Settlement agreements: government confirms that workers will be able to request NDAs

Last week, I wrote about the government's surprise decision to legislate to ban NDAs which prevent workers from speaking out about harassment and discrimination in the workplace. You can read our thoughts here, or listen to our podcast. 

I speculated that the government may implement a policy similar to one adopted by the Irish government in 2024, which allows the parties to include NDAs in agreements if these have been requested by the worker.

That appears to be what the UK government has in mind. It has now published an impact assessment which says that regulations will be introduced which will exempt NDAs from the ban ‘if the agreement is requested by the worker’. No other details are provided and it's not clear how this will work in practice. Will an employer, for example, have to leave the ball entirely in the employee's court, or will they be able to say something like ‘yes, we are willing to discuss entering into a settlement agreement with you, but we’ll only be able to reach an agreement if you ask for the terms to remain confidential'? 

The government certainly believes that this will shift control over NDAs to the worker and put them in a stronger bargaining position.

The government says that it has considered best practice from other countries. That's likely to include Ireland, which allows an employee to withdraw from confidentiality provisions they've asked for and agreed to within 14 days of signing the agreement. They don't incur any penalties and can keep whatever monies the employer has handed over. I can't find any publicly available quantitative data which indicates how often employees are exercising this ‘cooling off’ period - but I wouldn't expect many employers to be keen on settling claims under these circumstances. 

Estimated costs to business of implementing the change

It has estimated that it will take HR managers around half an hour to familiarise themselves with these legal changes (I think they're having a laugh here), and between an hour to two hours to update guidance and contract templates. The total cost to business is estimated to be 28.3 million which can only be described as a conservative estimate given the assumptions they are working on. 

It believes that the benefits, which it identifies as a reduction in workplace harassment and discrimination, exceeds the costs of implementing the policy. 

Increased pressure on Acas and tribunals

The government acknowledges that this is likely to mean that fewer issues are settled via settlement agreements. And despite the considerable pressure the tribunal service is already under (which will only get worse once the Employment Rights Bill comes into force), it is confident that the ‘overall scale of the impact is expected to be manageable’. I'm not sure many employment lawyers would agree with this, but we will have to wait and see.

It does, however, acknowledge that Acas may find that demand for its services increases which will either require additional funding or ‘reallocation of resources’. My money's on the latter.

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