If you don’t sign a settlement agreement, the proposed settlement terms will not take effect.
What happens next depends on why your employer offered the agreement. They may continue with a disciplinary, performance or redundancy process. In some circumstances, that process could eventually lead to dismissal.
You should understand what is likely to happen next before deciding whether to accept, reject or negotiate the offer.
Do You Have to Sign a Settlement Agreement?
No, you don’t have to sign a settlement agreement. Settlement agreements are voluntary. You can accept the proposed terms, reject them or try to negotiate changes.
Your employer cannot force you to sign simply because they have made an offer.
What Happens If You Refuse to Sign a Settlement Agreement?
If you refuse to sign, your employer may return to the employment process or situation that existed before the offer.
Depending on the circumstances, they could:
- Continue a disciplinary process
- Continue a performance or capability process
- Continue with redundancy
- Make a different settlement offer
- Take no further action
Rejecting the agreement does not automatically mean you will be dismissed.
Can Your Employer Dismiss You If You Don’t Sign?
Potentially, your employer can dismiss you if you don’t sign, but refusing to sign does not itself result in dismissal.
Your employer may instead continue with the underlying employment process. That process could eventually result in dismissal, depending on the circumstances. For example, this could happen following a disciplinary, capability or redundancy process.
What Happens If Your Employer Continues With Disciplinary Action?
A settlement agreement may be offered as an alternative to continuing with disciplinary action. If you reject the offer, your employer may continue with its disciplinary procedure. This will usually involve investigating the allegations before deciding whether formal disciplinary action is appropriate.
If the matter proceeds to a disciplinary hearing, your employer should explain the allegations and allow you to respond. You will generally have the right to be accompanied at a disciplinary hearing by a work colleague or trade union representative.
Following the hearing, your employer should tell you its decision. Depending on the circumstances, this could include no further action, a warning or dismissal.
Can You Appeal a Disciplinary Decision?
You should normally be allowed to appeal a formal disciplinary decision. An appeal allows you to challenge the outcome or raise concerns about how the process was handled.
If you are considering an Employment Tribunal claim, you may want legal advice about the disciplinary process and whether to appeal.
What Happens If You Reject a Settlement Agreement During Redundancy?
Your employer may offer a settlement agreement during a redundancy process. If you reject it, your employer may continue with the redundancy process instead.
You may still be entitled to payments such as:
- Notice pay
- Outstanding holiday pay
- Statutory or contractual redundancy pay, where applicable
These payments may be lower than the overall amount offered under the settlement agreement.
If you believe the redundancy process is unfair, get advice about your position before deciding whether to accept the settlement.
Can You Negotiate Instead of Rejecting a Settlement Agreement?
Yes. You do not necessarily have to choose between accepting the agreement as drafted and rejecting it completely.
You can potentially negotiate changes to:
- Compensation
- Your termination date
- Reference wording
- Confidentiality provisions
- Restrictive covenants
- How your departure is described
However, not every settlement agreement needs negotiating.
If the existing offer is reasonable, further negotiation may provide little benefit. Your solicitor should help you understand whether there is genuine scope to improve your position.
Is a Settlement Agreement Binding If You Don’t Sign It?
An unsigned proposed settlement agreement will not normally bind you to its settlement terms.
For a settlement agreement to validly waive the relevant statutory employment claims, specific legal requirements must also be met. These include receiving advice from a relevant independent adviser.
You should not assume that any proposed settlement terms apply until a valid agreement has been concluded.
Should You Accept or Reject a Settlement Agreement?
Before deciding, consider both the settlement offer and what is likely to happen if you reject it.
Important factors can include:
- The compensation offered
- Payments you are already entitled to
- Potential employment claims
- The strength of those claims
- Your reference
- Restrictive covenants
- Confidentiality obligations
- What your employer is likely to do next
Sometimes accepting a reasonable settlement provides greater certainty than continuing with an employment dispute. In other cases, there may be genuine grounds for negotiating better financial or non-financial terms.
Get Advice Before Refusing a Settlement Agreement
Before rejecting a settlement agreement, make sure you understand the offer and what is likely to happen next. Our settlement agreement solicitors can review the proposed terms and the circumstances behind the offer.
If the offer is reasonable, we will tell you. If there is genuine scope to improve your position, we can help you negotiate.
Frequently Asked Questions
Will I Lose My Job If I Refuse a Settlement Agreement?
You will not automatically lose your job if you refuse a settlement agreement. However, your employer may continue with an existing disciplinary, capability or redundancy process. Depending on the circumstances, that process could eventually result in dismissal.
Can I Change My Mind After Rejecting a Settlement Agreement?
You can ask whether the settlement agreement offer is still available if you change your mind after rejecting it. However, your employer may have withdrawn it or changed the proposed terms.
You should not assume that an earlier settlement offer remains open.
