Employment Settlement Agreement

Can you negotiate a settlement agreement?


One of the first questions that come to mind when an individual has been offered a settlement agreement is can you negotiate a settlement agreement offer? The answer is the agreement is always subject to negotiation, however, whether or not the negotiation is likely to be successful depends on the facts of each individual case.


If an individual has a claim arising from the facts leading up to the settlement agreement then it is more likely that he or she is likely to have prospects of negotiating a higher settlement offer. Clearly, the level of the opening offer is also relevant when asking the question, can you negotiate a settlement agreement?


If an individual has a strong claim for damages, but the opening offer in the settlement agreement amounts to a large percentage of the maximum damages that the individual could recover then it is important to proceed with caution.


However, if an employer has made a low opening offer for example has offered only contractual notice pay to the individual in a situation where claims may have arisen then the lawyer is likely to advise the individual to negotiate the sums with their employer or their employer’s legal advisor.


The question of whether you should negotiate a settlement agreement is one of the key questions that you should ask your legal adviser when taking advice on the agreement itself. You should provide the adviser with all of the information that he or she requires in order to advise you whether or not to negotiate or agree to the original offer.

How long does the settlement agreement process last?


Settlement agreements can often be concluded within the same day that they are received. We can advise you on the terms of your settlement agreement on the same day that you send it to us. 


It is possible for you to e-mail the agreement and then engage in a telephone or video call to obtain advice on the terms of the agreement? If you choose to negotiate on the terms of the agreement, it is likely that this negotiation will take longer than one day but on average, negotiated settlement agreements still conclude within 7 to 14 days after the initial instruction.


The deadline for making payments under the settlement agreement typically runs from the date the agreement is signed and returned to the employer. For this reason, there is an incentive to take advice on the settlement agreement quickly and to return the signed document to your employer to ensure that you receive the payments quickly.

How is the settlement agreement value calculated?


Settlement agreement payments are calculated using different methods and are entirely dependent on the individual facts of each case. For example, if an employee is entering into a settlement agreement with a view to compromising a potential discrimination claim it is likely that he or she will receive payments calculated on a different basis than an individual being made redundant by their employer.


Redundancy is the only method of dismissal that results in specified payments which typically relate to the number of years of service and the level of one week’s salary subject to a multiple. In most agreements, employers offer notice pay and all contractual payments plus a tax-free sum on top of this. The maximum tax-free sum which may be paid under a settlement agreement is £30,000.