What does the NDA consultation mean for accountancy firms?

For decades, the “quiet exit” has been an accepted, if rarely discussed, mechanism within the accountancy profession. When disputes arose, particularly those involving senior figures, confidentiality clauses and non-disclosure agreements (NDAs) offered a way to resolve matters discreetly, protect reputations, and preserve client relationships. However, that model is now under pressure. A new government consultation launched last week (15 April) signals a decisive shift, and when viewed alongside tightening regulatory expectations, the profession’s long-standing reliance on silence is becoming a material governance risk.

The government has formally opened a consultation on new regulations aimed at preventing employers from using NDAs to conceal workplace harassment and discrimination. The move sits within the broader framework of the Employment Rights Act 2025, a sweeping reform package designed to strengthen worker protections and promote fairer workplace practices.

At its core, the consultation seeks to render void any confidentiality clauses that attempt to suppress disclosure of harassment or discriminatory behaviour. It will also explore the conditions under which NDAs may still be considered valid, including who individuals should remain free to speak to regardless of any agreement they have signed. The scope may extend further still, with the government inviting views on whether protections should apply beyond traditional workers to include agency staff, volunteers, and the self-employed.

Employment rights minister Kate Dearden framed the consultation as part of a broader cultural reset, saying, “We are committed to ending a culture of silence and impunity. These changes will ensure no one has to suffer in silence and give workers confidence that inappropriate behaviour will be dealt with.”

“Forbidding NDAs to hide harassment, sexual or criminal acts is to be welcomed, as it will better enable good employers to keep the working environment safe, and give a strong message to perpetrators that they cannot hide.” – Jo Mackie, employment partner at Michelmores

The policy direction is not emerging in isolation. It directly responds to findings from the Sexism in the City Inquiry, which was published in March 2024 and concluded that NDAs had been used to “silence victims of sexual harassment and bullying”, enabling what the Treasury Committee described as an “era of impunity” for senior professionals. 

The professional stakes: integrity vs. confidentiality 

For accountancy firms, many of which operate under financial regulatory oversight, the implications are immediate and far-reaching. The consultation arrives at a moment when regulatory expectations are evolving rapidly. The Financial Conduct Authority (FCA) has introduced new guidance on “non-financial misconduct,” with a compliance deadline of September 2026. Under these rules, behaviours such as bullying and harassment are explicitly categorised as conduct breaches.

This creates a direct conflict with traditional NDA usage. If a firm settles a harassment claim privately and fails to record it as a conduct issue, it risks being accused of lacking integrity, a core regulatory principle. The consequences extend beyond the firm itself to the senior managers who authorised the agreement.

“If Parliament is serious about levelling the playing field, it should consider introducing a presumption of anonymity for both claimants and respondents.” – James Townsend, head of employment and partner at Payne Hicks Beach

What’s more, the Financial Reporting Council has reinforced this direction of travel, linking poor internal culture – often obscured by confidentiality agreements – to declining audit quality. The message is becoming difficult to ignore: transparency is no longer optional, but integral to professional standards.

Jo Mackie, employment partner at Michelmores, situates the consultation within this broader shift in professionalism. “This [NDA regulation] has been promised for some time, and if passed will be a welcome addition to the rules binding settlement agreements,” she says. “Forbidding non-disclosure agreements to hide harassment, sexual or criminal acts is to be welcomed, as it will better enable good employers to keep the working environment safe, and give a strong message to perpetrators that they cannot hide.”

For accountancy firms, her assessment highlights the increasingly interconnected nature of governance, culture, and regulatory compliance.

The counter-argument: the right to move on

Yet the debate is not entirely one-sided. Within the partnership model that defines much of the accountancy sector, there remains a pragmatic argument for preserving some form of confidentiality in settlements.

David Greenhalgh, partner at Excello Law, emphasises the importance of individual choice. “Women should be allowed to get justice on their own terms, and if that means they are happy to take a payment under the terms of a settlement agreement with an NDA, that is their choice,” he says. “It is important that reforms prevent the misuse of NDAs to pressure or silence victims. However, care must also be taken to preserve the ability of individuals to make informed decisions about how they resolve their claims.” 

Greenhalgh also believes that victims should not be barred from receiving compensation for mistreatment, nor should they be obliged to become public advocates for workplace reform or pursue litigation against their wishes. He points out that not every victim desires to be “on the front line of women’s rights in the workplace”.

This perspective reflects a commercial reality. In a profession built on client trust and long-term relationships, both parties may have legitimate reasons to seek a clean and discreet separation.

The head of employment and partner at law firm Payne Hicks Beach, James Townsend, offers a structural alternative that could reconcile transparency with protection. “If Parliament is serious about levelling the playing field, it should consider introducing a presumption of anonymity for both claimants and respondents (unless they choose to waive that right) when dealing with allegations of sexual harassment or racism in the workplace before an Employment Tribunal, rather than continuing the practice of publishing judgments online,” he says. “Such an approach would no doubt encourage claimants to come forward with greater confidence and end the naming of innocent parties.”

For many firms, such proposals may represent a more workable long-term solution than an outright prohibition.

The loopholes and legal fees trap

A more critical concern lies in how any new rules will operate in practice. Georgina Calvert-Lee, barrister at Bellevue Law, highlights the risk that well-intentioned reforms could be undermined by structural imbalances.

“The Employment Rights Act 2025 includes a provision rendering void any confidentiality or NDAs in agreements between an employer and a worker which purports to stop the worker disclosing information about harassment or discrimination in their workplace or the employer’s response to it. The provision is currently expected to come into force in October 2026,” Calvert-Lee explains. “In the meantime, the government has opened a consultation on whether this prohibition should also apply to other individuals who are not ‘workers’, for example, volunteers or job applicants.”

Calvert-Lee goes on to add the consultation’s focus on enforcement, specifically asking how the provision will be put into practice. A key aspect is whether any exceptions should allow NDAs despite the general prohibition. 

“This latter question has to be approached with care. The government has suggested that NDAs should be permitted where requested by the worker after they have received independent legal advice, paid for by the employer,” she elaborates. “This risks creating an exception that engulfs the rule. Given the obvious imbalance of power between an employer and a worker, there would be little to stop an employer pressuring a worker to ‘request’ an NDA, after taking advice from the lawyer the employer has paid for (and sometimes found).”

Calvert-Lee argues that the safeguard requiring employees to seek independent legal advice before signing a settlement agreement is undermined. She explains that employers typically offer such a small contribution towards the employee’s legal fees that the worker can only afford minimal, superficial advice – just enough to get a lawyer’s required signature. 

Consequently, many employees cannot afford to obtain comprehensive legal guidance tailored to their specific situation, unless they are fortunate enough to find a lawyer who is willing to significantly reduce their standard charges.

For accountancy firms, this introduces a tangible legal risk. If NDAs are later deemed invalid due to coercion or inadequate advice, firms could find themselves having paid for confidentiality that does not legally hold.

The consultation into the use of NDAs is underpinned by mounting evidence that workplace silence is already eroding. Research from the Young Women’s Trust found that one in four young women would be reluctant to report sexual harassment at work for fear of losing their job. Meanwhile, a 2025 survey by Unite the Union reported that 48% of those who experienced sexual harassment encountered it more than twice.

“Women should be allowed to get justice on their own terms, and if that means they are happy to take a payment under the terms of a settlement agreement with an NDA, that is their choice.” – David Greenhalgh, partner at Excello Law

At the same time, regulatory data released by the FCA has shown a fivefold increase in whistleblowing disclosures between 2024 and 2025, indicating that employees are increasingly bypassing internal mechanisms – and in some cases NDAs – to report concerns directly. This points to the culture of silence already weakening, even before the government’s newly-launched consultation. Legislative reform is, in many respects, catching up with changing expectations.

For accountancy firms, confidentiality can no longer serve as a substitute for accountability. The combined force of legislative reform, regulatory scrutiny and cultural change is redefining what constitutes acceptable governance.

The practical consequence, as noted by experts, is that firms must begin treating settlement agreements as compliance documents rather than purely legal instruments. Templates, processes and internal reporting mechanisms will need to withstand not only legal challenges but regulatory inspection.

With enforcement of key provisions expected from October 2026 and the consultation outcomes due in 2027, the window for preparation is narrow. The “quiet exit” may not disappear entirely, but it is unlikely to survive in its current form.