Termination and settlement agreements

Not every departure has to be a dismissal. Often both sides already know the relationship has run its course, and the real question is on what terms it ends: when, for how much, and with what said to colleagues and clients. An agreed exit can spare everyone months of friction. It can also backfire — when it is signed in a hurry, leaves a claim open, or costs the employee a benefit nobody mentioned at the table.

A termination or settlement agreement is a negotiated document, but the law limits what it can achieve. Whether it holds depends as much on how it was reached as on what it says:

• the rules on ending a contract by mutual consent, and on the conditions that make such an agreement valid;
• the rules on the employee’s free agreement — pressure, time to reflect, and when a signed document can still be undone;
• the rules on how an agreed exit affects the employee’s entitlement to unemployment benefits;
• the rules on the tax and social security treatment of a severance payment;
• the rules on waivers — which claims an employee may give up in a settlement, and which survive whatever is signed;
• the rules on the leaving date, garden leave, and the return of equipment, files and access rights;
• the rules on the reference, the announcement to colleagues and clients, and mutual non-disparagement;
• the rules on shares, options and other incentives held by a departing employee, and on good- and bad-leaver terms.

Our lawyers can support you with this.