It starts quietly. A comment brushed off. A hand that lingers. A message that crosses a line.
For many employees, these moments aren’t isolated, they’re part of a pattern of sexual harassment that slowly erodes confidence and safety at work. And while the topic may feel like one the UK has already “dealt with,” the evidence tells a different story.
The House of Commons Women and Equalities Committee recently reopened its inquiry into sexual harassment in the workplace, warning that progress has been “painfully slow.”
Its findings echo a stark reality: around 40% of women and 18% of men report experiencing some form of unwanted sexual behaviour at work.
Behind those numbers are real people – employees who often stay silent out of fear, embarrassment, or mistrust in how their complaint will be handled.
When the situation finally comes to light, employers are faced with a difficult decision: how to resolve it in a way that’s fair, lawful, and humane. That’s where settlement agreements often enter the picture.
These legally binding contracts – usually offering compensation in exchange for waiving legal claims – can bring closure. But when confidentiality clauses are misused, they risk replacing healing with silence.
Understanding Settlement Agreements and Confidentiality
Under the Equality Act 2010, sexual harassment is defined as unwanted behaviour of a sexual nature that violates a person’s dignity or creates an environment that is intimidating, hostile, degrading, humiliating or offensive.
Despite clear legal duties, many victims still face barriers to justice – and it’s here that employers must tread with particular care.
Employers have a legal duty to prevent such harassment and to take every complaint seriously.
When matters escalate, a settlement agreement is sometimes seen as the most practical route to resolution.
These agreements are legally binding contracts between an employer and an employee, typically involving financial compensation in return for the employee agreeing not to pursue tribunal claims against the employer.
However, within these agreements often lie confidentiality clauses – provisions that can restrict what an employee is allowed to say about the agreement itself, the circumstances that led to it, or even the amount paid.
Used correctly, confidentiality clauses protect both parties’ privacy and help close a painful chapter. Used irresponsibly, they can conceal wrongdoing and silence victims.
That’s why the Employment Rights Bill proposes to draw a clear legal line: banning the use of non-disclosure agreements (NDAs) that seek to stop victims of harassment or discrimination from speaking out.
As former Deputy Prime Minister Angela Rayner put it, “It is time we stamped this practice out. No one should be forced to suffer in silence.”
If passed, the legislation will render any clause that attempts to prevent an employee from speaking about an allegation of harassment or discrimination null and void.
It will give victims the legal freedom to share their experiences, and employers the opportunity to publicly demonstrate accountability and support, rather than secrecy.
However, employers who attempt to use settlement agreements to “buy silence” may face reputational and legal consequences.
The question is, what does all this mean for employees who want to pursue a settlement agreement and for employers wanting to use them responsibly?
Practical Considerations
The changes proposed under the Employment Rights Bill remind employers that settlement agreements don’t exist in a vacuum. When sexual harassment is involved, the decision to use one must be made with deep care, transparency, and genuine concern for the people affected.
Below are key considerations for employers – and lessons for employees – navigating these sensitive situations.
1. Assessing whether settlement is appropriate
A settlement agreement can’t undo harm. It can only address what’s already happened. Before moving toward settlement, employers should ask: Is this really the right route?
In some cases, particularly where the behaviour has been serious or repeated, disciplinary action against the perpetrator may be more appropriate.
Too often, financial settlement is used as a shortcut to make an issue “go away” rather than confronting the root cause.
It’s crucial to remember that sexual harassment isn’t just a legal breach; it’s a human experience that can cause long-term emotional and psychological harm.
No sum of money can fully restore a person’s sense of safety or dignity, but a fair, transparent process can begin to rebuild trust.
2. Clarity and fairness in confidentiality clauses
If confidentiality clauses are included, clarity is essential. They should be narrow, precise, and transparent, clearly stating what they do not prevent.
For example, an agreement should make clear that it does not stop an employee from:
- Reporting concerns to the police or regulatory bodies
- Making a protected disclosure (whistleblowing)
- Cooperating with any ongoing investigation
The Legal Services Board’s 2024 call for evidence found widespread concern over the misuse of NDAs in cases involving harassment and discrimination, with some individuals believing they had been “gagged” from seeking support.
Responsible employers must therefore make sure employees understand their rights, not just sign them away.
3. Getting compensation right
A fair settlement recognises both the legal and emotional realities of harassment.
Offering too little risks rejection or tribunal claims. Offering too much without addressing the underlying issue can signal that money alone will buy silence.
The right balance values the employee’s dignity and loss, while also reflecting the organisation’s accountability.
Beyond financial terms, employers can include non-monetary measures that signal genuine care – such as a neutral reference, outplacement support, or commitments to review workplace culture.
Research from the London School of Economics notes that sexual harassment costs organisations far more than any individual payout – through lost productivity, staff turnover, absenteeism and reputational harm. Real progress comes from culture change, not chequebooks.
4. Building a culture that prevents repeat harm
Settlement agreements should be a response, not a replacement for prevention.
Employers who rely on settlements to resolve every issue risk sending the message that problems can be quietly paid off rather than addressed.
Preventing harassment means taking visible action:
- Delivering regular, evidence-based training
- Creating safe and confidential reporting lines
- Ensuring senior leaders model zero tolerance and empathy
- Reviewing patterns and feedback after each case
When employees see that accountability is taken seriously, they’re far more likely to speak up early, long before harm escalates. As the Equality and Human Rights Commission has long warned, “a culture of silence is a culture of risk.
Creating Safer Workplaces Through Accountability and Care
Settlement agreements can help bring closure after workplace disputes, but when the issue involves sexual harassment, they must be handled with integrity, empathy, and long-term vision.
Confidentiality should never become a curtain that hides misconduct or silences those who’ve already had their voices taken from them.
Employers who respond with transparency, who listen, take action, and prioritise dignity over damage limitation, do more than protect themselves legally.
They build trust. They signal to every employee that this is a workplace where people are believed, supported, and safe. In truth, silence has never been golden, accountability is.
Get the Support You Need from Magara Law
If your organisation is facing a sensitive harassment matter, or you want to make sure your internal processes meet both legal and ethical standards, Magara Law can help.
Our specialist team advises employers across the UK on how to handle sexual harassment claims lawfully and compassionately – from initial complaints through to fair settlements and preventative workplace culture reviews.
Through our employment law retainer, you’ll have unlimited access to expert, on-demand advice when you need it most, helping you protect both your people and your reputation.
Don’t wait until silence becomes a liability. Schedule a consultation today and take the first step towards a safer, more accountable workplace.