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Do employers have to keep details of settlement discussions confidential from colleagues?

Photo by Kristina Flour on Unsplash

When an employee is offered a settlement package to leave their employment, there is no general rule that parties must keep the details confidential.

However, it is common for the employer to warn the employee to keep it confidential, except to the employee’s immediate family. This is normally to prevent them telling colleagues, who may try and achieve the same in the future. However, is there a similar obligation on employers?

Both the "without prejudice" rule and the rule on pre-termination settlement discussions in section 111A of the Employment Rights Act 1996 mean that details of settlement discussions will generally not be admissible in evidence if the negotiations are unsuccessful. However, this does not mean that the discussions are "confidential" in any wider sense. It does not prevent them being disclosed to third parties, unless the employee has been told otherwise.

The best way to protect the confidentiality of settlement discussions is to agree at the outset that they should be kept confidential, and by both parties.

However, a duty of confidentiality can arise where there is no express agreement. Employees may be protected by the implied term of trust and confidence, if they can satisfy the two part test:

  • The employer acts in a manner calculated or likely to destroy or seriously damage mutual trust and confidence.

  • The employer has no reasonable and proper cause for its actions.

Whether or not the term has been breached will be very fact dependent and in a case such as this will depend on the nature of the information being disclosed and the reasons for the disclosure.

Contact us if you wish to discuss further.

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