Trusts ‘risk breaching rules’ over confidentiality clauses

Academy leaders face potential delays and complications following a recent change in regulations regarding the use of confidentiality clauses in severance agreements with staff.

As per the updated statutory guidance, trusts are now required to obtain approval from the Department for Education (DfE) before including confidentiality clauses in settlement agreements with departing employees. This change was quietly introduced last week and could significantly impact how academies manage severance payments.

Polly O’Malley, a legal expert from the law firm Browne Jacobson, emphasized the importance for academy leaders to remain informed about these changes to avoid inadvertently violating academy regulations when finalizing severance packages.

Changes to Academy Regulations

The revised academy trust handbook stipulates that severance payments must be “in the trust’s interests” and justified according to a legal assessment of the likelihood of successfully defending a case at an employment tribunal. Furthermore, such payments should not be perceived as rewards for failure, particularly in instances of gross misconduct or unsatisfactory performance. O’Malley noted that confidentiality clauses are typically included in these agreements.

These clauses generally require that the parties involved do not disclose the existence of the agreement or the circumstances surrounding the termination of the employee’s contract.

Previously, the handbook merely advised that confidentiality clauses associated with severance payments should not inhibit an individual’s right to make disclosures in the public interest. However, the latest version expands on this, stating that such clauses are now categorized as “novel, contentious or repercussive” and cannot be utilized without prior DfE approval.

Implications of New Provisions

O’Malley warned that trusts issuing confidentiality clauses without DfE consent risk breaching the newly established provisions, which are effective immediately. “We foresee challenges in adapting to the new guidelines in the coming days and weeks,” she stated.

James Barron, a senior associate at Stone King, pointed out that the new provisions do not distinguish between clauses initiated by the employer and those requested by the employee. He expressed concern that a one-size-fits-all approach could lead to complications both in the short term and potentially alter the academy sector’s handling of settlement agreements in the future.

Seeking Government Clarification

Under existing regulations outlined in the burgundy book, teachers’ contracts are bound to specific termination dates, such as the last day of a school term, and require a minimum notice period of two months. O’Malley anticipates a surge in trusts seeking DfE consent this week, as many aim to finalize severance agreements before the year-end. This rush could result in delays, as any failure to secure government approval would mean employees are entitled to compensation until Easter, which could have significant financial implications.

Both Stone King and Browne Jacobson are awaiting further clarification from government officials regarding these recent changes to the rules.