A recent update to the Academy trust handbook 2025 on the use of confidentiality clauses associated with staff severance payments.
Trusts will already be aware of the need to seek approval for special severance payments. The new handbook now requires approval when confidentiality clauses are used as part of a severance payment agreement, e.g. a settlement agreement.
Confidentiality clauses now require approval
For the purposes of a settlement agreement with a worker or employee, the handbook states a confidentiality clause is novel, contentious or repercussive.
This means they must not be used unless DfE approval is granted.
The handbook further claries that confidentialty clauses must not:
- prevent an individual making a public interest disclosure under the Public Interest Disclosure Act 1998.
- be used to prevent DfE from obtaining sufficient information from trusts to fully assess such payments under its regulatory role.
What does this mean for academy school trusts?
Regardless of value, approval will be required. The consequential increase in requests for approval may result in delays.
Trusts should review and update any precedent wording used in settlement agreements, MARs agreements, voluntary redundancy schemes, or Acas COT3 settlements.
Updated Academy trust severance payments form
The new form contains the following section asking questions as to whether an express clause has been included to the effect that no provision in the agreement purports to prevent whistleblowing disclosures. It also asks for confirmation that the confidentiality clauses leave the transaction open to adequat public scrutiny, including the National Audit Office and Public Accounts Committee:
DfE approval of severance payments
Approval will still be required, even if a confidentiality clause is not used, as summarised below.
Department for Eduction (‘DfE’) approval must be sought for any severance payments (above contractual and statutory entitlements) valued at £50,000 or more. below that level, trusts have delegated authority but must exercise that power in accordance with DfE requirements contained in the handbook.
Payments must be in the trust’s interests, be justified based on a legal assessment, and not be a reward for failure. Offers and payments above this threshold require DfE advance approval.
Regardless of value, DfE approval is also required for staff where the total exit pakage is £100,00 or above, or the employee earns £174,000 or above, or the payments in novel, contentious or repercussive.
DfE updated guidance on severance payments notes “Such payments, specifically non-contractual elements, are always under scrutiny”.
References and further reading:
Sections 3.5 of HM Treasury guidance on public sector exit payments
Section 5.13 – Academy-trust-handbook.
Our Guide on NDA law in the UK