Should I Accept the First Settlement Agreement Offer?

Reasons to choose Wilson Browne

If your employer proposes a settlement agreement, you don’t have to take the first offer on the table.

Reaching a settlement agreement is a process of negotiation, and to get a better deal, you need to prepare to make a counteroffer.

How to Prepare for a Negotiation

If your employer raises the possibility of a settlement agreement with you and opens discussions, then you should start to think strategically about how to approach negotiations.

Your employer may first wish to discuss with you informally what such a settlement might look like. Once you’ve agreed broadly on what the agreement will include, they will then make an offer.

At this point, you should take your time. Think about the proposed package for a few days. ACAS recommends a minimum ten-day period for the employer to consider the offer. What are the pros and cons?

What would the ideal package include?
What would be the least amount you’d settle for?

Have a clear base threshold in your mind below which you’re not prepared to go.

Think about things that have a high value to you but won’t be costly for your employer, such as a good reference.

There are also likely to be issues of more value to your employer than you, such as confidentiality regarding settlement payments.

The aim is for you to meet somewhere in the middle and reach an agreement that both sides are happy with.

How to Negotiate Your Settlement Agreement

The approach will depend on the relationship you have with your employer and, to some extent, the conditions that have led to them making the offer in the first place.

If, for example, the relationship with your employer has already broken down over what they’re willing to pay, or if they’ve acted unfairly or unreasonably, you may wish to take a legal approach.

You would need legal advice before taking this approach and telling the employer you’re considering legal proceedings.

Alternatively, if there is sufficient goodwill, you may be able to take a gentler approach.

This might involve you explaining how much you’ve contributed to the business or highlighting the challenges of having to find new employment.

You can ask to have a protected conversation with your employer. This keeps discussions ‘off the record’, allowing you both to speak freely without either of you using this information against the other. It means the contents of any conversation is not admissible in the Employment Tribunal as evidence.

Avoid asking for either too much or too little. When working out the settlement payment you’re going to ask for, consider:

Salary
Length of employment
How long it will take to find a new job
Whether you’ve suffered discrimination
Any terms in your contract entitling you to more.

Also, check if any settlement amount will be taxable (usually over £30,000) and whether there are restrictions about who you can work for in the immediate future.

Reaching a settlement agreement is a process. Be prepared to negotiate to get a settlement you’re comfortable with. Taking sound, independent legal advice from settlement agreement solicitors is critical in helping you achieve this.

Click here for more information on what to do if you’re offered a Settlement Agreement