New ban on gagging clauses in settlement agreements as employment law reform timetable unveiled

New ban on gagging clauses in settlement agreements as employment law reform timetable unveiled

Tom Clarke, Associate, Employment Law & HR

The Government has recently released some updates to the Employment Rights Bill, including significant changes to the use of confidentiality clauses in contracts and settlement agreements and the provision of an intended timeline for the phased delivery of other elements of the Bill.

Settlement Agreements
A new addition to the Employment Rights Bill has introduced a ban on the use of any contractual provision which seeks to prevent an employee or worker from making allegations or disclosures about harassment or discrimination. This would apply to employment contracts, but more significantly, to settlement agreements too, where such provisions are more common. The change is intended to encourage safe and transparent workplaces by preventing the use of clauses that prohibit the disclosure of equality breaches, whether that’s by the employer or another employee. Once introduced, it will no longer be a breach of contract where an employee or former employee speaks to colleagues, the media, police or regulators regarding harassment or discrimination in the workplace. Once introduced, a review of employment contracts and settlement agreements will be crucial to avoid the use of clauses that are unenforceable and could risk reputational damage.

Timeline
In addition, the Government has provided a timeline for the introduction of its intended key changes to UK employment law. While some reforms will take effect soon, some significant updates – including changes to zero-hour contracts and ‘day 1’ unfair dismissal rights – have now been delayed until 2027. The new key dates are set out below:

April 2026:

• Doubling of protective award in collective redundancy claims
• Introduction of ‘day1’ rights for paternity and unpaid parental leave
• Strengthened whistleblower protections
• Statutory Sick Pay reform (removal of lower earnings limit and waiting days)
• Simplified trade union recognition and digital/workplace balloting

October 2026:

• Significant restrictions on fire-and-rehire practices
• Duty on employers to take “all reasonable steps” to prevent sexual harassment
• Expanded trade union rights

TBC in 2027:

• Unfair dismissal rights from day one of employment
• Enhanced rights for zero-hour workers
• Enhanced protection for pregnant workers
• Bereavement leave extension to include additional circumstances to parental bereavement
• Mandatory gender pay gap and menopause action plans for employers with at least 250 employees (this will be voluntary from April 2026)

The most significant news is the delay to implementing changes to existing unfair dismissal law. Consultations on the above proposals are commencing soon and we shall continue to keep you updated with any further changes.

Tom and the team are here to answer any questions.