The Academy Trust Handbook and settlement agreements

On 22 October 2025, DfE updated the Academy Trust Handbook (Handbook), specifically in relation to when consent must be obtained for staff severance payments and confidentiality clauses associated with such payments.

While there have always been restrictions on academy trusts making staff severance payments, the Handbook updates now mean that the prior approval of DfE would be required where a staff severance payment is novel, contentious or repercussive. This includes where an exit package involves a confidentiality agreement.

A special staff severance payment is paid to an employee outside of statutory or contractual requirements when leaving public employment. However, the Handbook is not clear on whether the new requirements relate to special staff severance payments only or all staff severance payments generally.

Ordinarily, the board of directors of an academy trust would need to determine if a transaction is novel, contentious or repercussive. However, DfE’s updates now suggest that staff severance payments containing confidentiality clauses will be novel, contentious or repercussive by default.

DfE has argued that the changes reflect HM Treasury’s updated guidance on exit payments.

Muckle sought clarification on the position, and we have received initial confirmation that all confidentiality clauses associated with all staff severance payments will be novel, contentious or repercussive and therefore require the consent of DfE before the arrangement is entered into.

Academy trusts therefore need to exercise caution when entering into agreements relating to staff severance payments, these are often referred to as settlement agreements.

A settlement agreement containing any form of confidentiality clause will be considered novel, contentious or repercussive and therefore require DfE’s consent before it can be entered into.

The timescales to finalise settlement agreements are likely to be significantly increased due to this new requirement and we are unsure how DfE will approach such requests. Academy trusts should be aware of that and, as far as possible, plan accordingly.

Please contact Jill Donabie at [email protected] or 0191 211 7933 with any questions.