Settlement Agreements – what’s your perspective?

By Peta Fry – Director of HR, Monahans

The Employer:

From an employers point of view settlement agreements may be thought of as a way out of a problem, when it feels too difficult to follow the standard procedures. However, sometimes where the organisation wants to go in a different direction or requires a different set of skills from some of its senior executives a settlement agreement can be a commercial alternative to redundancy.

You can:

  • Manage the financial exposure, you manage the negotiation and therefore remain in control of what you’re prepared to spend
  • Mitigate the risk of an Employment Tribunal claim as the employee is required to waive their legal rights
  • Manage the confidentiality of the decisions, which helps to maintain the organisations reputation in the marketplace and with current and future employees
  • Retain appropriate restrictive covenants to manage business exposure directly from the employee or their new employer
  • Move forward with the business strategy in a planned and timely manner, allowing the business to meet any deadlines and with less disruption than a redundancy programme may bring
  • Agree a package of support to assist the employee to move on and find their next appointment

The Employee:

In these circumstances, settlement agreement can also have benefits for the employee.

  • Brings a potentially difficult situation to an end with some control, as usually in these circumstances there is a degree of negotiation regarding the final package
  • It’s confidential, so other employers are not going to be made aware of the circumstances – this is all agreed
  • There’s a financial cushion, which allows you to take stock and decide on your future. Do you want to go in a different direction, something new you’ve always wanted to try? You’re in control, so time to step back and really decide “what motivates me”

Throughout the transition period it’s important that you retain control and can determine that the support you receive is right for you to achieve your goals.

As part of the package there may be support from an outplacement service, but if there isn’t you may want to consider finding someone for yourself. They can help with the shock of losing your job, help you identify what next and how you’re going to get there, preparing you for the job market including tapping in to the hidden job market and using social media effectively.

One opportunity that you have, is to make use of career assessments and when used in conjunction with professional support and advice can provide real understanding of your career needs and the possibilities based on who you actually are. It may help to broaden your horizons and discover all the alternatives that could work for you, and therefore  make a well-informed career decision.


IMPORTANT: The contents of this page are for guidance only and do not constitute legal advice. You should consult a solicitor without delay if you require legal advice on a particular employment matter.