Director & Executive Severance
Protect your business from the risks of senior-level exits through effective director and executive severance negotiations.
We take a skilled and commercial approach to senior exits.
Director & executive severance
Senior level exits can present complex legal risks for employers.
In addition to the rights that apply to all employees, senior executives typically benefit from further legal protection where they also hold status as a director or shareholder.
Failure to follow the correct procedure or to meet contractual obligations when handling a senior exit can expose the organisation to risks including claims for wrongful or constructive dismissal, discrimination and breach of contract, as well as damage to reputation.
Careful handling is critical to achieve an amicable exit or a favourable outcome where the exit is contentious.
Director & executive severance advice
The complexity and sensitivity that typically surrounds a senior level exit demands specialist advice to supplement any existing internal guidance on handling employee exits.
We support clients from the outset, considering legal risk at every stage of the exit process. We advise a strategic approach to executive terminations including:
- Reviewing employment documents and contracts regularly to ensure they are suitable for exit scenarios such as garden leave provisions or restrictive covenants.
- Guidance prior to any discussions or dialogue with an exiting executive including appropriate use of protected conversations.
- Coaching on how to approach discussions with the exiting employee in what can become challenging and emotionally charged exchanges.
- Setting the right level of offer, allowing for negotiation and taking account of other benefits which can form part of the settlement such as retaining their mobile phone number, covering legal costs and agreeing wording for external and internal communications and references relating to the exit.
We start by considering the underlying reasons for termination, as this will influence the options for lawful termination of an executive’s contract. At executive level, grounds can range from disagreements over company strategy to allegations or complaints of serious misconduct, differences in personality at board level or capability and performance issues.
Contentious exits in particular can present further challenges where the exiting employee holds leverage within the negotiation, for example where they hold director status and are required to formally resign their position.
We can help
DavidsonMorris’ employment law team provides expert advice on all aspects of executive severance.
We understand the risks and will help you to manage the exit process with skill and care, whether you are on amicable or contentious terms with the exiting employee.
We provide guidance to ensure you follow the correct legal procedures and manage the impact of an executive departure on your business.
We can also advise on how best to raise the matter with the exiting individual, to minimise the risk of a constructive dismissal claim through appropriate use of privilege and protected conversations.
We can help with:
- Post-termination restrictions, restrictive covenants, non-solicitation, non-poaching and non-enticement provisions
- Notice and garden leave
- Drafting and negotiating settlement agreements to record terms of the exit
- Advice on contractual and statutory pay and leave accrual
- Implications for the individual’s benefits and incentives package, pensions scheme and share options and bonuses
- Severance payment negotiations
- Boardroom dispute resolution
- Contractual disputes
- Defence of employment claims and Tribunal representation