Finding the Right Balance in 2025

For many years, confidentiality clauses have been part and parcel of resolving employment disputes. They help both sides move on, protect commercial information, and preserve reputations. But recent developments in legislation and regulation are reshaping what these clauses can legitimately achieve.

Why the rules are changing

The use of confidentiality provisions in settlement agreements has drawn increasing criticism. High-profile cases have exposed situations where employees felt silenced about harassment, discrimination or even potential criminal conduct.

In response, the Government has acted to prevent misuse of confidentiality clauses particularly those that appear to restrict lawful reporting or whistleblowing. The message is clear: confidentiality can protect business interests, but it must never be used to conceal wrongdoing.

New legal framework

Two key developments underpin this change:

1. The Victims and Prisoners Act 2024 (effective 1 October 2025): confidentiality clauses will no longer be enforceable if they attempt to prevent someone from reporting a crime or from sharing information with the police or regulatory bodies.
2. The Employment Rights Bill: currently progressing through Parliament, this Bill will void any clause that restricts workers from discussing or reporting harassment or discrimination, whether they are a victim or a witness.

These reforms are part of a wider cultural and legal shift toward transparency and accountability in the workplace.

What employers need to know

Despite the headlines, confidentiality clauses have not been outlawed, nor should they be. They remain a legitimate and valuable part of the settlement process. The challenge for employers lies in ensuring that confidentiality serves a protective function, not a preventative one.

Good practice example

An employer includes a confidentiality clause that prevents the employee from sharing sensitive commercial information about the company’s clients, pricing or strategy. However, the clause clearly states that nothing prevents the individual from reporting criminal conduct, cooperating with the police or disclosing experiences of harassment or discrimination.

This strikes the right balance between business protection, without infringing on statutory rights.

Bad practice example

An employer uses a settlement agreement with a sweeping “gagging” clause preventing the employee from speaking about the reasons for their dismissal “in any forum or to any person.” The clause makes no exception for disclosures to the police, regulators or legal advisers.

This approach will be unenforceable under the new legislation and may expose the employer to reputational damage.

SRA guidance 

The Solicitors Regulation Authority (SRA) has made it clear that lawyers must not draft agreements designed to cover up misconduct. Solicitors advising either party must ensure that confidentiality wording complies with both legal and ethical obligations.

This is particularly relevant where there are allegations of harassment or discrimination. Solicitors acting for an employee will rightly push back against any clause that could be seen as silencing their client.

Practical steps for employers

• Audit your template agreements: Review and update your settlement agreement templates to ensure that they do not prevent lawful disclosures. Any clause that might be read as suppressing reports of misconduct should be revised or removed.
• Define what truly needs protection: Keep confidentiality clauses targeted and proportionate. Protect commercially sensitive material, financial terms, or reputational interests, but carve out clear exceptions for legal or regulatory disclosures.
• Be transparent in negotiations: Employees should not feel pressured into silence as a condition of settlement. Demonstrating transparency and fairness reduces the risk of disputes later and supports a culture of trust.

Looking ahead

The legal direction of travel is unmistakable. Greater openness around workplace wrongdoing. Employers who adapt early and approach confidentiality with care will be in the strongest position to maintain both compliance and credibility.

At Gannons, we help employers navigate this evolving area by balancing legal protection with transparency. We can review your existing templates, update your agreements and guide you through the negotiation process to ensure compliance and commercial peace of mind. Please contact us today to find out how we can assist you.