Whether you’re simply leaving, being made redundant or being asked to sign a settlement agreement, job exits can often be a stressful time; whether it’s your choice or not.
We’re here to help and give some valuable advice and provide expert outplacement support to help you after you leave. Our outplacement programmes provide a really positive experience, helping you take stock, evaluate things, make positive change and then more effectively transition into a new role.
What is a settlement agreement?
A settlement agreement is an agreement between you and your employer covering your exit terms from your organisation. It covers:
- Terms and Conditions: The agreement outlines the terms and conditions upon which the parties agree to settle their differences. It specifies the specific issues being resolved, such as financial compensation, actions to be taken, or other remedies.
- Avoidance of Litigation: By entering into a settlement agreement, the parties choose to avoid going to court or pursuing further legal action. This helps save time, costs, and the uncertainty associated with litigation.
- Legally Binding: Once signed by the parties involved, a settlement agreement becomes a legally binding contract. They are obligated to fulfil the terms and conditions, and failure to comply can result in legal consequences.
What must an employer provide?
In a settlement agreement, an employer must provide several key elements. It must provide consideration, typically in the form of monetary compensation or other benefits, to the employee as part of the settlement agreement.
The employer must ensure that the settlement agreement is clear, understandable, and does not contain any unfair or ambiguous terms. It is important for the employer to communicate the agreement effectively to the employee and provide an opportunity for the employee to seek legal advice before signing.
You will have legal rights which an employment lawyer can advise you on. The company will usually provide the funding for this as part of the agreement. For help to find an employment lawyer who helps with settlement agreements see our partners section to see companies we recommend.
How to negotiate your settlement agreement
The first thing to bear in mind is that this is a negotiation and what you are offered at the outset, as generous as it may be, is unlikely to be the best deal you can get. Recognise that negotiations often involve give and take. Be willing to consider reasonable compromises and explore potential solutions that can meet both parties’ interests. You should determine your goals and priorities for the settlement.
It is useful before starting to negotiate your settlement agreement, to provide your employment lawyer with a copy of your contract of employment and any correspondence to do with your job exit.
Remember that each negotiation is unique, and the approach may vary based on the specific circumstances. It is important to be well-prepared, maintain a collaborative mindset, and strive for a mutually beneficial resolution.
There will be many aspects to your settlement agreement negotiation but some points to remember:
- Your first £30,000 will usually be tax free
- Work out what you want out of the agreement first and be prepared to compromise on some small points to get what you want
- Ask for outplacement support to be included. Think how long it will take you to get back into work – will the payments cover this period? A senior manager can often take 6 months to get back into work. Outplacement support can get you back into work quicker and into a job more aligned to your talents. Your organisation may want you to us their own provider but you should be able to choose your own. some are limited to a few months of support for example. Personal Career Management can advise you on what type of support may be best for you and on programme costs to include.
- Your employment lawyer should advise on how the payments can be made in the most tax efficient way. Outplacement is tax free as part of a settlement agreement and won’t come off your £30,000 allowance
- Be careful about restrictions placed on you to do with future work. Restrictions whilst protecting your employer, may impede your ability to work for a competitor; work elsewhere in your industry; or even set up your own business
Why include outplacement?
There are lots of reasons why getting outplacement services provided for you as part of your settlement agreement is a good idea:
- You’ll be able to review your future options with someone independently to make better, more informed decisions about your next move
- You’ll have professional help with putting your job search campaign together including your CV, and LinkedIn profile to get you to interview. And if you haven’t been in the job market for some time, they’ll make sure your you make the most of your experience, feel positive and ready for interview
- You’ll have resources available to you such as information on companies, head-hunters, job alerts and market intelligence essential for a modern job search campaign
- Outplacement services are tax free as part of a settlement agreement so including it now rather than after a few months trying it alone can save you thousands
