A guide to negotiating a settlement agreement successfully


Date: 1 February 2021

A worried female employee considers her options after being presented with a settlement agreement by her employer

It can be worrying if your employer presents you with a settlement agreement to end your employment. Understanding the legalities involved, and what you're entitled to, can be quite a headache when you're probably not feeling at your best.

It's important to remember that you don't have to sign the agreement and that you have a right to negotiate before you do sign it.

In this guide, we advise you on how you can successfully negotiate a settlement agreement if that's what you decide to do.

1. Don't resign

If you're involved in a dispute with your employer and you're asked to sign a settlement agreement, one of the worst things you can do is resign – this can drastically reduce your ability to negotiate.

2. Get legal support

Anyone signing a settlement agreement has to have independent legal advice. The employer is expected to pay a fixed sum for you to pay for a lawyer. Instructing a specialist settlement agreement lawyer helps to strengthen your negotiating position as they will support you in getting the best possible deal, while explaining the legalities involved.

3. Understand your employer's point of view

Take on board what your employer wants to achieve from the agreement as this can help you secure terms for yourself.

Most employers are looking for a quick, fuss-free exit, to keep their business affairs confidential, and for an agreed communication to be sent to colleagues and/or customers. They will also probably hope to achieve time savings and avoid hefty legal fees – and they will want to avoid an employment tribunal (ET).

4. Factor in what you want to achieve

You have to put your own needs first when negotiating a settlement agreement and ensure you're not left out of pocket.

In return for signing a settlement and waiving many of your employment rights, you should expect to receive payment, which can be paid tax-free up to £30,000. Consult with your lawyer and carefully consider the compensation being offered and assess whether it fairly reflects your status within the organisation and the issues you are facing.

Specialist lawyers will ensure you get a fair deal and receive as much compensation as possible. If you are negotiating on your own, be mindful not try to fight for an unrealistic amount as this is unlikely to be successful.

You can expect to receive a reference to apply for new jobs, but it can be worth having this agreed as part of the settlement.

Copyright 2021. Featured article made possible by Thompsons Solicitors. Their team of expert settlement agreement lawyers can help you negotiate and secure the best possible settlement.

What does the * mean?

If a link has a * this means it is an affiliate link. To find out more, see our FAQs.