A settlement agreement can usually be negotiated. However, whether you should negotiate depends on the strength of your situation and the size of the offer you’ve received. Strong legal claims, such as discrimination or unfair dismissal, often increase the chances of securing a higher payment. 

Settlement agreements can often be completed quickly, sometimes on the same day, although negotiations may take one to two weeks. The value of a settlement agreement depends on individual circumstances, but most include notice pay, contractual payments and a  compensation amount that is tax-free up to £30,000.

Can you Negotiate a Settlement Agreement?

Yes, a settlement agreement can almost always be negotiated. Whether negotiation is likely to be successful depends on the specific facts of your situation, including:

  • Whether you have a legal claim arising from the events leading up to the settlement agreement
  • The strength of any potential claim you may have
  • The size of the initial offer compared with what you could realistically recover

For example:

  • You may have a strong claim. However, if the employer has already made an offer that represents a large proportion of your likely compensation, our employment solicitors may advise caution before pushing for more.
  • If the employer has made a low opening offer, the position may be different. For example, they may offer only notice pay where claims may exist. In those situations, we may recommend negotiating the amount with the employer or their legal advisers.

Whether you should negotiate is one of the most important points to discuss with your legal adviser. To receive accurate advice, you should provide full details about your employment, the circumstances leading to the offer, and any concerns you have about the terms of the agreement.

How Long Does the Settlement Agreement Process Take?

Settlement agreements can often be completed very quickly. In many cases, advice can be given on the same day the agreement is received.

You can usually email the agreement and then discuss it with an employment solicitor over the phone or via a video call. If no negotiation is required, the agreement may be signed and returned the same day.

If you choose to negotiate the terms, the process will usually take longer. Even so, most negotiated settlement agreements are still concluded within 7 to 14 days from the point when legal advice is first taken.

Payments under a settlement agreement usually become due after the agreement has been signed and returned to the employer. For this reason, taking advice promptly and returning the signed agreement quickly can help ensure you receive payment without unnecessary delay.

How Is the Value of a Settlement Agreement Calculated?

The value of a settlement agreement is calculated on a case-by-case basis and depends entirely on individual circumstances.

For example, someone settling a potential discrimination claim may receive compensation calculated very differently from an employee who is leaving due to redundancy. The nature of the claim, the risks faced by the employer and the employee’s role and length of service all play a part.

Redundancy is the only type of dismissal where payments are set by law. These payments are usually based on the employee’s length of service and weekly pay, subject to statutory limits.

In most settlement agreements, employers offer:

  • Notice pay
  • Any outstanding contractual payments
  • A tax-free compensation payment, where applicable

The maximum amount that can normally be paid tax-free under a settlement agreement is £30,000. Any amount above this is usually subject to tax.

Get Clear Advice on Your Settlement Agreement

If you’ve been offered a settlement agreement and are unsure whether the offer is fair, speak to our employment solicitors for clear, independent advice before you sign.

FAQs

What Claims Am I Giving Up When I Sign a Settlement Agreement?

When you sign a settlement agreement, you typically waive your right to bring employment-related claims against your employer. This usually includes:

The agreement should list every claim being waived in detail. Anything not expressly included may still be pursued later, so it’s crucial to review this section carefully with your legal adviser.

Are There Any Rights I Cannot Give Up in a Settlement Agreement?

Yes, some rights and claims cannot be waived in a settlement agreement, even if you want to. These include:

  • Personal injury claims you’re not yet aware of
  • Future breaches of contract occurring after signing
  • Pension rights
  • The right to make protected disclosures (whistleblowing)
  • Reporting criminal conduct to the police
  • Cooperating with regulatory investigations

This means that even after signing a settlement agreement, you retain important protections. You can always speak up about serious wrongdoing in the public interest, report crimes or pursue claims for injuries you didn’t know about when you signed.

Do I Have to Keep My Settlement Agreement Confidential?

Most settlement agreements contain confidentiality provisions (NDAs) restricting what you can say about your departure, the employer, any complaints you raised and the agreement’s existence and terms.

However, you can always make protected disclosures (whistleblowing), report crimes to the police, cooperate with regulatory investigations or respond to court orders. Most agreements allow you to discuss terms with immediate family, financial advisers and sometimes your new employer.

What Happens If I Refuse to Sign the Settlement Agreement?

You cannot be forced to sign a settlement agreement: they are voluntary. However, refusing has consequences you should understand.

If you refuse to sign:

  • The employment situation continues (redundancy, disciplinary process, etc.)
  • The offer will be withdrawn and cannot be accepted later

Refusing may be right if:

  • The offer is too low
  • Terms are unacceptable
  • You have strong legal claims
  • It would cover up serious wrongdoing

Before deciding:

  • Discuss with your legal adviser
  • Never sign due to fear or pressure