A favourable reference can matter as much as the financial payment when you are leaving a role. If a prospective employer asks why you left, uncertainty over what your former employer will say can make a negotiated exit feel less secure. The good news is that can references be negotiated is usually the right question to ask early in settlement agreement discussions.
In many cases, yes: the wording of a reference can be agreed and included in the settlement agreement. It is not automatic, and an employer does not have to provide a detailed or glowing reference simply because a settlement is proposed. However, a clear, agreed reference is a common and reasonable point to raise, particularly where your next career move depends on it.
Can references be negotiated in a settlement agreement?
A settlement agreement is a voluntary contract. Its terms can be negotiated before signing, including compensation, notice pay, restrictive covenants, confidentiality clauses and the reference. The employer may initially offer only a basic factual reference, but you can ask for specific wording to be attached to the agreement.
The strongest arrangement is usually a written reference set out in a schedule or appendix to the agreement. This means both sides know what will be provided if a future employer requests a reference. It avoids relying on informal assurances such as, “We will say something positive if asked.”
An agreed reference does not normally mean the employer must give a reference to every future enquirer in all circumstances. Instead, it should state that, where the employer chooses or is required to provide a reference, it will use the agreed wording. The precise drafting matters. A settlement agreement should also identify who is authorised to issue references, so that a manager does not accidentally give an inconsistent response.
Why the wording matters
Many employers now give only a short factual reference. This commonly confirms your job title, dates of employment and sometimes your final salary. A factual reference may be entirely adequate, especially if you have a strong CV, good interview performance and other referees.
But a basic reference can be unhelpful where you are leaving during a dispute, following a performance process, or amid a redundancy exercise that has not been fully explained to future employers. In those circumstances, agreed wording may provide useful reassurance that your departure was handled on agreed terms and will not be presented unfairly.
A well-drafted reference can confirm your role, responsibilities, length of service and, where appropriate, positive aspects of your contribution. It may also state that the employment ended by mutual agreement or as part of a redundancy process. Whether that is sensible depends on the facts. You should not agree to wording that implies poor performance, misconduct or an admission you do not accept merely to secure a reference.
Employers must take care that any reference they provide is accurate, fair and not misleading. This is one reason some organisations prefer a standard factual reference. It is also why overly enthusiastic wording can be difficult to obtain if there has been a live dispute or unresolved concern. Negotiation is about reaching wording that protects your prospects while remaining credible and safe for the employer to give.
What to ask for
Before negotiating, consider what a future employer is likely to need. For many professional roles, an agreed factual reference confirming your title, employment dates and main duties is enough. If you were made redundant, it may be useful for the reference to confirm this clearly, particularly if the timing of your departure could otherwise raise questions.
For senior employees, regulated roles or positions where leadership and performance are closely scrutinised, a fuller agreed reference may be more valuable. It could include a concise description of responsibilities, achievements or conduct during employment. The wording should be measured rather than exaggerated. A reference that sounds artificial may create more questions than it answers.
It can also be sensible to deal with the practical points around the reference, including:
- whether the agreed wording will be used for written and verbal reference requests;
- the name or team responsible for responding to requests;
- whether the employer will confirm the agreed reason for leaving;
- how requests received through an online platform or screening agency will be handled; and
- whether the employer will provide a copy of the reference to you when it is issued, where this is practical.
These details can prevent an agreed written reference being undermined by an unplanned telephone conversation or an inconsistent response from HR.
When an employer may resist
An employer may say that company policy allows only standard references. That does not always end the discussion. Policies are relevant, but settlement agreements are negotiated documents, and employers sometimes make an exception to achieve a clean and amicable resolution.
The employer may also be concerned about ongoing disciplinary or capability issues, complaints raised by colleagues, or the risk that a detailed reference could later be challenged. If so, a compromise may be possible. For example, the parties might agree a neutral factual reference with an agreed statement that the employment ended under a settlement agreement, without commenting on disputed allegations.
There are situations where a reference is more difficult to negotiate. Regulated employers may have disclosure duties, and some professions require fuller information for safeguarding, compliance or fitness-to-practise purposes. A settlement agreement cannot prevent an employer from complying with legal or regulatory obligations. Similarly, it should not require anyone to make a statement they know is untrue.
That does not mean you should accept vague wording without discussion. It means the reference needs to reflect the real context and any obligations that cannot be contracted away.
Do not treat the reference as an afterthought
Reference terms should be discussed before you sign. Once the agreement is completed and your employment has ended, your negotiating position will usually be weaker. If the reference is important to you, make it a clear condition of settlement rather than a side request raised at the end.
Read the whole agreement alongside the reference. A positive reference may have limited value if another clause permits broad disclosures about the circumstances of your departure, or if a non-disparagement clause is drafted only in the employer’s favour. The provisions should work together.
You should also check whether the agreement says anything about announcements to colleagues, clients or suppliers. An agreed internal announcement is not the same as a reference, but it can influence how your departure is understood and whether external contacts receive consistent information.
A practical approach to negotiation
Start by deciding what outcome you genuinely need. If your priority is simply avoiding a damaging reference, an agreed factual reference may give you the certainty you need. If you need help moving quickly into a similar senior role, you may need fuller wording and clarity about the reason for leaving.
Then make a focused request. Providing proposed wording can help because it gives the employer something concrete to consider. Keep it accurate, professional and proportionate. Demanding a highly personalised endorsement where relations have broken down may make settlement harder; asking for neutral, agreed wording is often more achievable.
Do not assume the first draft is final. The reference may be missing from the original agreement, drafted too broadly, or subject to qualifications that weaken its value. Independent legal advice should cover this alongside the compensation and other legal terms. A solicitor can identify whether the wording gives proper protection and suggest amendments that are realistic in the circumstances.
Questions employees often ask
Can my employer give a different reference after agreeing one?
If the settlement agreement includes a clear obligation to use specified wording, the employer should comply with that contractual term. However, drafting should allow for legal and regulatory duties. It is also worth ensuring that the agreement covers both written references and verbal responses where possible.
Must an employer provide a reference in the UK?
Usually, no. There are exceptions in certain regulated sectors and where a contractual policy or previous commitment applies. This is why including the reference in the settlement agreement is valuable: it creates a contractual commitment where one may not otherwise exist.
Should the reference say that I signed a settlement agreement?
Usually, not unless there is a particular reason to mention it. A neutral explanation such as “employment ended by mutual agreement” may be appropriate in some cases, while redundancy may be better stated directly where that is the genuine reason. The right wording depends on your circumstances and future plans.
A settlement agreement should give you clarity, not leave you worrying about an email or telephone call months later. If your future employment prospects may depend on a reference, raise it early, agree the wording in writing and make sure the wider agreement supports the clean transition you are trying to achieve.