Settlement agreement when the employee has a new job to go to

An employee who has found another job wants to leave sooner than their notice allows, wants the employer's agreement to the start date, and wants to know the covenants will not stop them taking the role; the employer wants the handover done, the covenants observed, the new employer told what it needs to know, and the departure clean. A settlement agreement does all of that for a package that is often small, because there is no loss of employment to compensate, and in return the employer gets the waiver and the undertakings it would not otherwise have. The agreement is drafted for the employer, with a note on how to have the conversation, for a fixed £795 in three working days; where the employer wants the negotiation with the employee's adviser handled as well, the fee is £995.

Who this is for

Employers in England and Wales whose employee has resigned to join another business, including a competitor, and who want the departure on agreed terms rather than on the employee's.

What matters when the employee has a new job

Why an employee with a new job still wants an agreement

An employee who has resigned to join another employer wants a release from part of their notice so that they can start on the new employer's date, certainty that the covenants will not be enforced against the role they are taking (or a clear statement of what they may and may not do), an agreed reference and announcement, and sometimes a payment for the bonus or commission they would have earned; the employer wants the handover completed, the covenants observed and policed, no solicitation of colleagues or clients, the return of everything, and the waiver of claims the employee might otherwise raise on the way out; the agreement trades those, and the package is often the release from notice rather than money.

Notice, the release from it and the start date

The agreement should state the employee's contractual notice, the termination date the parties agree (earlier than the notice would give, or the full notice on garden leave), whether the employer releases the employee from the balance of the notice without pay or pays in lieu, and the start date with the new employer that the termination date allows; where the employer waives notice at the employee's request, no post-employment notice pay arises under section 402B of the Income Tax (Earnings and Pensions) Act 2003 because the employee has not been paid for the unworked period, which the accountants should confirm; the agreement should also deal with holiday accrued to the termination date under regulation 14 of the Working Time Regulations 1998.

The covenants, garden leave and the new employer

Where the employee is joining a competitor, the employer decides whether to enforce the covenants (non-solicitation and non-dealing with clients, non-poaching of staff, a non-compete if there is one) or to release them in part in return for undertakings, and the agreement should say precisely what the employee may do in the new role and what they may not, for how long, and with which clients, with garden leave used to delay the start where the employer needs time to secure relationships; a release that is too generous loses the clients and one that is too strict is challenged, and the note helps the employer decide where the line is; the employee's undertaking to show the agreement to the new employer, and the employer's right to send it, protect both.

The package when there is no loss to compensate

Where the employee leaves for a job they want, there is no loss of employment and the compensation payment, if any, is small: the employer may pay a modest sum inside the thirty thousand pound threshold that section 403 of the Income Tax (Earnings and Pensions) Act 2003 exempts for the waiver and the undertakings, may pay bonus or commission earned to the termination date as earnings, may release the employee from a training repayment or a notice requirement as the consideration, and contributes to the adviser's fees under section 413A because the agreement must still meet the conditions in section 203 of the Employment Rights Act 1996 and section 147 of the Equality Act 2010; the employee's adviser will not expect a large figure, and the agreement should not offer one.

The reference and what the new employer is told

The agreement attaches the reference the employer will give the new employer (factual, with the dates and title), agrees what the employer will say if the new employer asks about the covenants (the employer may send a copy of the restrictions), agrees the announcement to colleagues and clients, and sets the position on social media (the employee may announce the move after the termination date), with mutual non-derogatory terms within the limits the law sets (whistleblowing, which section 43J of the Employment Rights Act 1996 puts beyond any confidentiality term and the Employment Rights Act 2025 provisions on non-disclosure terms concerning harassment and discrimination, commenced on a timetable the regulations set); the reference is often the employee's main ask, and it costs the employer nothing to give the factual one.

The handover and the clean break

The agreement should set the handover (a stated list of matters, documents and relationships, completed by a stated date, with the employee's availability during garden leave for questions), the return of property, devices, data and credentials with a warranty that no copies are retained, the employee's confirmation that they have not solicited colleagues or clients before leaving and will not during the restricted period, the repayment of a stated sum on breach, and the waiver of claims so that the departure is final; an employee who leaves for a competitor on a handshake has left with the pipeline, and the agreement is where the employer secures what it is losing.

What it costs

Settlement agreement, £795. Drafted for your situation, with a note on how to have the conversation. Three working days.

Settlement agreement including reasonable negotiation with the employee's adviser, £995. The agreement in three working days. The negotiation then runs until the agreement is signed or it becomes clear it will not settle. Reasonable negotiation means what, in my experience, amounts to the standard back and forth on a settlement agreement. If the employee or their adviser is being unreasonable, for example by conducting themselves unprofessionally or requiring a substantial rewrite that needs material further legal advice to you, I will flag it and we will discuss how best to proceed, which may involve further fixed-fee work. That would be unusual.

Buying online forms the engagement on payment. The scope is what the settlement agreements for employers page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A bespoke settlement agreement drafted for the exit you are dealing with
• Proper waiver of the relevant statutory claims, so the agreement does what you are paying for
• Advice on the tax treatment, including the £30,000 exemption and what falls outside it
• Confidentiality, non-derogatory statements and an agreed reference
• Reaffirmation or replacement of restrictive covenants, which is often the real value
• A short note on how to open the conversation and keep it without prejudice or protected
• One round of amendments after the employee's adviser responds

What is not included

• Advising the employee, which their own adviser must do independently for the agreement to be valid
• Tribunal representation if the matter does not settle
• Payroll processing of the settlement sums
• Handling the settlement payment, since I do not hold client money

Questions I am often asked

Our employee has resigned to join a competitor and wants to leave early. Should we agree?

On terms: a termination date that suits both, garden leave where the employer needs time with the clients, the covenants stated precisely for the new role, a full handover, and the waiver. The agreement trades the early release for what the employer needs.

Do we have to pay the employee anything?

There is no loss to compensate, so the package is often the release from notice, bonus or commission earned to the date, and a modest sum for the waiver and undertakings, with the adviser's fees contributed to because the agreement must still meet the statutory conditions.

Can we tell the new employer about the covenants?

The agreement provides for it: the employee undertakes to show the restrictions to the new employer and the employer may send a copy. A new employer that knows the restrictions is less likely to induce a breach.

Related guidance and services

• Settlement agreements for employers, £795, the service this page describes
• Employment contracts and handbooks, £595
• Shareholders agreement, £995
• Settlement agreement with restrictive covenants
• Employment contract with garden leave

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.