A landmark ban on the use of non-disclosure agreements in workplace misconduct cases – a longstanding practice of financial firms – may make it harder for victims to win compensation and discourage some from speaking up, lawyers say
Under reforms to workers’ rights laws by UK Prime Minister Keir Starmer’s government due to come into effect later this year, any confidentiality agreements that seek to silence employees who say they faced harassment and discrimination would be null and void.
But lawyers say the ban risks unintended consequences: employers are less motivated to settle discrimination cases without confidentiality, leading to greater backlogs for the employee tribunal system and prolonged legal processes for victims seeking closure.
This could mean that fewer victims come forward to detail their experiences, according to Caroline Walker, managing director at Cavendish Employment Law.
“Tribunal claims are not for the faint hearted,” she said, referring to the courts where workers and employers head to fight their disputes. “They are time consuming, costly and cross examination over sensitive discrimination or harassment incidents can be brutal.”
There’s a risk too that companies try to bury victims in a legal quagmire, she said, with companies more determined to defend their reputation in court in the absence of a confidentiality agreement.
In the case of fewer settlements, lengthier legal processes could also pile pressure on an already overwhelmed UK employee tribunal system, Walker said. The backlog had reached almost 50,000 cases by the end of last year, an increase of 28% compared with a year earlier.
“This could result in employees having to commit to litigation in difficult circumstances, when they may otherwise have received a settlement, allowing them to move on more quickly,” Bethan Jones, an employment lawyer at Spencer West, said.
The use of NDAs for cases involving allegations of workplace abuse is widespread; 22% of respondents to a 2024 survey by the Chartered Institute of Personnel and Development said their company used them when dealing with allegations of sexual harassment. The ban marks a shift in policy for the UK after the previous Conservative government rejected calls last year to end their use and comes after a series of high-profile sexual harassment scandals in recent years, including allegations against hedge fund manager Crispin Odey. Odey has denied the allegations.
“There is commercial and reputational value to the employer in settling with confidentiality irrespective of the merit or otherwise of the allegation,” Jason Braier, a trial lawyer specializing in employment, said in a LindedIn post. “The government amendment will disincentivise employers from settling many claims they think they can defend.”
