Confidentiality clauses in settlement agreements

From 22 October 2025, the Department for Education (DfE) updated the Academy Trust Handbook and the College Financial Handbook, introducing significant changes to the way academy trusts and FE colleges may use confidentiality clauses in settlement agreements.

In particular, the updated handbooks impose new and tighter restrictions on the inclusion of confidentiality clauses in agreements connected with staff severance payments.

What has changed?

The DfE amended paragraph 5.13 of the Academy Trust Handbook and paragraph 5.12 of the College Financial Handbook to address the use of confidentiality clauses in connection with staff severance payments. The updated provisions confirm that confidentiality clauses:

1. must not restrict protected disclosures under the Public Interest Disclosure Act 1998
2. are treated as “novel, contentious or repercussive” and therefore must not be used unless prior DfE approval has been obtained
3. must not impede the DfE from obtaining the information it needs to assess the payments under its regulatory role.

Practically, this applies whenever academies and FE colleges enter into a settlement agreement or ACAS COT3 agreement that includes any clause intended to keep information confidential in the context of an exit. This covers clauses relating to the fact or terms of the agreement, reasons for departure, non-disparagement or ‘gagging’ provisions, or restrictions on discussing the matter with colleagues, the media, regulators or prospective employers.

However, routine confidentiality obligations that are simply about protecting personal data, safeguarding information or trade secrets in the ordinary course of employment and are not tied to a severance arrangement fall outside the new approval requirement. Standard whistleblowing carve-outs remain essential.

Impact

Academies and FE colleges will need to seek and obtain DfE approval before agreeing to include confidentiality clauses in agreements linked to staff severance payments, regardless of value. This introduces an additional approval step and may extend timelines for negotiated exits, which could be challenging where decisions are time-sensitive. Failure to obtain approval where required may trigger non-compliance with the handbooks and increase the risk of regulatory scrutiny, intervention and reputational harm for trusts and colleges.

While omitting confidentiality provisions may seem simpler, doing so may leave academies and FE colleges exposed. It will still be important to consider whether confidentiality clauses are necessary in each case.

What should academies and FE colleges do?

• Update settlement agreement templates and internal guidance to remove any default confidentiality wording or clearly flag that it is subject to prior DfE consent. Ensure whistleblowing carve-outs and DfE information-access provisions are explicit and robust
• Engage early with advisers and the DfE. Before entering into any settlement agreement, obtain specialist advice to ensure compliance with the handbooks and whistleblowing requirements, assess whether DfE approval is needed and manage risks. Where confidentiality is considered necessary, prepare submissions early with a clear justification and monitor any further DfE guidance clarifying scope and process
• Plan for approvals. Build DfE approval into the critical path for settlement timelines, recognising it is now a prerequisite for using confidentiality clauses
• Review employment contracts. Audit and update contracts to ensure clear, robust confidentiality and non-disparagement provisions (with explicit whistleblowing carve-outs and DfE information rights). Well-drafted contractual clauses can then be referenced in settlement agreements to reinforce obligations.