NDAs Reform; Parental Leave Review; FCA Non-Financial Misconduct Guidance & FTSE Gender Progress – Employment Law Matters: Edition 12

UK framework 2017 – present

Since the #MeToo movement gained global traction in 2017, in response to the emerging allegations of Weinstein’s offences (many of which he was subsequently convicted of), the use of confidentiality clauses and/or non-disclosure agreements (“NDAs”) in an employment context has been the subject of much regulatory and legal discussion. Questions have been asked about whether it is appropriate or acceptable for employers to ‘silence’ employees who raise allegations of sexual harassment or serious misconduct.

SRA

As a result, in 2018, The Solicitors Regulation Authority (“SRA”) reviewed the use of NDAs and issued a warning notice on 12 March 2018 (which was significantly revised in November 2020). The notices remind practitioners of the relevant issues and risks associated with NDAs and offer guidance on the circumstances in which the SRA would consider the use of NDAs as inappropriate or improper. In August 2023, the SRA published a Thematic Review on the use of NDAs in which it reported on compliance with its warning notice and recommended continuous monitoring and increased training on NDAs for practitioners.

WEC

In November 2018 the Women and Equalities Select Committee launched an inquiry into the use of NDAs, focussing on cases where any form of harassment or other discrimination had been alleged. It reported its findings in June 2019 and concluded that the evidence it had collected showed that an outright prohibition, either in discrimination and harassment cases or more generally, was not necessarily the way forward, as NDAs could benefit both employers and employees. However, it concluded that NDAs were being used too frequently, rather than with careful thought about the merits of them in each situation, and sometimes unlawfully. The then Government responded in July 2019 to state that it would introduce new legislation to deal with NDAs when Parliamentary time allowed.

Despite a further report from the WEC in early 2024, focussed on the continuing use of NDAs in the music industry, and a recommendation for the prohibition of NDAs in certain factual situations (including where there had been sexual harassment abuse or misconduct), the previous Conservative Government (near the end of its term) decided no legislative action was required, other than very minor changes, which we have commented on previously.

NDAs under Labour

In July 2024, the Labour Government was elected. The WEC tried again to deal with misogyny in the music industry. It issued a further report which was published at the beginning of June this year. This second report again recommended legislation to prohibit NDAs in cases where harassment and discrimination were alleged.

So where are we now? Following campaigning from the ‘Can’t Buy My Silence UK’ campaign, headed by Zelda Perkins, changes to the use of NDAs by employers are proposed to be included in the upcoming Employment Rights Bill. The proposed amendments to the Bill were published on 7 July 2025 and agreed by the Lords at Report stage on 14 July. The proposed changes will place an outright “ban” on NDAs used by employers in circumstances where they are drafted to ‘silence’ employees who have been subjected to harassment, sexual harassment or discrimination in the workplace, by providing that such clauses will be expressly void or unenforceable.

What to do now

Whilst it is not yet clear whether the proposals will be enacted in their current form and if so, when, employers are recommended to check now that the confidentiality wording in their handbooks, policies, employment contracts and settlement agreements is compliant with any new provisions that are introduced under the Employment Rights Bill, as claimants are already aware of the proposed changes which will have a significant impact on contracts, settlements and the negotiation of harassment and discrimination claims.

Try our free, interactive tool, CheckYourNDA, to help you check the terms of any non-disclosure or confidentiality agreement to ensure they are appropriate, enforceable and in line with best practice.

The tool provides you with a traffic-light report, giving you feedback on areas of potential concern about your NDA provisions, with explanations and suggestions for improvement. You can access the tool here.

In July 2025, the UK Government launched a full review of the parental leave and pay system, with the stated aims of creating a system that better reflects modern working families and supports participation in the labour market. This follows the proposals in the Employment Rights Bill 2025 that paternity and unpaid parental leave will be day one rights from April 2026.

The review covers all core entitlements: maternity, paternity, adoption, shared parental leave, unpaid parental leave, and also kinship care (where a child is raised by relatives or close family friends – not something that presently has statutory rights or protections), and is in response to long-standing concerns that the current system:

• is inflexible: Fathers are eligible for just two weeks of paternity leave, and shared parental leave (SPL) is underused (less than 5% of fathers use SPL) due to complexity and administrative barriers;

• is poorly understood: With multiple overlapping entitlements—maternity, paternity, SPL, adoption, unpaid leave, neonatal care—both employers and employees often struggle to understand their obligations and rights;
   
• causes financial strain: Statutory pay is just £187.18/week or 90% of earnings (whichever is lower), making leave unaffordable for many. This hits fathers and low-income families especially hard, discouraging uptake;
   
• disproportionately disadvantages fathers: The structure encourages extended leave for mothers and minimal leave for fathers, reinforcing the gender pay gap and impacting female career progression;
   
• excludes the self-employed: Self-employed parents receive little to no support, leaving a significant workforce segment behind.

The review is still in the evidence gathering stage, but it is expected to recommend reforms that extend the right to paternity leave, simplify the shared parental leave scheme and improve the level of statutory pay (amongst others). The Government has made a call for evidence which is open until 26 August 2025 and employers can engage directly via the GOV.UK portal. The reforms recommended by the review are expected to be published in January 2027.

FCA Consultation on Tackling Non-Financial Misconduct

In July 2025, the Financial Conduct Authority (FCA) published Policy Statement PS25/18 alongside a new consultation to guide firms in applying conduct rules to non-financial misconduct (NFM). These rules—already in place for banks—will extend to approximately 37,000 non-bank regulated firms from 1 September 2026. The FCA is seeking views until 10 September 2025, with final Handbook guidance expected by year-end to support firms in navigating the framework.

Key points to note:

• Broader Definition of Harassment: the definition of harassment is more aligned with the Equality Act 2010 but goes further in that any act of bullying or harassment, irrespective of whether it relates to a protected characteristic, can constitute a breach of the conduct rules. This means behaviour not deemed unlawful under the Equality Act 2010 may still breach regulatory standards;
   
• Not Retrospective: While the new conduct rules will not apply retrospectively, there is a grey area around how historic conduct—if raised after the rules come into force—will be assessed. Firms and individuals need transitional guidance to understand how such cases will be handled under the new regime;
   
• Relevance to Fitness and Propriety Confirmed: The FCA has confirmed that serious, substantiated non-financial misconduct is relevant to fitness and propriety assessments. This codifies what has been a growing expectation in the sector and raises the stakes for individuals whose past behaviour may now be reassessed through a regulatory lens;
   
• Private Life Boundaries Clarified: Personal conduct (e.g. behaviour during commutes or family interactions while working remotely) is generally out of scope. However, if it raises concerns about integrity or risk of future misconduct, it may affect fitness and propriety—particularly for Senior Managers, who face heightened accountability;
   
• Social Media Use: Posts using firm systems or accounts are likely in scope. Personal content may also be relevant where it indicates a risk to regulatory integrity or ethical standards. The guidance says individuals may still make personal posts expressing their beliefs even where such beliefs may be offensive to others; but Firms will need to be mindful to balance the rights to freedom of expression, with the protections against harassment under the Equality Act and those against discrimination on the grounds of belief;
   
• No ‘Moral Soundness’ Standard: The FCA has moved away from subjective notions like ‘moral soundness’ when considering private conduct, and instead focuses on whether conduct—inside or outside work—raises concerns about integrity, judgement, or the risk of future misconduct;
   
• Regulatory References and Reporting: Where serious NFM is substantiated, it must be reported to the FCA and included in regulatory references. This is intended to stop one ‘bad apple’ from moving on and infecting the culture of their next firm, but this could have lasting and arguably disproportionate consequences if a firm takes a cautious approach in borderline cases.

The FCA’s consultation on the draft guidance remains open until 10 September 2025 with any guidance to be published by 31 December 2025. It is hoped that the final framework achieves a balanced approach—empowering firms to take decisive action where warranted, while also safeguarding fairness and consistency in the treatment of individuals, especially in cases that fall outside of the clear-cut definitions of ‘serious’ or ‘not serious’ misconduct. Once any guidance has been published, firms will have 8 months to 1 September 2026, to incorporate it into internal policies, training and reporting protocols.

2025 FTSE Women Leaders Review

In its 15^th year, the 2025 FTSE Women Leaders Review – Achieving Gender Balance, outlines further progress in gender representation in British boards and leadership teams of the FTSE 350 and the UK’s 50 largest private companies. Since the review started in 2011, there has been a ‘seismic shift’ in the gender balance of British boards from 9.5% to 43%.  2025/26 will be the final year of this review and pressure remains to achieve in these top 400 businesses the voluntary target of 40% female representation in British boards and leadership teams. 

In the last three years in which the review has extended beyond the FTSE companies to include the top 50 largest private companies, it can be seen that these private businesses are keeping pace with the FTSE 100 and currently reporting 35% of Exec Com roles are held by women. 

The data-led report underlines that British businesses acknowledge that a strong diverse workforce is fundamental for business success; the Chair of Lloyds Banking Group states that where leadership reflects the society it serves, it equips businesses to understand their customers drive innovation and deliver long-term sustainable growth. Lloyds Banking Group reports what works for them: a clear strategy, leadership accountability, and unwavering commitment to reviewing processes to eliminate any potential bias.

The key themes from the 2025 review include:

• boards across the FTSE 350 indices are essentially gender balanced;
   
• executive teams continue to make progress in the proportion of women since 2016, although without a concerted push it looks as though parity may take a little longer than 2025;
   
• limited progress is being made on CEOs, but the trend on Finance Director appointments has improved this year; critically businesses must ensure they are also developing P&L leaders to deepen the CEO pipeline;
   
• British business is making progress on Chairs, but the Four Key Roles continue to be dominated by Senior Independent Directors. The review will continue to monitor over time if this develops into a rich Chair succession pipeline.