When can I leave employment if I sign a settlement agreement?

This depends on the terms of your settlement. You will be told when your employment will come to an end. Sometimes this date has passed but it is often a future date. You will be paid until this date but this should be clearly set out in the settlement agreement. The date is often called your ‘Termination Date’ meaning the date your employment terminates.

Where the leaving date is in the future the agreement should confirm whether you are required to work or whether you will be on paid leave until then (often called garden leave). Again, the leaving date can be a point of negotiation with other amendments to the settlement agreement. It is however important to remember that when you are not at work but still being paid you cannot usually work elsewhere in this period. It is likely that this would be a breach of the terms of the agreement and that if your employer discovers this could refuse to pay you under the agreement.

It is usual purely for convenience for the leaving date to be at the end of the payroll period although you may not be required to work up until that date. This makes the payroll periods neater i.e. if you are paid monthly then your last day of employment will be the end of a month. This is not always the case though.

If you are on garden leave until your employment ends under the terms of the settlement agreement then you are sometimes required to take any outstanding holiday. The leave date can be a point of resignation but often if you have any of the £30,000 tax free allowance remaining for the ex-gratia payment, it would be better to negotiate on this rather than pushing the leave date back as this is taxable pay.

More FAQs on Settlement Agreements