This guide is maintained as a current resource for July 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Learn what confidentiality clauses in redundancy settlement agreements mean under UK law. This guide explains their purpose, legal limits, rights to disclosure, exceptions for whistleblowing and legal advice, and practical tips for employees and employers in England and Wales.
When an employer and employee agree to end a job by mutual consent, especially as part of redundancy, they often use a settlement agreement (sometimes called a compromise agreement). These legally binding documents can include confidentiality clauses, also known as non‑disclosure agreements (NDAs), which restrict what the parties can say about the agreement and associated matters. Confidentiality clauses are common but subject to legal limits. This article explains what confidentiality clauses are, how they operate in redundancy settlement agreements under the law of England and Wales, what rights and protections exist, potential risks, and key considerations for both employees and employers.
What Is a Confidentiality Clause in a Redundancy Settlement Agreement?
A confidentiality clause is a contractual term in a settlement agreement that restricts an individual's right to disclose certain information. In redundancy contexts, this commonly includes the existence of the agreement, its terms and financial details, and sometimes circumstances leading up to the redundancy. The primary purpose is to protect business interests, maintain discretion, avoid workplace unrest, and prevent reputational harm. These clauses are voluntary and must be agreed by both parties as part of the overall settlement negotiation.
Confidentiality clauses do not automatically apply just because redundancy has occurred. They normally form part of a settlement agreement, which is a separate document from statutory redundancy pay or contractual redundancy rights. Without such an agreement, there is generally no legal requirement to keep redundancy matters confidential unless another contract clause already applies.
Legal Context: Settlement Agreements and Confidentiality
Settlement Agreements in Redundancy
A settlement agreement allows an employer and employee to end a contract of employment on agreed terms, often in exchange for a payment that may exceed statutory redundancy pay. To be legally valid, a settlement agreement must meet statutory requirements under the Employment Rights Act 1996. These include being in writing, relating to a specific complaint or potential claim, and the employee receiving independent legal advice.
Confidentiality clauses are frequently part of these agreements, agreed during the negotiation phase known as pre‑termination negotiations, which are often protected by the “without prejudice” principle and section 111A of the Employment Rights Act 1996 (meaning discussions cannot generally be used as evidence in tribunal proceedings).
What a Confidentiality Clause Can and Cannot Do
Typical Content
A standard confidentiality clause in a redundancy settlement agreement might:
- Require the employee not to disclose the existence of the settlement.
- Prevent disclosure of the specific terms, including sums paid or compensation details.
- Restrict sharing circumstances and correspondence leading to the agreement.
These are subject to clearly defined exceptions, such as:
- Disclosures to professional advisers (solicitors, tax advisers) or immediate family.
- Disclosures required by law or regulatory bodies.
- Protected disclosures under whistleblowing law.
Statutory Limits and Exceptions
Confidentiality clauses cannot lawfully prevent an employee from:
- Reporting criminal offences to the police.
- Making a protected disclosure (whistleblowing) under the Public Interest Disclosure Act 1998.
- Cooperating with enforcement bodies or regulatory authorities.
- Seeking legal or tax advice, or consulting healthcare professionals or close family.
Any clause that tries to prevent these actions is generally unenforceable. Clauses that appear to restrict these rights could not only be struck down but may jeopardise the enforceability of parts of the agreement.
Policy and Reform
Recent government proposals and legislative developments aim to reinforce limits on confidentiality clauses, especially where they might be misused to silence victims of harassment or discrimination. These reforms, part of ongoing employment rights legislation, underscore that confidentiality must be clear, lawful, and not impede statutory protections.
Negotiating and Understanding Confidentiality Clauses
Employee Considerations
Employees should:
- Read the clause carefully and understand exactly what information is covered.
- Ensure the clause includes express carve‑outs for permitted disclosures (legal advice, whistleblowing, reporting crime).
- Clarify whether the employer's obligations (e.g., mutual non‑disparagement) are reciprocal.
- Seek appropriate independent legal advice before signing.
Negotiation can adjust overly broad clauses; employees are not obliged to accept terms they find unfair or unclear.
Employer Considerations
Employers should:
- Ensure confidentiality clauses are precisely tailored and no broader than necessary to protect legitimate interests.
- Avoid clauses that could be interpreted as gagging or preventing lawful disclosures.
- Seek legal guidance to draft clauses that are compliant with evolving law and ACAS guidance, which emphasises clarity and necessity.
Risks of Breaching a Confidentiality Clause
If an employee breaches a confidentiality clause, the settlement agreement typically includes remedies which may include:
- Repayment or clawback of part or all of the settlement payment.
- An injunction to prevent further disclosure.
- Potential damages for any loss suffered by the employer.
However, if a clause is found to be unenforceable because it contravenes statutory rights, those remedies may not be available.
Confidentiality vs Whistleblowing and Public Disclosure
It is important to distinguish between confidentiality clauses for commercial or personal settlement terms and protected disclosures. Whistleblowing that reveals wrongdoing in the public interest-such as safety breaches, discrimination, or illegal conduct-is protected under the law and cannot be lawfully prevented by an NDA, even after a settlement agreement has been signed.
Practical Examples
- Standard Settlement: An employee agrees to enhanced redundancy pay and, in exchange, agrees not to disclose the financial terms to colleagues. They can still report misconduct to the police or a regulator.
- Overbroad Clause: A confidentiality clause that attempts to stop an employee from reporting discrimination may be unenforceable and could be challenged if it impedes statutory rights.
- Carve‑Outs: A well‑worded clause expressly allows disclosure to legal and tax professionals, immediate family, and for whistleblowing, reducing uncertainty for the employee.
Key Takeaways
Confidentiality clauses in settlement agreements tied to redundancy are common and designed to protect business interests and personal privacy. They must be voluntary, clearly drafted, and compliant with legal limits, particularly regarding reporting criminal conduct or making protected disclosures. Employees should seek independent legal advice and understand their rights before agreeing to confidentiality terms. Employers should craft clauses carefully to ensure they are necessary, proportionate, and legally enforceable.
