GTE Settlement Agreements
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A settlement agreement marks the end of only one job. Whatever the reason for leaving, your next priority should be getting a new job. A Settlement Agreement should offer all the things you need to see you on your way.

This guide unpacks everything you need to know about getting a job after a settlement agreement. From financial compensation and employer references, to restrictive covenants and confidentiality clauses.

Working your notice period after signing a settlement agreement

Your employer must give you notice to end your contract of employment. You may be required to work your notice, be placed on ‘garden leave’ or be paid in lieu of notice.

Working your notice
If you are required to work your notice, you must perform your duties professionally and you can’t start a new job until it’s ended but it can be possible to renegotiate an earlier exit down the line. You can use this time to look for new work.

Garden leave
Garden leave means you don’t carry out your tasks but are treated as being still employed with  a soft requirement to complete a handover and keep in touch.

You can’t start a new job during the garden leave period unless otherwise agreed as with working your notice, but you can start looking.

Payment in lieu of notice (PILON)
With a PILON, your employment ends immediately, and you’re free to start a new job and if you get one, you get to keep all the pay.

Settlement Agreement & References

Employers are not legally required to provide a reference, but settlement agreements normally include a clause providing one will be vital when it comes to that new job.

Settlement Agreements provide for 2 types:

  • Standard reference: Larger employers tend to offer these. They confirm your job title and dates of employment.
  • Agreed reference: Some settlement agreements include an agreed reference with more details about your work and qualities.

What if no reference is provided? 
If your employer did not agree to provide a reference, you can:

  • Ask a former manager or colleague for a personal reference.
  • Highlight achievements and responsibilities in your CV and LinkedIn recommendations.
  • Use performance reviews, work portfolios, or client testimonials as evidence of your skills.

Restrictive covenants in settlement agreements

Restrictive covenants are clauses in your contract of employment or maybe the Settlement Agreements which limit what you can do after leaving. They can restrict your job search and career progression, so it is crucial to review them carefully. Common post-employment restrictions include:

Non-disparagement clauses

These should prevent both parties from making negative statements about the other. This means you cannot criticise your former employer and it cannot speak negatively about you – including to future employers.

If your Settlement Agreement includes this clause, avoid discussing workplace disputes in interviews or online. This restriction does not prevent an employee from making legally required disclosures, such as reporting concerns to a regulatory authority.

Non-compete clauses

These can (rarely) prevent you from working for a competitor or starting a similar business within a specific time frame or geographical area. You may be restricted from applying for roles within your industry or with competing businesses for several months or even years.

Normally, they don’t stop you joining a competitor, but they do prevent you from supplying the same services to existing clients of your old employer.

Non-solicitation clauses

These prevent you from actively targeting former clients, customers, colleagues, or suppliers, to bring them to your new employer but they should not stop you from working in the same industry and they don’t stop former clients getting in touch with you, for example when you update your Social Media profile.

Confidentiality clauses

Confidentiality clauses require both parties to keep the terms of the Agreement private including the financial settlement, reasons for departure, and any sensitive business information as well as the events leading to the Agreement.

But they cannot prevent reporting legal failures or speaking to your immediate family about the financial payment received – as long as they don’t share this information with anyone else.

What happens if you break a restrictive covenant?

If you break a restrictive covenant, your former employer could take legal action against you , including:

  • Seeking an injunction to prevent you from working for a competitor or contacting former clients.
  • Filing a claim for financial damages if they believe they have suffered a loss due to the breach.
  • Taking action against your new employer if they encouraged or benefited from the breach.

The limits of restrictive covenants

These clauses must be reasonable and proportionate. If a restrictive covenant unfairly hampers your ability to work, it may not hold up in court.

What makes a restrictive covenant enforceable?

For a restrictive covenant to be legally binding, it must:

  • Be reasonable in scope: The restriction must only protect legitimate business interests, such as client relationships, trade secrets, or key commercial information
  • Be limited in duration: Courts often reject restrictive covenants that last too long. For example, a 12-month non-compete clause may be enforceable in senior roles, but a 5 year restriction is likely to be challenged.
  • Be geographically proportionate: If a clause bans you from working anywhere in the UK or globally, it will likely be unenforceable unless justified by business needs.
  • Reflect the employee’s seniority and role: More stringent restrictions may be justifiable for directors, senior executives, or employees with access to highly sensitive information, but not for lower-level employees.

Challenging a restrictive covenant after signing a settlement agreement

Your solicitor will assess any restrictive covenants and advise you of their reasonableness before you sign your settlement agreement. But what can you do if the contract is already signed and a restrictive covenant is preventing you from securing a new role?

  • Seek legal advice: Consider whether the restriction is justified, proportionate, and necessary. If not, your legal adviser can assess its enforceability and may be able to negotiate modifications or challenge it in court.
  • Discuss with your new employer: Some companies will negotiate with your former employer or offer legal support to challenge restrictions.
  • Negotiate a waiver: Your former employer may agree to waive or reduce the restrictions, particularly if you were made redundant or your departure was amicable.

Here at GTE Settlement Agreement Solicitors, we can assess any restrictive covenants and advise you of their reasonableness before you sign your settlement agreement. If appropriate we can negotiate amendments or waiver of these clauses.

Benefits of a financial cushion under a Settlement Agreement

A settlement payout might include statutory redundancy pay, a tax-free ex-gratia payment, notice pay, bonus and commission payments, and payment for untaken holidays. Depending on your circumstances, this could provide financial stability, giving you time to plan your next move.

Rather than rushing into the first job, you might want to use the time you now have with some money in your pocket to:

  • Upskill or retrain: If you’ve been considering a career change or wish to move into a higher-paying or more fulfilling role, this could be the perfect time to invest in your skills.
  • Take the time to explore different career paths: You might consider moving into consulting, academia, or a fintech startup – even if that means accepting a pay drop.
  • Take on a freelance role in an unrelated industry: Freelancing can be a great short-term solution to keep your income stable while giving you flexibility to pursue other opportunities.
  • Start a new business: If you’ve always wanted to be your own boss, your settlement payment could provide the financial cushion needed to launch your own business.

While your settlement payout gives you time to explore new opportunities, you must ensure that any new role or business venture does not violate the restrictive covenants in your agreement.

What to say in interviews about your settlement agreement

After a settlement agreement is signed, it can be difficult explaining why you left your last job. Redundancy or restructuring is easy to explain but what about where you don’t get on with your boss? Here are some tips on how to handle things professionally.

  • Keep it positive and professional: Focus on what you bring to the new employer. If asked, frame your departure positively while remaining truthful.
  • Focus on your skills and contributions:  If necessary, redirect the conversation to your strengths and what you bring to the role.
  • Avoid negative comments about your previous employer: Even if you left due to a dispute, avoid badmouthing your former employer. Prospective employers may see this as a red flag.
  • Don’t go into details: Most employers won’t ask directly about a settlement agreement, and you don’t need to disclose specifics if they do…something along the lines of there was a lot going on and I saw a chance to leave on amicable terms. 

Moving forward with confidence after a settlement agreement 

Getting a job after a settlement is much less daunting because the agreement closes things down neatly. Leaving you with a clear head and time to make a positive career move.

If you have been given a Settlement Agreement, and want to prioritise getting a new job, contact GTE Settlement Agreement Solicitors today.

We offer same-day review and sign-off and we’ll ensure your agreement is fair, legally sound, and finalised without delay – at no cost to you. Call our specialist team today on 020 7247 7190.