How to Negotiate a Settlement Agreement with Your Employer

Joy Drummond
Partner, Employment Law Solicitor

You can either negotiate a Settlement Agreement directly with your employer, or you can ask an Employment Solicitor to negotiate on your behalf, or support and guide you in your negotiations.

To find out how we can help you negotiate a Settlement Agreement, get in touch with our Employment Solicitors for free initial legal advice.

Call us on 0808 258 3531 or request a callback

Negotiating a Settlement Agreement

If your employer has presented you with a Settlement Agreement, or you or they want to agree terms to leave or change your employment, you might be wondering what to do next.

Firstly, you do not have to accept the agreement offered. You are perfectly entitled to enter into negotiations, or indeed decline to accept it altogether. You can do this by yourself, or you can ask an Employment Solicitor to negotiate for you or assist you in how best to negotiate with them yourself. The choice is entirely yours.

Either way, there are certain things you should consider when negotiating a Settlement Agreement and it is best to seek advice at an early stage.

How Much Money is Reasonable?

When you sign a Settlement Agreement, this usually, but not always, involves the termination of your employment, for example in a redundancy or restructuring situation, and a payment to you. You need to ensure the amount of money you receive is reasonable taking account of the legal rights and claims you have that you will be giving up and the overall circumstances and what you want to achieve.

It’s difficult to say exactly how much money you should receive. When you sign a settlement agreement you will be giving up your employment rights. In return for this you should, as a minimum, be receiving your strict legal entitlement plus something extra. This is usually financial but it can be a non-financial benefit.

If you’re not sure, ask an Employment Solicitor for advice. That way, you know what to aim for during negotiations.

What about a Good Reference?

You shouldn’t just focus on the money. A Settlement Agreement can offer additional advantages, such as a good reference from your employer. This can be essential for your future career, whether or not you are leaving your current employment on bad terms.

Without a specific agreement to do so an employer is not legally obliged to give you any reference at all, and cannot be ordered to by an Employment Tribunal.

A Settlement Agreement can stipulate that your employer must provide a good reference. It can even specify the wording that must be used in the reference.

Settlement Agreement Terms and Conditions

An employer usually attaches certain other terms and conditions to the Settlement Agreement. Typically, the terms must remain confidential and you cannot ‘bad mouth’ your employer to others. The exact wording of these can be important.

There may also be restrictive covenants which prevent you from competing with your employer. If so, you might want to negotiate additional compensation.

Better Off at an Employment Tribunal?

If your employer is refusing to accept your requirements, consider whether you would be better off making a claim at an Employment Tribunal. There are risks and costs associated with bringing a claim in a Tribunal and it can take many months.

But if the Tribunal finds in your favour, you could be awarded more money than is currently on the table. You must weigh up the pros and cons and decide what your bottom line is. If you and your employer know the prospects you have of making a successful claim this can strengthen (or weaken) your hand in negotiations.

Have You Had Independent Legal Advice?

For the protection of employees, an employer can only use an agreement to prevent the employee from bringing employment claims if, before signing a Settlement Agreement, the employee has had independent legal advice.

For this reason the employer will require it and will usually make a contribution to the costs of the advice. Even if you are happy with the settlement offer, it’s prudent to speak to an Employment Solicitor before agreeing to anything verbally. An Employment Solicitor can tell you if the offer is fair, and whether there are any drawbacks you have not considered.

It’s best to get this advice sooner rather than later, as it gives you better bargaining power.

Employment Solicitor Fees

Understandably, you might be worried about paying for an Employment Solicitor, especially if you are soon-to-be out of work. This is something you should ask your employer about.

Employers usually make a contribution to your legal fees. This may be sufficient to cover your costs.

Our Employment Solicitors Can Help You

If you would like free initial legal advice on a Settlement Agreement, our Employment Solicitors can help you. We can advise you on whether the proposed Settlement Agreement is fair. If not, we’ll explain the options open to you.

Whether you would like us to enter into negotiations with your employer, or advise you before or during your own negotiations, we can pursue the matter, working hard to help you to achieve the best possible settlement.

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