When a senior-level working relationship begins to break down, employers can find themselves facing a difficult balancing act. On the one hand, there may be a strong desire for a smooth and swift transition. On the other, employers may be reluctant to pay out a lengthy contractual notice period, particularly where concerns have arisen about performance. In these situations, the conversation does not always need to be about notice pay alone. In a recent matter, we explored the broader commercial considerations that could create value for both parties and help achieve a practical exit.
What mattered to each side?
The key was understanding what each party actually valued. This included:
- A positive future reference: The employee wanted certainty around how their departure would be characterised to prospective future employers
- Restrictive covenants: The scope and duration of the employee’s post-termination restrictions were an important consideration.
- Time and management cost: For the business, a lengthy performance management process would require significant time, cost and management attention.
- Certainty and a swift transition: The business wanted to bring the employment relationship to an orderly and timely conclusion.
By identifying these priorities, the discussion moved away from a simple negotiation over notice pay and towards a broader commercial conversation. The parties ultimately agreed an exit that brought the employment relationship to an end several months earlier than originally anticipated.
The commercial lesson
Senior executive exits are rarely just about salary or notice pay. A well-structured negotiation considers the wider interests of both parties and looks for opportunities to exchange value in a way that provides certainty, reduces risk and achieves a commercially sensible outcome. The right employment advice is not always about choosing between paying more or paying less. Sometimes, it is about understanding what each side values and finding a solution that works for both.
