalty”. Permitting the worker to unilaterally withdraw from just the NDA clause(s) but allowing the rest of the agreement to remain in force poses difficulties for negotiations, particularly on settlement agreements. If an employer has agreed a sum of money to resolve all issues and part of that commercial analysis includes the value of the NDA, the risk of the worker walking away from the NDA at the last minute may have a chilling effect on employer willingness to settle. It also gives rise to complex questions where the NDA clause covers more than just relevant discrimination and harassment – would the worker withdrawing from the NDA in the cooling off period also affect the NDA’s ability to prevent disclosures of trade secrets or confidential information? An ‘all-or-nothing’ approach, where withdrawing from the NDA means withdrawal from the rest of the agreement, avoids this issue but may also make settlements less attractive if employers face the risk of the worker walking away even after agreeing to terms, potentially after a lengthy negotiation. A cooling off period may also pose practical difficulties where parties are looking to settle urgently (for example due to an impending tribunal hearing or deadline). The consultation does acknowledge these potential risks and does ask if workers should be allowed flexibility to waive the cooling off period in certain circumstances. However, the Government’s preference does seem to be that no waiver should be permitted, due to concerns that this could be used to place pressure on workers. 
• Potential upper limit on how long an NDA can last – The Government is also exploring whether there should be a time limit on the maximum length of an NDA covering relevant harassment and discrimination, with options ranging from 1 to 10 years, or no maximum unless one is specified in the agreement. There are problems with requiring a maximum time-limit by law for NDAs in an excepted agreement, which the Government itself says could be a “blunt approach”, given that workers themselves may prefer lasting confidentiality. A time-limited NDA may make settlements less attractive to employers, particularly where allegations are disputed, because employers (as well as individuals named) may prefer to investigate matters rather than face the possibility of unproven allegations being made in the future, the time could make any investigation more difficult or even impossible. Regulated employers will often need to conduct an investigation in order to comply with their regulatory obligations, even where a settlement is entered into, so time-limited NDAs may see this practice become more common among non-regulated sectors.
• Forward-looking NDAs covering relevant harassment and discrimination will be void – The Government’s preferred approach is that there would be no exceptions for NDAs that seek to prohibit disclosure of relevant harassment or discrimination that has not yet happened and such NDA provisions would be void. Accordingly, excepted NDAs would only be permitted where the incident of relevant harassment or discrimination has (or is alleged to have) already taken place. While explicitly forward-looking NDAs are relatively unusual, this proposal, if enacted, would require employers to carefully review their existing practice around NDAs (for example standard terms in employer contracts) to ensure they do not inadvertently fall foul of this prohibition.
• Permitted disclosures, even where the parties have entered into an excepted agreement – The Government is also seeking input on what disclosures should be permitted, even where there is a valid NDA entered into by way of an excepted agreement. The Government’s suggestion is to allow permitted disclosures to be made to certain individuals for certain purposes (for example, to seek support or advice from specified individuals). This looks to be similar to approaches taken elsewhere, such as in section 17 of the Victims and Prisoners Act 2024, though it goes slightly wider and would also allow disclosures to ACAS and trade union representatives. However, there is an emphasis on encouraging workers to seek further exceptions, which may be another factor which will make negotiations of NDAs more complex and time-consuming (though this is not a new issue, and currently workers do seek to negotiate specific exceptions to confidentiality provisions allowing disclosures to certain people, like recruiters or prospective employers).

Expanding Protection Beyond Workers

The Government is also considering whether the ban on NDAs covering relevant harassment or discrimination should be expanded beyond the category of ‘worker’, to cover a broader set of working relationships, including those on work experience placements, agency workers, and those on secondments. 

Clearly, the Government’s intended purpose here is to protect individuals who it considers may be vulnerable to potential misuse of NDAs seeking to prevent disclosures about discrimination and harassment. However, this could potentially give rise to complicated issues in practice, that may be very difficult for employers to navigate.

Impacts and Next Steps

These new rules could fundamentally change how employers approach workplace disputes where discrimination or harassment issues are involved. Depending on where the regulations end up, it may be that employers are less willing to settle disputes involving discrimination and harassment if they are unable to include an NDA in a settlement agreement, and therefore may be more willing to litigate in order to defend allegations. Where settlements remain on the table, they may become more difficult to agree, and may take more time and require more employer resources to negotiate.

For what was a fairly last-minute amendment to the Employment Rights Bill before it became law, reforms to the use of NDAs could end up having a significant impact on employer and worker strategies around resolving disputes.

With the rules governing NDAs becoming ever more complex for employers to navigate, at a minimum employers will need to review standard contracts to ensure they do not inadvertently fall foul of the complex new requirements, as well as complying with existing limitations on the use of NDAs.

The consultation is open until 8 July 2026, and responses can be submitted online here. Please contact your usual Littler contact if you would like any support with preparing your business for the upcoming changes. For further information on the latest developments, see our Reform Hub.