Non-Disparagement Clauses in the UK: Legal Force and Enforcement

Non-disparagement clauses are increasingly common in UK employment contracts, settlement agreements, and commercial arrangements. They contractually prohibit parties from making negative statements about each other — but their enforceability and interaction with defamation law raises important questions.

What Is a Non-Disparagement Clause?

A non-disparagement clause is a contractual term that restricts one or both parties from making statements that could damage the other's reputation. Unlike defamation law — which only prohibits false statements — non-disparagement clauses can prevent even truthful negative statements.

Typical clauses appear in:

• Settlement agreements — mutual non-disparagement as a condition of settlement
• Employment contracts — restricting employees from criticising the employer during and after employment
• Shareholder agreements — preventing departing shareholders from damaging the company
• Commercial contracts — franchise, licensing, and distribution agreements

Enforceability Under English Law

Non-disparagement clauses are generally enforceable in England and Wales, subject to certain limitations:

• Clarity — the clause must clearly define what constitutes "disparagement." Vague wording risks being held unenforceable for uncertainty
• Reasonableness — in employment contracts, the clause must be a reasonable restraint of trade. Unlimited duration or scope may be struck down
• Public interest — clauses cannot prevent protected disclosures (whistleblowing) under the Employment Rights Act 1996
• Regulatory obligations — clauses cannot prevent someone from reporting to regulators (FCA, SRA, GMC, etc.)

Non-Disparagement vs Defamation Claims

The key difference is that breach of a non-disparagement clause is a contract claim, while defamation is a tort claim. This distinction matters:

• Truth is no defence to breach of contract — if the clause prohibits negative statements, a true but negative statement still breaches the clause
• Damages are assessed differently — contract damages are based on expectation loss, not injury to reputation
• Limitation periods differ — 6 years for contract vs 1 year for defamation
• Both claims can run in parallel — a false disparaging statement can be both a breach of contract and defamation

Drafting Effective Clauses

Well-drafted non-disparagement clauses should:

1. Define "disparagement" precisely — distinguish from factual statements and legitimate business communications
2. Be mutual — one-sided clauses face greater enforceability challenges
3. Include carve-outs for legal proceedings, regulatory reports, and whistleblowing
4. Specify remedies — including injunctive relief and liquidated damages
5. Set a reasonable time period — perpetual clauses in employment contexts risk being struck down

Settlement Agreements: Special Considerations

Non-disparagement clauses in settlement agreements receive closer scrutiny. Since 2023, the government has signalled concern about clauses being used to silence victims of harassment or discrimination. Best practice now includes:

• Ensuring the employee has received independent legal advice on the clause
• Not restricting the employee's ability to report criminal conduct
• Allowing the employee to discuss their experience with medical professionals and close family
• Including agreed factual references or statements about the departure