One question that often arises when an individual has been offered a settlement agreement is whether entering into the agreement will adversely affect the individual’s ability to find another job.
The answer is it depends on the wording of the settlement agreement and this is one of the reasons why it is essential that an individual seeks legal advice on the terms within the agreement before signing it.
Settlement agreements may include the wording for references to be provided for the employee to their prospective employer and/or agents of that employee by the employer upon request.
This wording is typically included within a schedule to the second agreement at the back of the document. The clause referring to the reference wording often explains that upon request for a reference, the employer will provide a reference in the form of wording set out in the schedule of the document.
The clause would also typically explain that a verbal reference will not be given or alternatively that any verbal reference will be provided in line with the written reference contained in the schedule of the document.
It is important to ensure that the individual coming what their employer will be saying about them to their prospective employers because this will affect whether they can get a job after a settlement agreement.
The individual should consider putting in a deadline for the employer to respond to requests for a reference so he/she has certainty that the request will be responded to in a timely manner. Seven days would be typical in these circumstances.
The reason for termination which is detailed within an agreement may also affect getting a job after a settlement agreement. Typical reasons for termination include “resignation”, “mutual consent” or “redundancy”. The reason for termination may be set out within the wording of a reference or in some cases, the reference is silent regarding the reason for termination.
An individual should seek legal advice from a settlement agreement solicitor on the reason given in the agreement for termination and the wording of the reference within the agreement to determine whether or not it is appropriate to negotiate this with their employer.
If an employee has departed their previous employer due to a dispute it is not in the employee’s best interests to disclose that fact to their prospective employer. For this reason, they may elect to use a neutral reason for termination for example “resignation” which does not have any connotations of dispute and would not affect the individual’s ability to secure future employment.
Room for negotiation
Although it may be possible to negotiate both the terms of a reference and the reason given for termination set out within an agreement it would normally only be appropriate to insert a factual amendment to any suggestions made by the employer. For this reason, it is unlikely to be possible to insert for example a reason of “redundancy” where that is factually incorrect.
However, if the settlement agreement describes a termination of employment as for the reason of “mutual consent” this has connotations of dispute and therefore it may be more appropriate for an individual to consider a reason for termination described as “resignation” which would also likely be factually correct.
It largely depends on the strength of negotiation as to whether or not an individual is able to negotiate a different reason for the termination or to negotiate on the wording of a reference to be provided to a prospective employer.
If an individual is concerned about getting a job after a settlement agreement, they should make this clear to their legal adviser. Their legal adviser should then factor that into their thinking when negotiating with the employer about the terms set out in their agreement itself before their client chooses to sign it.
With over 10 years of experience in employment law matters, David Philip Harris specialises in providing legal advice on settlement agreements to both employees and employers throughout the UK. David’s opinion and advice are frequently sought after as he contributes often to BBC Radio Berkshire and the People Management Magazine. David Is a long-standing member of The Employment Lawyers Association and The Law Society.