Negotiating A Settlement Agreement with Your Employer

You’ve been given a settlement agreement. As a legal requirement, you need to seek legal advice from an employment lawyer specialising in settlement agreements. Is the offer in your settlement agreement fair? Maybe you have grounds to negotiate more compensation or terms.


You are within your rights to make a counteroffer to your employer. This negotiation can be done by yourself or if your lawyer believes you have a strong case, they can negotiate on your behalf.

Negotiation preparation


A settlement agreement is going to affect your future in some way. Therefore you want to make sure you can achieve the best outcome possible. Don’t feel the need to be quick with your answers if your boss or manager puts you on the spot. There is no need for you to make a rash decision.


According to the guidance set out in ACAS’s Code of Practice on Settlement Agreements, an employer should give their employee at least ten days in which to accept the terms offered in their settlement agreement. This is guidance and not an employment law requirement. Use the ten days effectively to really think about what’s really important for you and your future.


The ten-day period will allow the employee the time to seek legal advice and with the help of your settlement agreement advisor, decide if the offer is fair. A counteroffer can be made with the help of your employment lawyer. Typically the legal fee contribution made by an employer may not include covering the lawyer’s negotiation services.


To maximise the chances of your counteroffer being accepted, it would be advisable to be realistic. A small increase in compensation for example may make a big difference to you but it’s best to keep your demands reasonable. 


Your lawyer will be able to guide you with this as well as advise you on your chances of your offer being successfully accepted based on your years of experience. It’s not just the compensation payment that can be negotiated. What may seem like an advantage to you may not be a big deal for your employer.

Negotiating an agreed reference


Receiving a good and fair reference from your employer is, without a doubt, going to help your future in a positive way. An employee can get creative with this and at the same time make it easier for the employer. You could write your own reference, then have your employer read through and check it. As long as what you’ve written is based on truth, you’ll have an excellent reference and will reduce the burden and workload placed on the employer.

Confidentiality clause


In many cases, a settlement agreement will contain a confidentiality clause stating that the employee must keep the termination payment amount confidential. From an employer’s perspective, not keeping payments confidential may cause issues and grievances with other employees.

Settlement Agreement Counter Offer


Before going through with a counteroffer, consider the reasons why an employer should accept your offer. Although the employer wishes to terminate employment as quickly and cleanly as possible, they may not wish to pay you any more compensation.

Counter-offer Strategies


There are a couple of different ways to approach your counteroffer. If you feel your employer’s offer of compensation is way lower than your worth, you may receive a larger payment by going through an employment tribunal, if that’s the case then make that clear to your employer during the negotiation process.


It would be advisable to use this strategy by subtly mentioning to your employer that you are aware of this possibility. Giving your employer the ultimatum of “increase my payment or else” will likely come across as hostile. This strategy would be more appropriate if the relationship between employee and employer has already broken down.


If the relationship between both parties is peaceful, another approach may be called for. A softer approach may be more fitting. Perhaps the employer has already offered a payment that meets legal requirements. If you have less than two years of service or the settlement agreement is being used in place of redundancy, the softer approach would be ideal.


Your employer may understand that you do not have any grounds to take this to the employment tribunal but based on your performance to date will increase your termination payment.

Settlement agreements and protected conversations


If you have not already been asked to attend a protected conversation with your employer, then you’re entitled to request one. A protected conversation will allow you both to speak openly and freely without the risk of the conversation being used against either party. Seeking legal advice from a solicitor with settlement agreement expertise will help you to understand if you have a case for negotiation and which strategy you should take.