Settlement Agreements

Settlement agreements (also known as compromise agreements, severance packages, leaving packages or exit agreements) are becoming more and more commonplace in the workplace.

At Harrowells, we offer fast turnaround on all types of settlement agreements and redundancy packages, and you’ll be looked after from start to finish by our experienced, friendly team. In most cases, your employer will contribute to your legal costs and we will be able to sign off the agreement at no cost to yourself.

What is a Settlement Agreement?

Settlement Agreements are used in a variety of different situations (e.g. where an employee is being made redundant or where there is a dispute between an employee and their employer). Employees who enter into settlement agreements usually agree to give up any claims that they may have against their employer in return for leaving their employment and receiving an agreed sum of money.

A Settlement Agreement is a legally binding contract and it is only valid if you receive your own independent legal advice. It is usually used to bring an employment relationship to an end and 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/or to provide a reference.

Employee Exit Negotiations

Whether you had received an offer of a severance package, or whether you are contemplating suggesting one to your employer, it is important to take advice early to understand how to make the most of your negotiating power in achieving the best possible deal. We can advise you on how to maximise your settlement sum and ensure that the terms of the settlement agreement protect you as far as possible.  In most cases, your employer will pay a significant contribution to cover most or all of your legal costs.

We are specialists in advising senior executives and directors when it comes to negotiating an exit from a company.

We have experience in advising and guiding senior-level 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.

Senior executive exits are usually less straightforward than lower-level employee exits, and yet often the same template documents are used by employers. These standard templates are often not fit for purpose and regularly need to be amended to protect your position. Common examples of terms which we regularly re-negotiate include:

• Termination date and garden leave
• Payments in lieu of notice
• 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

Unlike some firms, we won’t seek to charge you a percentage of any increase we renegotiate for you – we will just charge for the work we do for you, and 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 usually cover most or all of your legal fees. 

Knowledge, skill and experience

Whatever your circumstances, if you instruct one of our employment solicitors to handle your settlement agreement or exit negotiations then you can take comfort from knowing that your solicitor will use all of their knowledge, skill and experience to secure the best possible outcome for you, whilst ensuring that you fully understand all options available to you and that you can make an informed decision.  Our Employment Team has particular expertise in acting for high-level executives and senior employees who may be subject to clauses such as garden leave and restrictive covenants.