Settlement Agreement vs NDA: What’s the Difference?

Written by: Owen John, Employment Law Partner, Darwin Gray | Last updated: 24/10/2026 | Reviewed by: Owen John

Key takeaways

• A settlement agreement and an NDA are not the same thing, though they overlap.
• A settlement agreement settles an employment dispute and waives claims; an NDA is purely about keeping information confidential.
• Most settlement agreements contain a confidentiality clause, which does a similar job to an NDA.
• Confidentiality clauses are usually mutual and should carve out people you can still talk to.
• You can never be silenced from reporting a crime, whistleblowing, or cooperating with regulators, whatever the clause says.

Are a settlement agreement and an NDA the same?

No, though it’s an easy and common confusion. They do different jobs, and understanding the difference helps you see what you’re actually signing.

• A settlement agreement is a legally binding contract that resolves an employment situation. Its main purpose is that you waive your right to bring claims against your employer, usually in return for a payment and other agreed terms.
• An NDA (non-disclosure agreement) is a contract, or a clause, whose sole purpose is confidentiality: keeping certain information secret.

So they’re aimed at different things. The reason people conflate them is that most settlement agreements include a confidentiality clause, and that clause functions much like an NDA. In that sense, a settlement agreement often contains an NDA, but it’s much more than one.

Where the confusion comes from

In commercial life, NDAs are everywhere, businesses use them to protect trade secrets, pricing, and confidential plans when sharing information. In the employment world, you less often see a standalone “NDA” and more often see a confidentiality clause tucked inside a settlement agreement.

That clause typically says neither you nor your employer will disclose the terms of the settlement, or sometimes the circumstances of your departure. It’s doing NDA-type work, keeping things confidential, but it sits within the bigger settlement contract that’s also waiving your claims and dealing with payment, reference, and so on.

So when someone says “I’ve been asked to sign an NDA at work”, what they’ve usually been handed is a settlement agreement with a confidentiality clause in it. Knowing that helps you focus on the whole document, not just the confidentiality part.

How confidentiality clauses in settlements work

A well-drafted confidentiality clause in a settlement agreement should be balanced and fair. Things to look for:

• It should be mutual. It’s not just you who stays quiet, your employer should be bound too, so they can’t discuss why you left.
• It should carve out the people you need to tell. Your spouse or partner, your legal and financial advisers, HMRC, and anyone you’re legally required to inform. These exceptions are standard and we make sure they’re there.
• It shouldn’t stop protected disclosures. This is the crucial one, see below.

If a confidentiality clause is one-sided, or so broad that it stops you talking to your own family or advisers, that’s a red flag we’d push back on.

What an NDA or confidentiality clause can NEVER do

This matters, so it’s worth being clear. No confidentiality clause, NDA, or settlement agreement can lawfully stop you from:

• Reporting a crime to the police.
• Whistleblowing, making a protected disclosure about wrongdoing.
• Cooperating with a regulator or other proper authority.
• Reporting discrimination or harassment to the relevant bodies in the proper way.

Following high-profile concerns about NDAs being misused to silence people, the law and professional rules are clear that confidentiality clauses can’t gag you from these things. A clause that tries to is unenforceable to that extent, and a reputable solicitor won’t let you sign one that overreaches. If a clause feels like it’s trying to buy your silence about something serious, tell us, that changes the picture significantly, and often your leverage too.

What this means for you

For most people, the confidentiality clause in a settlement agreement is reasonable and even helpful, it keeps your departure private and stops your employer discussing it. The key is making sure it’s mutual, properly carved out, and not trying to silence anything it legally can’t. That’s exactly what we check. And because the confidentiality clause is only one part of the settlement, we look at the whole thing, payment, tax, reference, and restrictive covenants, so nothing gets missed.

Frequently asked questions

Is a settlement agreement the same as an NDA?

No. A settlement agreement is a binding contract that resolves an employment situation and waives your right to bring claims, usually in return for a payment. An NDA (non-disclosure agreement) is purely about keeping information confidential. They overlap because most settlement agreements contain a confidentiality clause that works like an NDA, but a settlement agreement does much more than an NDA. When people say they’ve been asked to sign an “NDA at work”, it’s usually a settlement agreement with a confidentiality clause.

Does a settlement agreement have a confidentiality clause?

Almost always, yes. Most settlement agreements include a confidentiality (or non-disclosure) clause saying neither side will discuss the terms, and sometimes the circumstances, of your departure. A good clause is mutual, so your employer is bound too, and carves out the people you can still talk to: your partner, your advisers, HMRC, and anyone you must inform legally. If the clause is one-sided or overly broad, that’s something to push back on.

Can a confidentiality clause stop me whistleblowing or reporting a crime?

No. This is a firm limit. No confidentiality clause, NDA, or settlement agreement can lawfully stop you reporting a crime to the police, making a protected disclosure (whistleblowing), cooperating with a regulator, or reporting discrimination or harassment in the proper way. Any clause that tries to is unenforceable to that extent, and a reputable solicitor won’t let you sign one that overreaches. If a clause seems to be buying your silence about something serious, get advice.

Should I be worried about signing an NDA or confidentiality clause?

Usually not, for most people the confidentiality clause in a settlement is reasonable and even works in your favour, keeping your exit private and stopping your employer discussing it. What matters is that it’s mutual, properly carved out so you can still speak to family and advisers, and doesn’t try to silence protected disclosures. Those are exactly the things we check. And since it’s only one part of the agreement, we review the whole document so nothing is missed.

Talk to us about your settlement agreement

If you’ve been asked to sign a settlement agreement or an “NDA” at work, we’ll check the confidentiality terms are fair and that the whole agreement protects you. We’re Darwin Gray, one of Wales’ leading employment law firms. You’ll deal directly with your solicitor, and as the only firm in Wales offering full Welsh language employment advice at every level, we can help in Welsh or English.

Get a free, no obligation chat with our employment team. Call 02920 829 100 or use our contact form.

Related information

Settlement agreements for employees

Without prejudice

Restrictive covenants

Getting a job after a settlement agreement

Disclaimer: This guide is general information, not legal advice, and employment law changes. For advice on your situation, please speak to a qualified employment solicitor.

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