Theresa May has attacked powerful people for “unethically” using non-disclosure agreements to cover-up sexual harassment allegations.

The government announced on Wednesday it would launch a consultation on imposing greater rules on the confidentiality clauses, which are known as NDAs.

It came after The Daily Telegraph revealed it has been blocked from naming a “leading businessman” accused of sexual harassment and racial abuse of staff.

Court of Appeal judges ruled complaints had been “compromised by settlement agreements” under which “substantial payments” were made to the employees who made the allegations.

Speaking during Prime Minister’s questions on Wednesday, May said any employer that allowed harassment of women to go unpunished was “sending a message about how welcome they are and about their value in the workplace”.

“Just as we won’t accept any behaviour that causes people to feel intimidated or humiliated in the workplace, there must be consequences for failing to comply with the law,” she told MPs.

“Non-disclosure agreements cannot stop people from whistle-blowing but it is clear some employers are using them unethically.”

May’s official spokesman later told reporters that non-disclosure arrangements “should never be used to cover up criminal activity”.

The government began work earlier this year on measures to improve the regulation around NDAs, to ensure that they are used in an ethical manner and for their intended purpose, said the spokesman.

Further details will be revealed “imminently” when a consultation process is launched.

May was responding to a question from Labour MP Jess Phillips who said NDAs were being used to “silence women”.

“It seems our laws allow rich and powerful men to pretty much do whatever they want as long as they can pay to keep it quiet,” she said.

Earlier Philips suggested she would name the anonymous businessman at the centre of the sexual harassment allegations if she knew his identity. She wrote on Twitter that she could use the ancient right of parliamentary privilege – which allows MPs to speak freely in Parliament without being sued for libel – to reveal the identity of the accused.