We are often asked by our clients whether or not an employer can withdraw the offer of a settlement agreement after it has been made. Strictly speaking, the answer is it depends on the process which has been followed by the employer in making the offer of a settlement agreement.
Off-the-record conversation – protected conversation
Normally an employer offers a settlement agreement during what is known as a protected conversation. In this case, the off-the-record conversation is had without prejudice, which means that it cannot be held against the employer during future litigation.
However, for a conversation to be protected in this way, an employer needs to follow certain guidelines concerning the conduct of that conversation. If the employer acts in ‘bad faith’ during the conversation with the employee, the conversation may lose its protected status. Consequently, it can be referred to in court or tribunal proceedings.
Pressure to accept a settlement agreement
A conversation may be regarded as being in ‘bad faith’ if the employer unduly pressures the employee to accept a settlement agreement. For example, if the employer threatens dismissal unless the employee accepts the agreement, this is likely to be regarded as ‘bad faith’. Therefore, the conversation could be used against the employer concerned.
If a discrimination claim is related to a protected conversation, the conversation’s content may be used to argue that the employer sought to dismiss the individual for discriminatory reasons.
Can a without-prejudice offer be withdrawn?
A without-prejudice offer can be withdrawn by the employer at any time before it is accepted by the employee. The offer remains an ‘offer’ until the employee accepts it, and until that point, the employer can withdraw it.
If an employer offers a settlement agreement, they will often do so subject to a time limit for the employee to accept that offer. The employee must get legal advice on the settlement agreement and return a signed, certified copy to the employer before the deadline to make it binding.
The employer will often have to follow a formal process to terminate the employee’s employment alongside the offer of a settlement agreement. As such, the offer of a settlement agreement cannot be open-ended.
Seek legal advice for settlement agreements
The individual should take advice from their solicitor about whether or not the settlement agreement should be entered into within the deadline. Alternatively, the individual should attempt to negotiate different terms under the settlement agreement before signing.
Therefore, in most cases, it will be possible for an employer to withdraw the offer of a settlement agreement. This is especially true if this offer has been made during a protected or off-the-record conversation or via without-prejudice correspondence.
However, the employee should be reassured by the fact the employer has made an offer in the first place. This strongly indicates that the employer prefers to resolve disputes amicably.
If an employee requires additional time to consider a settlement agreement, an employer will ordinarily allow this. They prefer to grant extra time rather than withdraw the offer altogether.
Get in Touch
If you have questions about settlement agreements or need legal advice, get in touch. Let us help you navigate the complexities of your settlement agreement confidently.
With over 10 years of experience in employment law matters, David Philip Harris specialises in providing legal advice on settlement agreements to both employees and employers throughout the UK. David’s opinion and advice are frequently sought after as he contributes often to BBC Radio Berkshire and the People Management Magazine. David Is a long-standing member of The Employment Lawyers Association and The Law Society.