Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Good leaver definition

What does Good leaver mean? In share incentive arrangements, a good leaver is a departing employee, director or consultant who receives favourable treatment of their shares or options on leaving. The term is not defined by legislation or case law; it is a contractual concept used in articles of association, shareholders’ agreements and employee share plans across England & Wales, Scotland, Northern Ireland and Ireland, with broadly consistent usage. A good leaver typically includes someone leaving due to death, permanent ill‑health or disability, redundancy, retirement with board consent, sale of the employing business, a TUPE‑type transfer out of the group, or dismissal other than...

Leavers in UK employee share schemes: good/bad leaver definitions, HMRC tax/NICs and exercise rules for SAYE, SIP, CSOP, EMI; unapproved awards, corporate governance, discretion, PAYE, EOTs and compensation

Published by a LexisNexis Share Incentives expert

Practice notes

What are leavers?

People who depart are generally described as ‘leavers’. Under the terms of the relevant share award, the departure reason will typically determine whether someone is a ‘good leaver’ or a ‘bad leaver’, with different consequences arising accordingly.

Usually regarded as ‘good leavers’ are those leaving due to:

redundancy
retirement
death
disability
ill health or injury
a transfer of employment protected by Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006), SI 2006/246
the participant leaving because the employer company has ceased to be an associated company of the scheme organiser

Conversely, individuals dismissed for any other reason, specifically for poor performance, or those who leave to join a competitor, are treated as ‘bad leavers’.

These are not technical terms, but are widely used in share scheme provisions to set out the treatment of leavers and to differentiate the outcomes that apply in various leaver situations.

The company may define what constitutes a good or bad leaver to align with its particular commercial aims. For more information on issues which can be relevant...

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Web page updated on 21/05/2026

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