TRW & Co · Employment, Pensions & Immigration
Senior Executive and Partner Exit Lawyers in London
Executive employment lawyers London boards, directors and partners instruct advise on service agreements, negotiated exits, bonuses and equity, restrictive covenants and regulatory obligations. With unfair dismissal compensation uncapped from 1 January 2027 and non-compete reform announced, the timing and terms of a senior departure matter more than ever.
Key pointFor dismissals with an effective date of termination on or after 1 January 2027, the cap on unfair dismissal compensation disappears, so long notice periods can carry an exit decided in 2026 into the uncapped regime.
At a glance
Current compensation cap
Until the reforms take effect, the unfair dismissal compensatory award is capped at the lower of 52 weeks' gross pay and £123,543.
Uncapped from 2027
From 1 January 2027 the qualifying period falls to six months and the compensatory award cap is removed, where termination takes effect on or after that date.
Six-month time limits
Since 1 October 2026, most Employment Tribunal claims must be presented within six months, extended by Acas early conciliation where it applies.
Tax on exit payments
Section 401 ITEPA 2003 allows the first £30,000 of genuine non-contractual termination payments to be received free of income tax.
Non-compete reform
On 9 October 2026 the government announced legislation to restrict non-compete clauses; detail had not been published by late October 2026.
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What senior executive employment law covers
Executive employment lawyers London boards and senior individuals instruct deal with the moments when a leadership relationship is set up, renegotiated or ended. That includes service agreements for directors and senior managers, bonus and equity arrangements, restrictive covenants, regulatory obligations in financial services, and, most often, exits: negotiated departures, contested dismissals, team moves and partner retirements or expulsions.
Executive matters differ from ordinary employment disputes in three ways. The money is larger and much of it sits outside salary, in bonuses, deferred awards, shares and options. The individual usually holds a statutory office, a regulatory role or a partnership interest as well as a job, each with its own rules. And reputations are at stake on both sides, so confidentiality, announcements and references are negotiated as carefully as the payment.
We act for both organisations and individuals. Executive employment lawyers London businesses rely on need to understand the employment, corporate, tax and regulatory rules together, because a mistake in one area, such as a payment for loss of office made without the required approval, can undo a carefully negotiated settlement in another.
The legal framework for senior exits
There is no separate statute for executives. Their rights come from the same sources as other employees, applied to more complex facts, together with company, partnership and regulatory law.
Contract and common law
The service agreement is the starting point. It sets notice periods, payment in lieu of notice (PILON) provisions, garden leave rights, bonus and incentive terms, and post-termination restrictions. Breach of contract claims, including wrongful dismissal for failure to give proper notice, are decided on contractual principles, and the duty of mutual trust and confidence applies to how both sides behave.
Statutory employment rights
Under the Employment Rights Act 1996, employees with sufficient service can claim unfair dismissal. At present that requires two years' service and the compensatory award is capped at the lower of 52 weeks' gross pay and £123,543, with a week's pay for the basic award capped at £751, under the Employment Rights (Increase of Limits) Order 2026. For senior people, that cap has historically limited the value of an unfair dismissal claim.
That changes on 1 January 2027. The Employment Rights Act 2025 reduces the qualifying period to six months and removes the cap on the compensatory award, for dismissals where the effective date of termination is on or after that date. Discrimination and whistleblowing claims were already uncapped and need no qualifying service. Since 1 October 2026, most tribunal claims must be brought within six months rather than three. Our Employment Rights Act 2025 timeline sets out each change.
Company and partnership law
Directors hold an office under the Companies Act 2006 as well as a job. A director can be removed by ordinary resolution of shareholders under section 168, but removal does not itself end the employment contract. Payments for loss of office to directors generally need shareholder approval under sections 215 to 222, subject to exceptions such as payments in good faith discharging an existing legal obligation. Quoted companies must also comply with their approved directors' remuneration policy; see our note on the directors' remuneration policy.
Partners and LLP members are not usually employees. Their exits are governed by the partnership or LLP agreement, the Partnership Act 1890 or the LLP default rules, and general equitable principles. In Clyde & Co LLP v Bates van Winkelhof [2014] UKSC 32 the Supreme Court held that an LLP member can be a worker for whistleblowing purposes, which matters in contested partner exits.
Scotland and Northern Ireland
Employment law is largely the same in Scotland as in England and Wales, and the Employment Rights Act 2025 reforms apply across Great Britain. Northern Ireland has its own employment legislation and Industrial Tribunals, with a different qualifying period for unfair dismissal, so executives based there need separate advice.
Exit routes and how to approach them
Most senior departures end in a negotiated agreement, but the route taken to get there affects cost, risk and reputation. The table compares the main options.
| Route | How it works | Advantages | Risks |
|---|---|---|---|
| Protected conversation and settlement agreement | Off-the-record discussion under section 111A, leading to a binding settlement agreement under section 203 | Speed, confidentiality and certainty; claims waived | Section 111A protection does not cover discrimination or whistleblowing claims, or improper behaviour |
| Without prejudice negotiation | Negotiation to settle an existing dispute | Broader protection where a genuine dispute exists | No protection if there is no dispute yet |
| Termination with notice or PILON | Employer serves notice under the contract, with or without garden leave | Contractual certainty; garden leave protects the business | Unfair dismissal exposure if no fair reason and process |
| Disciplinary or capability dismissal | Fair procedure following the Acas Code | Can reduce payments where justified | Litigation risk, reputational exposure and uplifts for Code failures |
| Resignation and team move | Executive resigns to join a competitor, sometimes with colleagues | Executive's choice of timing | Garden leave, injunctions and springboard claims; confidentiality breaches |
Settlement agreements must meet the conditions in section 203 of the Employment Rights Act 1996, including independent legal advice to the employee. Our settlement agreements team handles these daily, and our guide to settlement agreement compensation explains how packages are valued.
For senior people, the 1 January 2027 reforms change the arithmetic of every exit: an unfair dismissal claim is no longer worth at most a year's pay.
Pay, bonuses, equity and tax
The headline payment is often not the most valuable element of an executive exit. Bonus entitlements, deferred awards, long-term incentive plans and share options may be worth more, and their treatment depends on plan rules rather than the service agreement.
Bonuses and incentives
Discretionary bonuses must still be decided rationally and in good faith. Plans usually distinguish good leavers, who keep some or all of their awards, from bad leavers, who forfeit them. Definitions matter: whether resignation, termination without cause or a negotiated exit counts as good leaver status is often the central negotiating point. In regulated firms, deferral, malus and clawback under the remuneration codes limit what can be agreed. Our share plans and incentives team advises on plan rules and leaver treatment.
Tax treatment
Under section 401 of the Income Tax (Earnings and Pensions) Act 2003, genuine termination payments not otherwise taxable as earnings can benefit from an exemption for the first £30,000. Contractual payments, payments in lieu of notice and post-employment notice pay are taxed as earnings. Employer National Insurance can apply to termination payments above the threshold. The tax analysis should be settled before figures are agreed, and agreements usually contain tax indemnities.
References, announcements and reputation
For senior people, how the departure is described can matter as much as the money. Agreed internal and external announcements, an agreed reference, mutual non-disparagement obligations and the handling of any board or investor communications are standard negotiating points. Listed companies also have disclosure obligations that may dictate timing and content. Executive employment lawyers London executives instruct will usually negotiate these terms alongside the payment, because they are difficult to fix once an announcement has been made.
Employers should make sure that anything they agree to say is accurate. A reference must be true, accurate and fair, and in regulated firms it cannot omit matters the rules require to be disclosed.
How a negotiated executive exit typically runs
- Strategic assessment. Review the service agreement, incentive plans, articles and any regulatory status, and identify potential claims on both sides.
- Timing and dates. Map notice, bonus and vesting dates against the 1 January 2027 unfair dismissal changes and the six-month tribunal time limits.
- Opening discussion. Hold a protected conversation or without prejudice discussion, with a written proposal and a reasonable period to consider it.
- Negotiation. Agree payment, leaver status, garden leave, restrictive covenants, references, announcements and legal fee contribution.
- Corporate and regulatory steps. Arrange board resignations, Companies House filings, any shareholder approval and FCA notifications or regulatory references.
- Documentation. Draft the settlement agreement, board resignation letters, announcements and any consultancy or transitional arrangements.
- Completion and aftercare. Make payments, process equity awards, return property and data, and monitor compliance with covenants.
Restrictive covenants, garden leave and team moves
Post-termination restrictions protect client connections, confidential information and workforce stability. They are enforceable only if they protect a legitimate interest and go no further than reasonably necessary, judged at the date the covenant was agreed. In Tillman v Egon Zehnder Ltd [2019] UKSC 32 the Supreme Court confirmed that an unreasonable part of a covenant can sometimes be removed, leaving the remainder enforceable.
Reform is coming. In November 2025 the government published a working paper on options for reforming non-compete clauses, and on 9 October 2026 the Prime Minister announced that the government will legislate to restrict them and look at wider restrictive practices, starting with long notice periods. As of late October 2026 the chosen approach had not been published. Our article on non-compete clauses tracks developments, and our restrictive covenants team acts in enforcement and defence.
Team moves generate the most urgent work, and executive employment lawyers London employers call on in these cases often have only days to act. Typical remedies include injunctions to enforce garden leave or covenants, springboard relief, and claims for breach of fiduciary duty where a director solicits colleagues or diverts opportunities before leaving. Directors' duties in respect of conflicts and opportunities can continue to apply after they cease to hold office.
Covenants signed years ago at a junior level are often unenforceable for a senior executive today, because reasonableness is judged when the covenant was agreed. Employers should refresh restrictions on promotion with fresh consideration. Executives should take advice before resigning, as conduct in the weeks before departure is what most often leads to injunctions.
Risks and common mistakes
Ignoring the 2027 unfair dismissal changes
From 1 January 2027, employees with six months' service can claim unfair dismissal and the compensatory award is uncapped where the effective date of termination is on or after that date. Because notice periods for senior people are often six or twelve months, a dismissal decided now may have an effective date after the change. Employers should model exposure on both bases, and executives should understand how the timing of termination, and whether a PILON is used, affects the effective date. Settlement values will move accordingly.
Missing corporate approvals for director payments
Payments to directors for loss of office can require shareholder approval under the Companies Act 2006, and for quoted companies must be consistent with the remuneration policy. A payment made without approval may be held on trust for the company, and directors who authorised it can be liable. The exceptions, including for payments discharging an existing legal obligation or damages for breach, need careful analysis. Build approvals into the timetable and keep the board minutes and calculations that support any exception relied on.
Over-reaching confidentiality terms
Settlement agreements cannot prevent a worker from making a protected disclosure, and confidentiality clauses are increasingly restricted. The Employment Rights Act 2025 will make void provisions that prevent workers speaking about harassment or discrimination, other than in excepted agreements meeting conditions to be set by regulations; the government has indicated these changes will take effect in 2027. Agreements drafted now should include clear carve-outs, and employers should not rely on blanket gagging terms. Our whistleblowing team advises where protected disclosures are in play.
Mishandling regulatory obligations in financial services
In FCA and PRA regulated firms, the departure of a senior manager triggers notifications and, where requested, regulatory references, which must disclose relevant conduct findings. Firms cannot agree to omit information that the rules require, so references cannot be traded in negotiation. Conduct investigations that are incomplete at the exit date need careful handling. Reform of the Senior Managers and Certification Regime is under way through the Financial Services and Markets Bill and FCA and PRA consultations, so check the current requirements at the time of each exit.
Partner exits without reading the agreement
Expulsion of a partner or LLP member usually requires an express power in the partnership or LLP agreement; under the default rules there is no power to expel. Agreements set out notice, garden leave, capital repayment, profit share during notice, and restrictions. Decisions must be taken in accordance with the agreement and in good faith. Departing partners may have whistleblowing or discrimination claims as workers, as Bates van Winkelhof shows. Read the agreement before any conversation and follow its process precisely.
Cross-border executives and international groups
Many senior executives in London work for international groups, travel extensively or are seconded from abroad. Whether UK employment rights apply depends on how closely the employment is connected with Great Britain, not simply on the governing law clause. Equity awarded by an overseas parent may be governed by foreign law and subject to different tax treatment.
For groups headquartered in Bangladesh, the Gulf or Singapore, a London exit may need coordination with home-country employment law, board approvals at parent level and tax in more than one jurisdiction. Executives sponsored under UK immigration rules face a further issue: the end of employment affects their permission to remain, so timing and any new sponsorship need planning. Our business immigration team works alongside our executive employment lawyers London clients engage on these exits, and TRW & Co's Dhaka office advises on the Bangladesh side.
How TRW & Co's executive employment lawyers London clients instruct can help
We act for organisations and for individuals. For employers, we aim to achieve a clean, defensible exit that protects the business. For executives, we aim to secure fair value and a dignified departure, on terms that let them move on.
Service agreements and incentives
Drafting and negotiating service agreements, bonus and equity terms, notice and garden leave clauses and covenants that are enforceable for the role.
Negotiated exits
Strategy, protected conversations, valuation of claims and settlement agreements, including tax, leaver status, references and announcements.
Disputes and tribunal claims
Unfair dismissal, discrimination, whistleblowing and breach of contract claims in the Employment Tribunal and courts, alongside our employment tribunal team.
Team moves and injunctions
Enforcing or defending garden leave, covenants and confidentiality, including urgent injunctions. Where advocacy in the higher courts is required, we instruct specialist counsel.
Board and regulatory issues
Director removals, shareholder approvals, remuneration policy compliance, FCA notifications and regulatory references for departing senior managers.
Partner and member exits
Retirements, expulsions and disputes under partnership and LLP agreements, including capital, profit share and post-exit restrictions.
See our practices for related areas, or contact us in confidence to discuss a specific situation.
Checklist for boards and executives
Before any senior exit conversation, executive employment lawyers London boards trust would expect these questions to be answered:
- What do the service agreement, incentive plan rules and articles say about notice, PILON, garden leave, leaver status and covenants?
- When would the effective date of termination fall, and does it land before or after 1 January 2027?
- What claims could the executive bring, including discrimination or whistleblowing, and what is the realistic exposure?
- Do any payments require shareholder approval or need to fit within a remuneration policy?
- Are FCA or PRA notifications and regulatory references required, and what must they disclose?
- Are the restrictive covenants likely to be enforceable, and how might reform of non-competes affect them?
- Have tax treatment, announcements, references and confidentiality carve-outs been agreed?
- Are immigration or cross-border issues relevant to timing?
A senior exit handled well protects the business, the individual and their reputations. Handled badly, it becomes the most expensive dispute an organisation faces that year, which is why it pays to involve executive employment lawyers London businesses and executives trust before the first conversation takes place.
Frequently asked questions
01How much is a senior executive's unfair dismissal claim worth?
Currently, the compensatory award is capped at the lower of 52 weeks' gross pay and £123,543, plus a basic award calculated on age and service with a week's pay capped at £751. For dismissals with an effective date of termination on or after 1 January 2027, the cap on the compensatory award is removed, so a highly paid executive's full loss of earnings may be recoverable. Discrimination and whistleblowing claims are already uncapped. Contractual claims for notice pay and bonuses are assessed separately.
02Should I sign a settlement agreement?
A settlement agreement waives your claims in return for payment and agreed terms, so you should understand what you are giving up. The law requires you to receive independent legal advice for it to be binding, and employers usually contribute to the cost. Before signing, check the payment and its tax treatment, leaver status for bonuses and equity, the reference, the announcement, confidentiality carve-outs and any covenants. Consider whether the timing of termination relative to 1 January 2027 affects the value of your claims.
03Can my employer put me on garden leave?
Only if your contract allows it, or if there is an implied right in limited circumstances. Garden leave keeps you employed and paid during notice while keeping you away from work, clients and colleagues. Courts may enforce it by injunction where there is a legitimate interest, and a period of garden leave is often taken into account when assessing whether post-termination restrictions are reasonable. The government has said it will look at long notice periods as part of its non-compete reforms.
04Are non-compete clauses still enforceable?
Yes, for now. A non-compete is enforceable if it protects a legitimate interest, such as client connections or confidential information, and goes no further than reasonably necessary, judged when it was agreed. On 9 October 2026 the government announced it will legislate to restrict non-competes, following a November 2025 working paper. As of late October 2026 no legislation or start date had been published, so existing clauses remain subject to the common law test.
05How is a termination payment taxed?
Contractual payments, such as salary and benefits during notice, payments in lieu of notice and post-employment notice pay, are taxed as earnings. A genuine non-contractual payment for loss of employment may benefit from the exemption in section 401 ITEPA 2003 for the first £30,000, with income tax on the excess. Employer National Insurance may also apply above the threshold. Bonuses and equity follow their own rules. Agree the tax analysis before agreeing figures, as it can materially change the net value.
06Can a partner be expelled from an LLP or partnership?
Only if the partnership or LLP agreement contains an express power to expel and the procedure is followed properly and in good faith. Under the statutory default rules there is no general power to expel. Partner exits are governed mainly by the agreement, which typically covers notice, garden leave, capital, profit share and restrictions. LLP members can also qualify as workers for whistleblowing protection, and discrimination law applies to partners, so contested exits can lead to tribunal claims.
07What happens to my FCA approval when I leave a regulated firm?
Your firm must notify the regulator when you stop performing a senior manager function, and future employers in the regulated sector will request a regulatory reference covering relevant conduct matters. Firms must disclose what the rules require and cannot agree to leave out such information as part of a settlement. If an investigation is ongoing when you leave, take advice on how it will be concluded and reported. SMCR reform is under way, so the detailed requirements may change.
Sources and official materials
- Employment Rights Act 2025 — Reforms to unfair dismissal, time limits and NDAs
- Employment Rights Act 2025 (Commencement No. 4) Regulations 2026 — Six-month qualifying period and cap removal from 1 January 2027
- Employment Rights (Increase of Limits) Order 2026 — Compensation limits from 6 April 2026
- Employment Rights Act 1996, section 203 — Conditions for valid settlement agreements
- Income Tax (Earnings and Pensions) Act 2003, section 401 — Taxation of termination payments
- Tillman v Egon Zehnder Ltd [2019] UKSC 32 — Severance of unreasonable restrictive covenants
- Acas: settlement agreements — Official guidance on negotiating settlement agreements
General information only, current as at 21 October 2026. It is not legal advice and does not create a solicitor–client relationship. It reflects the law of England and Wales unless stated otherwise; Scotland and Northern Ireland have separate legal systems, and the law changes frequently. Check current official sources and take advice on the facts of your matter.