Top tips: how to negotiate a settlement agreement

When an employee is given a settlement agreement it is not always expected, and it can mean that you may quickly have to assess how to put yourself in the best position when leaving employment.

We have set out below the factors to consider.

Are you happy with what is being offered in the settlement agreement?

You may not be happy to enter into the agreement on the basis of the financial offer being made to you. Furthermore, if the employer has drafted the settlement agreement you may want to suggest changes to the drafting and your legal adviser will be able to suggest appropriate changes.

It may be that the agreement imposes new obligations into the agreement such as restrictions on your ability to work for another employer. It is important to consider carefully what your future plans may be and whether these restrictions are likely to cause you difficulties in your search for new employment.

What are the deadlines you need to be aware of?

A settlement agreement is, generally speaking, intended to settle any claims that you may have against your employer arising out of your employment or its termination. When you are negotiating on an agreement it is important not to forget the time frame you would need to contact ACAS to bring your employment tribunal claim as, if you do so, you may be prevented from pursuing any claim at all.

Understand the strength of your own position

If your potential claims have a strong prospect of success you are likely to be in a better bargaining position with your employer to request changes to a settlement agreement. It is important to receive realistic advice on likely prospects and to be able to communicate your position effectively to an employer.

If you are not happy with the sums being presented to you under the agreement, it will benefit you to seek legal advice on the merits of any claim you have and how best to go back to your employer to get a better financial settlement.

Some of the benefits

Entering into settlement agreements can help parties reach mutually agreed ways of ending  employment and/or resolving legal claims.

Bringing a claim in the employment tribunal can be a lengthy, time consuming and expensive process for both parties.  A settlement agreement can therefore offer a more time and cost-effective solution.

Additionally, there may be added benefits which are not available as part of employment tribunal claims such as agreeing the terms of reference that will be provided to prospective employers or a statement about an individual’s exit from an organisation.

Know the risks

There is always a risk when negotiating the terms of a settlement agreement that either party could pull out before the agreement is finally concluded.  It is therefore important that when negotiating with your employer you are realistic about the terms that you are asking for. Both parties should aim to respond to each other in a timely manner and answer any queries the other has. Not all negotiations will contain contentious points and sometimes all that is needed is clarity.

Further support and guidance

Our Employment team are based in Maidstone and Canterbury. If you would like to speak to someone about a settlement agreement received, please contact a member of the employment team or take a look at our advice on what to expect in your settlement agreement.

This content is correct at time of publication