Settlement Agreements, Exits and Redundancy

Managing your exit

Whether you’re leaving, being made redundant or being asked to sign a settlement agreement, exits can often be a stressful time. We’re here to help, both during the process, if you want some advice, or in providing outplacement support to help you after you leave. Our outplacement programmes provide a really positive experience, help you take stock, evalutate things, and then make an effective transition into your next role. The following advice applies even if you’re not leaving under a settlement agreement, and remember if you have any questions, give us a call.

What is a settlement agreement?

A settlement agreement (previously known as a compromise agreement) is an agreement between you and your employer covering your exit terms from your organisation and is legally binding once signed by both parties. An employer will offer it in a number of circumstances, primarily to avoid future litigation but also where the current contract doesn’t protect them sufficiently; following a breakdown between the employer and employee; or most commonly where a redundancy situation has arisen.

What a Settlement Agreement Includes

Your notice period and whether you will work it or not

Your final salary payment details

Any other payments such as payments to do with bonuses, unused holiday etc.

Help the company will pay for to help you get back into work, called outplacement

Any terms to do with non compete clauses

References to accompany your departure and any agreed announcement

A outplacement interview taking place

What must they provide?

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.

View Employment Lawyers

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. You should also take comfort in knowing your employment lawyer is used to negotiating settlement agreements and will do so on your behalf which is helpful particularly as, no matter what the reason for exit, you’ll still want to keep on good terms with your employer.

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 exit, bonuses etc.

There will be many aspects to your settlement agreement negotiation but some points to remember:

  • Your first £30,000 will usually be tax free
  • 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 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
  • Work out what you want out of the agreement first and be prepared to compromise on some small points to get what you want
  • 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
Joining Personal Career Management

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, networking etc. And if you haven’t been in the job market for some time, they’ll make sure your self marketing materials are up to date
  • You’ll have resources available to you such as information on companies, 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

Outplacement Services

How Personal Career Management can help

We can discuss with you at an early stage the best options for you regarding your exit (excluding legal advice), which outplacement programme will best suit your requirements and  how to negotiate it into your agreement (if it’s not in already). We can often save clients hundreds if not thousands.

Simply call us on 0345 686 0745 0r fill in the form








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