A non-disclosure agreement (“NDA” or “confidentiality clause”), is any agreement, either freestanding or part of a wider agreement such as a settlement agreement, which imposes an obligation on one party to keep information confidential, typically in return for a payment.
NDAs have been controversial in recent years, particularly following the #metoo movement and reports of alleged misuse of NDAs by employers and their lawyers to silence victims of crimes allegedly committed by its senior employees, in order to protect the employer from reputational damage.
The current position is that an NDA cannot legally prevent someone from reporting a crime to the police or other relevant regulatory or statutory body. If a “protected disclosure” is made (i.e. whistleblowing), the Employment Rights Act 1996 provides protections from detriments against the whistleblower, and any part of an NDA which purports to restrict the making of whistleblowing disclosure is legally invalid. Save for these restrictions on the scope of NDAs, the current default principle is that of freedom of contract, namely that the parties are free to enter NDAs as agreed regardless of the imbalance in their bargaining positions, which is typically between the employer and outgoing employee under a settlement agreement.
Draft secondary legislation has now been published under Section 17 of the Victims and Prisoners Act 2024 (“the 2024 Act”) which expands the specific circumstances in which NDAs will be void against victims of crime.
What’s new?
From 1 October 2025, victims of crime (or a person who reasonably believes they are a victim) cannot be precluded from making the following disclosures, and any part of an NDA which purports to restrict such disclosures is void against that victim of crime:
- To bodies which investigate or prosecute crimes, for the purpose of investigating or prosecuting the relevant conduct (i.e. the crime they are a victim of). This includes the Police, HSE, Gambling Commission, Financial Conduct Authority and ICO, among others.
- To qualified lawyers, for the purpose of seeking legal advice about the relevant conduct.
- To regulated professionals, for the purpose of obtaining professional support. This could be a social worker or a teacher, for example.
- To victim support services, for the purpose of obtaining support, such as healthcare professionals and professional counsellors.
- To a regulator, for cooperation with the regulator in relation to the relevant conduct. For example, the Solicitors Regulation Authority or the General Medical Council.
- To the victim’s close family and other close and long lasting relationships – parent, child or partner – for the purpose of obtaining emotional support.
- To the Criminal Injuries Compensation Authority, for the purpose of a claim for compensation in relation to the relevant conduct, and to a court or tribunal in relation to such a claim.
The definition of a “victim of crime” is drawn very broadly by the 2024 Act. It refers to someone who has been subject to criminal conduct. There does not need to be an investigation, conviction, or even a report of crime for this definition to apply. It also includes persons who reasonably believe they are victims of crime.
The key points to consider are (1) who is the disclosure being made to and (2) why is the disclosure being made. The focus of the 2024 Act is squarely on ensuring support for victims and ensuring alleged criminal conduct can be investigated effectively.
Conversely, a disclosure for the purpose of raising media attention, for example, will not necessarily be covered. If the key objective for the victim is putting the information into the public domain, this may potentially fall into the scope of a whistleblowing disclosure but only if it meets the statutory definition of a protected disclosure.
What are the implications?
The above restrictions on NDAs will come into force on 1 October 2025. Any NDAs signed on or after 1 October 2025 will not be enforceable against victims of crime in the above circumstances. Agreements signed prior to 1 October 2025 will not be effected by the new legislation.
With the broad definition of “victim of crime”, the changes to legislation will need to be carefully considered. Anyone using NDAs or advising on such agreements, both for the employer and employee, will need to review their standard (and non-standard) clauses to ensure compliance with the new legislation. Specific wording should be considered to ensure that whilst validly preventing the disclosure of certain information, a victim or potential victim of crime is not being unduly silenced. There should also ideally be an express understanding that, if needed, the alleged victim can (and ought to) seek support and speak to relevant investigatory/regulatory bodies.
Whilst current NDA wording used by employers often already provides for the above exceptions in general terms, the new law in force on 1 October 2025 will provide a clear statutory underpinning to those exceptions and give them added importance, and will oblige parties and their lawyers to actively consider if the NDA is in full compliance with new statutory restrictions.
This will mean a cultural shift in the use of NDAs, and provide further comfort to victims of crime, or those reasonably believing they are victims, that they remain able to report any incident to the appropriate authorities without the risk of litigation or threatened litigation. Employers need to take steps to ensure they do nothing which could be interpreted as in any way deterring an employee from reporting a crime, and must carefully consider if any alleged misconduct in work could be reasonably be viewed as a criminal offence so as to engage the 2024 Act.
The draft legislation implementing the new restrictions explicitly empowers the Minister for Justice to expand the list of exceptions, meaning that it is likely that in future other information commonly falling under an NDA to protect an employer from reputational damage could become disclosable, such as potentially including disclosures of alleged discriminatory or harassing conduct, but which falls short of amounting to a criminal offence.
It will remain to be seen what real world impact these restrictions will have on the amount of settlements and reporting of crimes for workplace offences and whether respective bargaining positions are adjusted. It is likely, however, that any further expansion in the statutory limits on the use of NDAs will bring in a new, major factor to consider in settlement negotiations. Parties will have to review whether litigation is, on balance, more attractive if these new restrictions limit the financial and other commercial value of settlement agreements, both for employers and employees.
How can we help?
For further information about issues raised in this article, please contact a member of our Employment team.
