Settlement agreement & executive severance FAQs

A settlement agreement is a legally binding contract between you and your employer that records the terms of your exit. In return for a payment or other consideration, you’ll agree not to pursue employment-related claims. 

You must receive independent legal advice for the agreement to be valid.

No. Redundancy is a reason for dismissal — a settlement agreement records the terms on which you agree not to pursue claims. 

Settlement agreements are often used in redundancy situations but not always.

Ideally as soon as the settlement is raised. Taking early advice from a trusted legal team maximises your leverage, protects your bonus or share entitlements and helps you to avoid common mistakes.

Key considerations include financial terms, benefits, bonuses, shares, restrictive covenants, references, reputation and future career plans. 

Every exit is an opportunity to secure better terms.

Typical terms include financial payments, notice arrangements, bonus treatment, the return of company property, confidentiality, references and post-termination restrictions. 

For senior staff, agreements may also cover shares, LTIPs, regulatory matters and directors’ duties.

A fair agreement reflects your contractual rights, the strength of any legal claims, market norms and your seniority. It should leave you in no worse a position than if the proper process had been followed — and ideally in a better one.

A good agreement protects your finances, future career and reputation. We assess the legal merits, identify leverage points and benchmark the offer against similar cases so that you can understand whether the deal is fair.

Most agreements can be improved — whether through increased compensation, extended benefits, fairer reference wording, reduced restrictions or better treatment of bonuses and shares. 

Effective negotiation almost always increases value.

Good negotiation is strategic, evidence‑based and commercially focused. We can assess your leverage, identify legal risks for the employer and secure the strongest possible package while protecting your reputation.

Straightforward cases may conclude within a few days, whereas more complex exits — especially those involving shares, bonuses or regulatory matters — can take longer. 

We work efficiently to protect your position without unnecessary delay.

The first £30,000 of a genuine ex‑gratia termination payment is typically tax‑free. Notice pay, bonuses and holiday pay are taxable. 

We can advise you on how to structure payments in a tax‑efficient way.

Once both parties sign the agreement and you’ve received independent legal advice confirming that you understand the terms, the agreement becomes legally binding.

Yes. Employers can usually withdraw an offer at any time before it’s signed. Likewise, you’re not obliged to accept an offer and can walk away or negotiate further.

You may have a contractual claim for payment plus interest. We can intervene quickly to secure payment and consider enforcement options if needed.

Most agreements require payment within seven to 28 days of signing or your termination date, though this can be negotiated.

Until signed, it’s simply an offer. After signature, the terms remain binding unless varied by agreement.

Yes. You can’t be forced to sign. If the offer is unfair, unlawful or commercially unattractive, we’ll negotiate improved terms or advise you on the alternative options.

This may constitute a breach of contract. Remedies can include damages, repayment of sums received or injunctive relief. We advise on both enforcement and defence.

Yes. ‘Without prejudice’ or protected conversations allow employees to request or negotiate an exit. 

We can advise you on the best approach to take.

Any employee can sign, provided that they obtain independent legal advice. Employers must use an authorised signatory.

Usually not. While the agreement must be signed by you, the employer and your legal adviser, the signatures don’t typically need to be witnessed — unless the agreement has been prepared as a Deed, in which case signatures will need to be witnessed.

You should consider challenging a settlement agreement where the financial offer is clearly out of step with your contractual rights, past practice or the strength of any legal claims you may hold (such as unfair dismissal, discrimination or whistleblowing). 

Directors and senior executives should also assess whether termination has implications for equity, bonus schemes or regulatory status. 

A robust challenge early on often leads to a significantly improved exit package.

Common mistakes include accepting restrictive covenants at face value, overlooking valuable equity or bonus rights, failing to protect reputation and references or signing before receiving legal advice. 

We can ensure that no commercial or legal opportunity is missed so that you can exit on the best possible terms.

Evidence that demonstrates unfairness, discrimination, breach of contract or procedural failings will strengthen your negotiating position. 

For executives, documents relating to bonus entitlement, vesting schedules, share plans, performance evaluations and internal communications around your exit are particularly valuable. 

Our role is to identify the most persuasive evidence and use it strategically to secure the best outcome for you.

Executive exits are complex. We can address termination payments, notice pay, bonuses, LTIPs, shares, regulatory matters, governance issues and reputational concerns. 

A bespoke negotiation strategy is essential to secure a commercially and personally protective outcome.

Yes. Employers typically agree to a factual reference but we frequently negotiate more detailed and supportive wording, including references tailored for regulated roles or board-level appointments.

Yes. We can negotiate agreed form wording for internal communications, external statements and regulatory notifications. These clauses are often as important as the financial terms.

Potentially, yes. While many incentive schemes are discretionary or subject to ‘good leaver’ conditions, these can often be negotiated. 

We regularly secure favourable treatment of LTIPs, STIPs and deferred bonus arrangements so that executives don’t lose out merely because the employer is seeking an exit.

This depends on the scheme rules, articles of association and your specific leaver status. Without negotiation, many employees default to ‘bad leaver’ treatment — losing unvested awards. 

A well-negotiated agreement can ensure vesting, accelerated vesting or the buy-back of shares at fair market value.

Yes. If the timing appears engineered to deprive you of significant rewards, you may have claims for breach of contract, breach of trust and confidence or discrimination. 

Employers will often re-evaluate their position when challenged robustly and vesting may be renegotiated as part of your exit.

Yes. A settlement is often the best opportunity to soften or remove post-termination restrictions, especially if they’re outdated, too wide or not relevant to your role. 

We frequently negotiate carve‑outs, reduced durations or complete removal.

Sometimes. Depending on commercial needs, it may be preferable for both parties for you to remain employed on garden leave rather than face long non‑competes or non‑solicitation clauses. This is a common discussion point for senior hires.

Yes. We regularly secure clauses to prevent negative announcements, ensure accurate internal messaging and require the employer to communicate your departure in a mutually agreed, positive way.

Absolutely. These clauses must be fair and workable. We often negotiate exceptions so that you can speak to family, advisors, regulators and prospective employers, as well as ensuring that your employer is bound to not disparage you.

It can. Firms that are subject to FCA, SRA, PRA or other regulatory requirements must give fair and accurate references. 

We can ensure that the agreement aligns with regulatory obligations while protecting your position and reducing unnecessary disclosure.

Settlement agreements involve additional considerations around conduct, investigations, reporting obligations and regulatory notifications. 

For senior managers and certified persons, we also review SMCR implications and potential impact on future authorisation.

Settlement agreements can resolve employment issues but can’t prevent genuine regulatory reporting obligations. 

We focus on ensuring that the process is fair, the employer’s conclusions are accurate and future disclosures don’t unfairly disadvantage you.