Summer surge in settlement agreements: Why July is peak season for workplace exits

Solicitors specialising in employment law have observed that the summer months, particularly July, are a peak time for such agreements, often tied to organisational restructuring, redundancies, or amicable terminations of employment.

Settlement agreements, formerly known as compromise agreements, are legally binding contracts in which employees agree not to pursue legal claims against their employer in exchange for a financial settlement and other negotiated terms.

But why does July see such an increase?

End of the Line for Many Financial and Academic Years

According to Milton Keynes-based Solidaire Solicitors, specialists in settlement agreements, one of the biggest reasons for the July spike is that many organisations, particularly in education and the public sector, operate on financial or academic cycles ending in July. Schools, universities, and public bodies use this time to make staffing decisions before a new term or financial period begins.

“It’s a natural point in the year for review and planning,” explains a spokesperson for the firm. “Employers want to ensure that they start September with the right team structures in place.”

Performance Reviews Often a Trigger

Beyond budgetary reasons, July frequently follows mid-year performance reviews. Employers may use these discussions as a springboard to offer employees a settlement agreement, avoiding the need for lengthy capability or disciplinary processes.

For many businesses, particularly those in professional services, September marks a fresh commercial cycle. Companies take advantage of the quieter summer period to resolve internal changes and start the autumn with renewed focus.

A Strategic Time for Both Employers and Employees

The timing can also benefit employees, giving them the opportunity to use the summer months for reflection, holiday, or job hunting, with many industries ramping up recruitment again from September onwards.

Financial Planning Another Factor

For some businesses, offering settlement agreements in July is also a question of financial tidiness. Managing exit payments before a new financial reporting cycle can simplify internal budgeting and ensure closure on employment issues before the summer break.

A Growing Summer Trend

While settlement agreements can be offered at any time of the year, the July trend shows no signs of slowing, particularly as businesses increasingly prioritise flexibility in their workforce management.

Employees faced with a settlement agreement are advised to get professional guidance, ensuring that any agreement reflects their true value and legal rights.