What is changing in settlement agreements for employees?

To tackle misuse of confidentiality clauses when workplace harassment or discrimination occurs, the Government has said that it plans to require employers to set out more clearly the consequences and limitations of confidentiality clauses in contracts of employment and settlement agreements.

What are the main proposals?

• Ensure that a confidentiality clause cannot prevent an individual from making a disclosure to the police, regulated health and care professionals, or legal professionals.

• Improve independent legal advice available to an individual when signing a settlement agreement.

• Produce guidance on drafting requirements for confidentiality clauses.

• Introduce new enforcement measures for confidentiality clauses that do not comply with legal requirements

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What would this mean for employers?

The changes would not prevent employers from making use of confidentiality clauses when an employee’s employment ends. For example, employers use confidentiality clauses to protect commercially sensitive information and prevent employees from sharing such information with their competitors. They can also help the employee to move on and make a clean break from the employer when the relationship has irrevocably broken down.

However, the changes would mean that employers would have to ensure that:

• their confidentiality clauses do not prevent employees from making disclosures to the police, regulated health and care professionals and legal professionals; and

• employees who are asked to agree to confidentiality clauses, whether that is at the beginning of their employment (within their contract of employment) or at the end (within a settlement agreement), are given clear advice on the consequences of doing so.