There is a particular question that often arises when an individual has been offered a settlement agreement. This is whether getting a job after a settlement agreement will be adversely affected by entering into the agreement.

The answer is it depends on the wording of the settlement agreement and this is one of the reasons why an individual must seek legal advice on the terms within the agreement before signing it.

What is a Reference Clause?

A reference clause is a part of a settlement agreement that explains how your former employer will give you a job reference after you leave the company.

This section usually includes specific wording that tells your employer exactly what to say if a future employer asks for a reference about you. This agreed-upon wording is usually found in a separate section at the end of the settlement agreement.

The clause ensures that if someone requests a reference, your employer will provide one using the exact language stated in the agreement. It also often mentions that the employer will not give a verbal reference, or if they do, it will match the written reference.

Key Considerations for a Reference Clause

  • Ensure the wording is neutral and factually correct.
  • Verify that it doesn’t mention the reason for termination unless agreed upon.
  • Confirm that the employer commits to responding promptly to reference requests.
  • Include a clause that limits references to written form only, if necessary.
  • Make sure you are comfortable with the agreed-upon language, as it can impact future job opportunities.

It’s important to ensure you understand and agree with what your former employer will say about you because this can impact your chances of getting a new job after the settlement.

You should also include a deadline for how quickly your former employer should respond to reference requests. Seven days would be typical in these circumstances.

Why the Reason for Termination Matters

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. In some cases, the reference does not mention the reason for leaving the job.

Legal Advice on Negotiating Termination Reasons

Getting legal advice from a settlement agreement solicitor who specialises in settlement agreements is a good idea. This ensures the reason for leaving your job and the wording of your reference in the agreement are fair. They can help you decide if you should negotiate these details with your employer.

If you left your previous job because of a dispute, it’s usually best not to mention that to future employers. Instead, you might choose to use a neutral reason for leaving, such as “resignation.” This doesn’t suggest any issues and won’t harm your chances of getting a new job.

Strategies for Negotiating Your Settlement Agreement

You can negotiate the details of your reference and reason for leaving in a settlement agreement, but typically only factual changes are possible. It’s important to stick to what’s accurate when discussing these details with your employer. For example, you can’t claim “redundancy” if that’s not true.

However, if the settlement agreement says your job ended by “mutual consent,” which might imply a dispute, you might want to ask to change it to “resignation” if that’s also accurate. This could make it easier for you to find a new job.

Whether you can negotiate a different reason for termination or adjust the wording of a reference largely depends on how strong your negotiation is.

Get in Touch With Your Legal Advisor

If you are concerned about getting a job after a settlement agreement, you should make this clear to your legal adviser. Here at Settlement Agreements, we can negotiate with your employer about the terms set out in your agreement itself before you choose to sign it. Get in touch to start your negotiations.

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