On 22 October 2025 the Department for Education (“DfE”) updated the Academy Trust Handbook (“the Handbook”) . The amendment was unexpected this early into the new academic year particularly as the updated 2025 Handbook only came into force several weeks earlier, on 1 September 2025. The key change relates to the use of confidentiality clauses associated with staff severance payments. The amendment provides that such clauses are novel, contentious or repercussive, and so must not be used unless the trust has obtained prior DfE approval. Failure to comply with this requirement will put the trust in breach of the Handbook.
Our Schools HR team consider what this means for SATs and MATs.
What has changed regarding the use of confidentiality clauses?
Confidentiality clauses (sometimes referred to as Non-Disclosure Agreements (“NDAs”)) are universally accepted as standard provisions in a settlement agreement or COT3, and one of the main reasons why the parties may wish to enter into such arrangements. The amendment to the Handbook is therefore significant.
The 2024 Handbook provided:
“Use of confidentiality clauses
5.14 Academy trusts must ensure confidentiality clauses associated with staff severance payments do not prevent an individual’s right to make disclosures in the public interest (whistleblowing) under the Public Interest Disclosure Act 1998.”
However, the amended 2025 Handbook provides:
“Use of confidentiality clauses
5.13. Confidentiality clauses associated with staff severance payments:
- must not prevent an individual’s right to make disclosures in the public interest (whistleblowing) under the Public Interest Disclosure Act 1998
- are novel, contentious or repercussive, and so must not be used unless the trust has obtained prior DfE approval
- must not be used to prevent DfE from obtaining sufficient information from trusts to fully assess such payments under its regulatory role”
What is a staff severance payment?
The Handbook defines these payment as follows:
“Special staff severance payments
5.7. Special staff severance payments are paid to employees outside statutory or contractual requirements when leaving public employment. They are different to ex gratia payments.”
Is a staff severance payment the same as a compensation payment?
According to the Handbook, no.
The Handbook provides that:
“Compensation payments
5.14. Compensation payments provide redress for loss or injury, for example personal injuries, traffic accidents or damage to property. If an academy trust is considering a compensation payment, it must base its decision on a careful appraisal, including legal advice where relevant, and ensure value for money.
5.15. Academy trusts have delegated authority to approve individual compensation payments provided any non-statutory or non-contractual element is under £50,000. Where the trust is considering a non-statutory or non-contractual payment of £50,000 or more, DfE’s prior approval must be obtained.”
Notably, at this time, the provisions relating to the use of confidentiality clauses/NDAs do not appear to apply to compensation payments.
We do not recommend trying to use this to circumvent the requirements relating to confidentiality clauses in the Handbook by suggesting that a payment is a compensation payment when in reality it’s a special staff severance payment. Doing so may put the trust in further breach of the Handbook. Moreover, seeking to mislead the regulator could have serious consequences for the organisation and any individual engaging in such conduct. However, it is acknowledged that in some cases a payment may genuinely be a compensation payment. A careful appraisal should be undertaken and specialist legal advice sought before proceeding on that basis.
What does this mean for SATs and MATs?
For organisations who are subject to the requirements of the Handbook, the changes mean that from 22 October 2025 where:
- they propose to enter into a settlement agreement (which includes a COT3 negotiated through Acas); and
- the settlement includes a staff severance payment; and
- the settlement agreement (or COT3) includes a confidentiality clause/NDA
they must obtain DfE approval before proceeding with the agreement.
The change has unsurprisingly unsettled the sector including unions. The timing of the change was of itself problematic given that it occurred a matter of days before the cut off for teacher notice periods of 31 October 2025 to leave on 31 December 2025, and where parties had already agreed terms and were about to enter into a settlement agreement. Further uncertainty has been caused by the DfE giving no indication as to how long getting approval may take, so that trusts can plan ahead, or the criteria that will be applied when such approval is sought. Further guidance from the DfE will inevitably be required.
There are various potential issues with the change including but not limited to:
- making settlement agreements less attractive to both employer and employee since both may want confidentiality clauses for different reasons;
- entering into agreements where there is no confidentiality clause and which allows the staff member to disclose the terms and existence of the agreement, potentially setting a precedent and exposing the trust to nuisance claims or “have a go” litigants who may not otherwise have raised a dispute;
- delaying the resolution of workplace disputes or jeopardising agreed settlements if there are delays to obtaining DfE approval;
- increased number of disputes that may be raised through Acas Early Conciliation;
- increased number of employment tribunal (“ET”) claims at a time when the tribunal system is already overburdened;
- increased costs to trusts in having to conclude internal processes and/or defend ET claims.
Does this mean we can’t use settlement agreements/COT3s anymore?
No, this change is not a ban on the use of settlement agreements (or COT3s) by trusts.
However, it does mean that where an organisation who is subject to the requirements of the Handbook wishes to enter into such an agreement (and provided that all other requirements of the Handbook have been complied with including the sections relating to Special Payments) must bear in mind the following:
Where the agreement:
- does not include a special staff severance payment and is limited only to contractual/statutory entitlements and does include a confidentiality clause (NDA) = DfE approval not required and the trust can proceed.
- does include a special staff severance payment but does not include a confidentiality clause (NDA) = DfE approval not required and the trust can proceed.
- does include a special staff severance payment and does include a confidentiality clause (NDA) = DfE approval required and the trust cannot proceed before approval is obtained.
What should trusts do now?
Trusts are advised to now:
- read the updated Handbook and understand the changes;
- review any template settlement agreements and COT3 agreements to ensure that they are compliant with the updated Handbook;
- update trustees, governors, Headteachers, HR managers, leaders and other relevant staff involved in negotiating such agreement about the changes to ensure compliance going forward;
- undertake a careful appraisal of the circumstances where it is proposed that a settlement agreement (or COT3) is entered into and, in particular, where it is proposed not to use a confidentiality clause/NDA; and
- take specialist legal advice to manage risk and make informed decisions.
We anticipate that the DfE may issue further guidance in the coming weeks given the sector response to the change. In the meantime, we recommend trusts seek legal advice when negotiating settlement agreements to include how best to protect their interests and comply with the Handbook requirements. Taking advice will also ensure that if the DfE queries the approach taken to a settlement agreement or confidentiality clause the trust can point to advice taken at the time to evidence compliance with the Handbook. As always, our team of specialist education employment lawyers are available to support you with implementing these changes and any other regulatory or compliance requirements.
This briefing is not intended to be an exhaustive statement of the law and should not be relied on as legal advice to be applied to any particular set of circumstances. Instead, it is intended to act as a brief introductory view of some of the legal considerations relevant to the subject in question.
For further advice on the Academy Trust Handbook or any other legal issue in schools, please contact Winckworth Sherwood’s dedicated Schools HR helpdesk on SchoolsHR@wslaw.co.uk or 0345 026 8690.