NHS Employers have issued updated guidance on the use of settlement agreements (SAs) and particularly confidentiality clauses within those agreements. Here we summarise the key points:
Payments
The guidance emphasises that all payments must comply with:
- Annex 4.13 of Managing Public Money (May 2023)
- Public Sector Exit Payments Guidance on Special Severance Payments (May 2021)
- NHS TDA’s Guidance for NHS Trusts on processes for making severance payments (June 2014)
Using settlement agreements appropriately
The guidance sets out that SAs should not be used as a substitute for addressing poor performance or disciplinary matters through internal processes, particularly in relation to any matter that might otherwise arise out of, or may compromise the quality and safety of patient services, or the care or wellbeing of workers.
Employers may be subject to regulatory action (for example, a CQC Well Led Review) if they are found to have used settlement agreements inappropriately.
Confidentiality / Freedom to speak up
- The NHS Standard Contract was amended in 2019 to clarify employer duties and worker rights to speak up or make protected disclosures under the Public Interest Disclosure Act 1998. This includes a requirement for all NHS providers to include an express carve-out clause which makes it clear in any contract or agreement that a worker cannot waive their rights to speak up about or disclose any issue which would be a protected disclosure under current law.
- The employer and their representatives should pro-actively consider, in every case, whether confidentiality clauses are required. If confidentiality clauses are needed, they should be appropriately tailored to the specific facts of the case and/or the individual involved and should not go further than necessary.
- Mutually Agreed Resignation Scheme (MARS) – NHS Employers' view is that it is not appropriate to include confidentiality provisions in MARS agreements – the process should be open and transparent.
- Carve outs from disclosure / confidentiality of agreement clauses – all settlement agreements need to include express carve-out clauses which make it clear that the employee cannot waive their rights to speak up or disclose any issue which would be a protected disclosure. The guidance sets out a suggested clause.
Board members
- From September 2023, NHS England's Fit and Proper Person Test Framework for board members (FPPT) has applied to NHS organisations' engagement of board members. There is a requirement that relevant SAs and any discontinued investigations should be included in the board member reference template for leavers and be considered as part of a board member’s initial and annual fitness assessments.
- The guidance sets out a clause which should be included in any SA with a board member.
What does this mean for employers?
Whilst this new publication is guidance rather than a legal requirement much of it is sensible advice to protect both parties. Employers should carefully consider the guidance when entering into a settlement agreement and any templates employers currently hold should be revised and updated accordingly. We can of course advise further when needed in relation to individual settlement agreements.
