Important changes to the Academy Trust Handbook regarding confidentiality clauses

Background

On 22 October 2025, the Department for Education (DfE) updated the Academy Trust Handbook (the Handbook). This update places new restrictions on academies on the use of confidentiality clauses associated with staff severance payments. This includes the use of confidentiality clauses in settlement agreements including COT3s agreed during litigation.

Prior to the change, academies could use confidentiality clauses provided they did not prevent an individual from whistleblowing by making disclosures of wrongdoing in the public interest under the Public Interest Disclosure Act 1998. This meant that academies could require departing staff to maintain confidentiality regarding the background to and existence of a settlement agreement and the reasons for their departure. 

The updated Handbook maintains the restriction on confidentiality clauses which prevents whistleblowing but also now states that confidentiality clauses associated with staff severance payments:

• Are novel, contentious or repercussive, and so must not be used unless prior DfE approval has been obtained
• Must not be used to prevent DfE from obtaining sufficient information to fully assess staff severance payments.

The DfE’s primary concern in introducing this wording is to ensure transparency in public sector spending and to prevent the misuse of confidentiality clauses. This shift is a response to public concerns over the lack of transparency in severance agreements, particularly when public funds are used.

The updated wording is however extremely broad and on the face of it captures all confidentiality clauses including, potentially, non-derogatory statement provisions.

There is also significant ambiguity in the new wording. The phrase "confidentiality clauses" is not defined and the phrase "associated with" is not clear. The wording also suggests that confidentiality clauses can still be used without DfE approval where only contractual and/or statutory payments are being made under settlement agreements but this would run contrary to the spirit of the policy.

We understand that further guidance will be issued by the DfE in die course which will hopefully clarify some of these points.

In the meantime academies need to exercise real caution:

• Confidentiality clauses used with staff severance payments are novel contentious and repercussive and trusts should seek approval from the DfE where such clauses are to be used, regardless of the value of the severance payments.
• Where approval is necessary, this will need to be obtained before the trust proceeds with any severance agreement.
• Clauses that restrict disclosure or references to the existence of severance agreements require approval.

The DfE's current guidelines for providing approval are around 4 – 5 weeks. If the staff severance payment is over £100k then Treasury approval will be required and this will delay things by at least a further 2-3 weeks.

Any application for DfE approval need to include a very clear rationale for why it is necessary to include confidentiality clauses.

Standard clauses reminding parties of their obligations under data protection legislation are acceptable. The restrictions also do not impact clauses in employment contracts relating to confidential information.

Approval is not be required if the severance agreement does not include confidentiality clauses unless the staff severance payment is £50k or more. 

Impact on academies and use of settlement agreements

The requirement for DfE approval introduces several challenges for academies. The first question for academies will be whether to include confidentiality clauses in severance agreements at all. It will be quicker and easier not to but this may leave academies exposed. Seeking approval will cause delay which may cause challenges, especially where time-sensitive decisions are involved.

The move towards greater transparency is likely to lead to more public scrutiny of severance packages and the terms under which staff leave academies. 

Academies that do not seek prior approval and continue to use confidentiality clauses could face consequences, including triggering intervention from the DfE and consequent reputational damage.

How VWV can assist

In light of these changes, we have reviewed and updated our template settlement agreements to ensure compliance with the latest guidance. We understand the complexities involved and we are here to guide academies through this new process, ensuring that all agreements are in line with the updated requirements.

Our team can assist in drafting settlement agreements, advising on the need for DfE approval, and helping academies navigate the approval process. We can also provide training and support on best practices for negotiating severance terms that align with the updated Handbook.

The changes also increase the importance of ensuring that employment contracts contain robust confidential information clauses.

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If you need help with settlement agreements or have questions regarding the changes to confidentiality clauses, please contact Nick Murrell.