Many people’s employment will end as a result of a mutually agreed settlement with their employer. This ensures that both parties can end their employment relationship formally –  usually with the payment of a termination package recorded in a settlement agreement – but, without recourse to an employment tribunal. A person’s exit from their role may be initiated by the employer, or the individual, for a wide variety of reasons. However, reaching a negotiated settlement is usually far preferable to pursuing litigation, for both parties. We set out some tips for those who find themselves negotiating an exit.

Hold your horses…

If your employer has started discussions with you about a possible exit then it is quite likely you will be shocked and upset. But don’t burn any bridges just yet! Try to stay calm and dignified. The key is to consider what is being proposed rationally, focusing on what is in your own best interests. Take time to think about what is being proposed and don’t be afraid to say you need time to consider your position. Ideally your employer would agree to you taking paid leave while negotiations continue.

Take your time and don’t feel pressured into agreeing anything “on the spot”.

It is possible that your employer will present you with a draft settlement agreement during discussions. This can be helpful if it sets out fully the termination package which is being offered. However, never feel pressurised to agreeing to anything (either verbally or in writing). You should take any documentation away and read it at your leisure so that you can consider it fully and carefully.

If your employer sets a deadline for response, remember that this is not binding and if you reasonably need more time, for example to take professional advice or talk to your family then say so.

Understand your legal rights but don’t make premature threats about litigation

By understanding your legal rights you can have some confidence about the strength of your negotiating position. If your position is not a strong one then it is best to know this early on. You can only make a decision about whether the termination package being offered is a fair one when you know what your potential, legally enforceable claims against your employer could be. However, you should not make empty threats about “seeing your employer in Court” as this could be counter productive and jeopardise future negotiations.

Get professional advice

Investing in professional legal advice early on could be a wise move and save you money further down the line. A lawyer will be able to advise you dispassionately on the strength of your position and is quite likely to be able to secure a better deal from your employer in the long run. If necessary a lawyer can negotiate with your employer on your behalf which could remove some of the stress of the situation. If your employer knows you are being professionally advised they may be more willing to reconsider the termination package they are offering and conclude matters more quickly.

Dig out the paperwork

It is only when you understand the rights conferred by your employment contract and associated documentation that you can assess if the termination package being offered is fair. So dig out your paperwork and read your employment contract to understand what you are entitled to.

For example, how long is your notice period? If your employer proposes paying you in lieu does your contract specify that you will be paid basic pay only or should the value of your other terms and conditions also be compensated?

Terms and conditions may not just be set out in your employment contract, they may also be set out in the staff handbook and other documents so don’t overlook any relevant ancillary documents.

Insist on seeing the figures 

If your employer has not provided you with a draft settlement agreement or a written breakdown of the proposed termination package then insist on receiving this. If you are negotiating your exit face-to-face then always take a note of meetings and make sure any proposals made orally are confirmed in writing afterwards to avoid misunderstandings and to enable you to take advice on these later if necessary.

Pensions and share options are valuable – don’t put them at risk

Some of the most valuable benefits we can receive as employees are pensions and share options. How you exit your role can affect your entitlement. For example, if you are regarded as a “good leaver” you may still be able to exercise share options (and so make a profit) and some pension schemes are more generous if you are made redundant after a certain age or leave due to ill health. It is therefore important to agree with your employer why your employment is ending.

Are there any “cost neutral” things you can ask for?

Even if your employer is firm about paying you only a certain amount, are there any cost neutral things you can ask to be included in your settlement agreement? For example, the transfer of your mobile phone number to your own account, drafting your reference in a certain way or continuing to receive insurance benefits such as private medical for a set amount of time where the premium has already been paid – and the employer would therefore not receive a refund if it withdrew such benefits from you?

Control the communications

Does it matter to you how your exit is communicated to colleagues and customers? If so, try and agree any public communication with your employer and, have this set out in your settlement agreement.

Finally, remember, if you don’t ask, you don’t get! 

A negotiation is a two way process so, don’t accept the first offer, there is no harm in asking for more – just keep the negotiations business like and professional! Settlement agreements were previously known as compromise agreements  and it is worth bearing in mind that some compromise will probably be required and you won’t get everything you want. However, this needs to be balanced against the uncertainty, expense and stress of resorting to litigation. A negotiated exit can be a good thing for an employee as it brings closure and allows people to move on to a new  chapter in their life, perhaps allowing them to do things they had not thought about before.



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Updates: For employers: Dismissing staff | Settlement agreements | For employees: Exit package |

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