What should be included in a settlement agreement for senior executives?

A settlement agreement, or severance agreement, as they are sometimes known, is a legally binding contract which is usually used to bring an employment relationship to an end. It sets out in writing the agreed way the employer and employee will part ways.

In most cases, the employee will waive the right to bring a claim in a tribunal or court in return for the employer agreeing to pay them a sum of money and often providing a reference.

For a settlement agreement to be legally binding, the employee must take legal advice and in most cases the employer will agree to pay a contribution to cover most or all of the legal costs.

The importance of early legal advice

If you have been offered a settlement agreement, or would like to initiate one with your employer, taking advice early in the process will allow you to make the most of your negotiating power to achieve the best possible outcome. A specialist employment solicitor will take time to understand your situation and advise you on ways to maximise your settlement sum and ensure that the terms of the settlement agreement protect your future career.

Settlement agreement terms for senior executives

Senior management exits are often more complex than lower-level employee exits, and yet employers often use the same template documents. These standard templates are often not fit for purpose, and we regularly amend the terms of settlement agreement contracts to protect our client’s position. Here are some examples of the terms we regularly re-negotiate in our client’s favour:

• Termination date and garden leave
• Payments in lieu of notice to include car allowance, pension contributions and payment in lieu of other benefits
• Settlement payments
• Holiday pay
• Release or partial release from, or variation to, post termination restrictions including non-compete and non-dealing clauses and intellectual property clauses
• Retention or realisation of shares or options including determination of ‘leaver status’
• Entitlement to bonuses including future bonuses
• Obtaining an agreed reference which employers cannot deviate from
• Management of internal and external announcements and messaging
• Retention of items of company property

Negotiating a settlement agreement for you

Solicitors with specialist employment law experience and knowledge, like Harrowells, will be best placed to ensure you maximise the payment and terms secured through a settlement agreement.

We have experience in advising and guiding employees through a managed exit, supporting our clients through the process right from the initial proposal through to securing the deal and ensuring prompt payment of the settlement monies. We regularly secure six-figure settlements for our clients and have expertise in acting for senior employees who may be subject to clauses such as garden leave and restrictive covenants.

Some solicitors will seek to charge you a percentage of any increase renegotiated for you, but Harrowells will only charge for the work we do. In most cases we will be able to negotiate an increase in your employer’s contribution to your legal fees, meaning that your employer will normally cover most or all of your legal fees. 

For advice concerning settlement agreements, please contact Ruth Rogers on 01904 698621 or Ruth.Rogers@Harrowells.co.uk.