As of 1 October 2025, the UK government introduced significant changes to settlement agreements, particularly focusing on confidentiality provisions and non-disclosure agreements (NDAs) under the Victims and Prisoners Act 2024. These changes aim to improve transparency, reduce the misuse of NDAs, and ensure employees’ rights are protected while still allowing employers to safeguard their legitimate interests.
Understanding these new provisions is critical for both employers and employees to ensure compliance and navigate dispute resolutions effectively.
What is a Settlement Agreement?
A settlement agreement is a legally binding contract between an employer and an employee to resolve a dispute, typically following the termination of employment. These agreements often cover issues like severance payments, employment references, and the resolution of any potential claims arising from the employee’s time with the employer. One of the key features of many settlement agreements is the confidentiality provision. These clauses are designed to ensure that the terms of the agreement remain private, protecting the reputations of both parties and encouraging open negotiation.
However, with the introduction of the Victims and Prisoners Act 2024, these confidentiality provisions will be subject to important changes, especially where they interfere with an individual’s ability to report criminal activity or seek help.
The New Rules Under the Victims and Prisoners Act 2024
The Victims and Prisoners Act 2024 impose restrictions on the use of confidentiality provisions and NDAs in settlement agreements.
Specifically, the new legislation ensures that:
- Confidentiality clauses and NDAs will be unenforceable if they prevent a victim of crime from:
- reporting a crime to the police; and
- seeking confidential advice and support (such as legal advice or counselling).
This reform is intended to prevent situations where victims might be coerced into signing agreements that silence their ability to report criminal behaviour, such as harassment, assault, or fraud, particularly in cases of workplace misconduct.
The key point is that these restrictions will apply to agreements signed on or after 1 October 2025, meaning any settlement agreements or NDAs created after this date must reflect the new legal framework.
Why These Changes Were Necessary
The Victims and Prisoners Act 2024 was introduced as part of broader reforms to better protect victims of crime. NDAs and confidentiality clauses, while valuable in protecting commercial interests, have often been misused in situations involving workplace harassment or discrimination.
In some cases, victims of crime have been asked to sign settlement agreements that prevent them from discussing or reporting the crime. This could result in employees being forced to remain silent about criminal behaviour or misconduct, denying them the ability to seek justice or support. The new law ensures that victims can report criminal activity without the fear of being penalised by confidentiality clauses that may otherwise silence them.
In cases where there has been criminal conduct, the victim’s rights to seek justice and access help will always take precedence over the terms of a settlement agreement.
Carve-Outs in Confidentiality Provisions
It’s important to note that many settlement agreements already include carve-out provisions in their confidentiality clauses. These are exceptions that allow employees to report illegal activity or blow the whistle on wrongdoing, such as fraud or harassment, without breaching the confidentiality terms.
However, these carve-outs may need to be revisited and updated to ensure full compliance with the Victims and Prisoners Act 2024. Specifically, agreements should include explicit language confirming that the employee retains the right to report any criminal behaviour to the police or seek legal advice and support.
How Employers Can Prepare
As an employer, it’s essential to ensure your business is fully prepared for these changes.
Here’s what you can do to stay compliant:
- Check your existing settlement agreement templates to identify and amend any clauses that might unintentionally prevent employees from reporting crimes or seeking advice.
- Ensure your confidentiality provisions now include clear carve-outs for reporting criminal activity and seeking support.
- Work with your legal team to update any NDAs and settlement agreements, ensuring they reflect the latest legislative requirements.
- Make sure HR teams and managers understand the changes and are aware of how to handle settlement discussions appropriately.
How Employees Can Protect Their Rights
If you’re an employee considering a settlement agreement, it’s crucial to understand that the new law gives you greater protection.
Confidentiality clauses in settlement agreements can no longer prevent you from:
- Reporting criminal activity to the police.
- Seeking advice from legal professionals or support services.
Before you sign any settlement agreement, make sure the terms do not limit your ability to seek justice. If you have concerns or questions, don’t hesitate to seek advice on your options.
Need Help with a Settlement Agreement? Contact Us for Assistance
Whether you’re an employer or an employee, navigating the complexities of settlement agreements in light of the Victims and Prisoners Act 2024 can be a challenge.
- For employers, ensuring that your agreements comply with the new law is critical to avoid potential legal issues and maintain good practice in your business.
- For employees, understanding your rights under the new rules is essential to ensure you’re not coerced into signing an agreement that could prevent you from reporting crimes or seeking support.
At Acuity Law, we’re here to help. Contact us today for expert guidance on how these changes may affect your settlement agreement. Whether you need assistance drafting compliant agreements or need advice as an employee considering a settlement, our team is ready to support you through these changes.
