How to negotiate settlement agreement terms with your employer – top 10 tips
In this article one of our specialist employment solicitors, Chris Hadrill, provides ten tips on how to negotiate settlement agreement terms with your employer. He also explains what traps to avoid in settlement agreement negotiations
- Research the law in order to determine how much your settlement agreement is reasonably worth
- Use any personal connections that you have with management to help your settlement agreement negotiations
- Think about instructing specialist employment solicitors to advise you
- Set out clearly what benefits you wish to receive under the terms of the settlement agreement
- Deal with the negotiations with your employer calmly and courteously
- Send a written grievance to your employer detailing your complaints
- Don’t always accept the first offer that your employer makes
- Check the terms of any settlement agreement offered carefully
- Consider carefully the costs and benefits of signing a settlement agreement as compared to litigating
- Make sure that your settlement agreement is legally compliant
Research the law in order to determine how much your settlement agreement is reasonably worth
Make sure you research the law relevant to your matter thoroughly before starting settlement agreement negotiations with your employer – for example, if you’re being made redundant then you’ll need to check (among other things) whether you’re entitled to bring an unfair dismissal claim, whether you’re entitled to a statutory redundancy payment (and , if so, how much), whether you’re entitled to a contractual redundancy payment (and, if so, how much), what period of notice you’re entitled to, and what other benefits you’ll receive as part of your redundancy package. You can do the research yourself but it is probably a good idea to speak to a specialist employment solicitor in order to check what you’re entitled to.
ACAS also provides some useful guidance on how settlement agreements should be dealt with by your employer.
Use any personal connections that you have with management to help your settlement agreement negotiations
If you’ve instructed a solicitor to advise you on your settlement agreement then you may think that the natural thing to do would be to instruct the solicitor to communicate with your employer for you. However, it isn’t always the case that it’s best for your solicitor to negotiate/communicate with your employer on your behalf; in certain circumstances it may in fact be preferable for you to communicate with your employer yourself – this generally applies if you have good connections with the senior manager(s) who has responsibility for dealing with the settlement agreement negotiations, as you can use your personal relationship with them to negotiate to good effect. Personal connections do, generally, really matter, as then you’re more than a ‘number’ to management. This may seem basic but it’s true.
If you do have good personal relationships with the relevant senior management then it’s nonetheless still a good idea to speak to your lawyer first to examine your entitlements, the tactics to use in negotiations, and to discuss a negotiating strategy.
Think about instructing specialist employment solicitors to advise you
Again, this may seem like fairly basic advice (and something that a solicitor would say) but it really is a good idea to get specialist advice from an employment solicitor at an early stage in your settlement agreement negotiations in order to identify what your entitlements might be, what issues need to be negotiated, and to discuss negotiation tactics and strategies.
Further reading: read our guide on settlement agreements here
Set out clearly what benefits you wish to receive under the terms of the settlement agreement
The first things you should identify in the settlement agreement negotiations are:
- What your basic minimum entitlements are; and
- What you wish to gain out of the settlement agreement negotiations (i.e. what your ideal package is)
It may also help to have information on what your employer’s general approach to settlement agreement negotiations are i.e. what packages your employer normally offers and what their approach is to various issues (such as, for example, what enhanced redundancy packages the employer offers as a matter of custom and practice or what their position is on bonuses being paid out). You might have this information but, if you don’t, your solicitor might have this information (based upon his experience with the relevant employer) or you might be able to speak to a (current or former) colleague about what they received under their settlement agreement (although be careful here, though – you don’t want to breach confidentiality clauses (and potentially be found out) before negotiations start).
Deal with the negotiations with your employer calmly and courteously
A basic point (yet again) but keeping the relationship between you and your employer (or your solicitor and your employer or their representative) is generally pretty important – if the settlement agreement negotiations start to become fractious or bad-tempered then this may decrease the likelihood of achieving certain targets for the settlement agreement or could potentially lead to a breakdown in the negotiations. This is best avoided for obvious reasons.
Send a written grievance to your employer detailing your complaints
This may not be appropriate in all circumstances (for example, if you’re taking a voluntary redundancy package) but, in appropriate circumstances, sending your employer a detailed grievance outlining your complaints may assist in negotiating your settlement agreement for the following reasons:
- It will identify that you have a problem (if your employer isn’t already aware of this)
- It will identify what your complaints are, and potentially what your Employment Tribunal claims might be – this will give your employer an opportunity to investigate those complaints, determine the risk that they face, and potentially allow them to estimate an appropriate value for your settlement agreement
- It will serve as a useful ‘placemarker’ for an Employment Tribunal of what your complaints were at a particular time
Don’t always accept the first offer that your employer makes
Even if your employer says that their first offer is ‘full and final’ or ‘non-negotiable’ there is, in most circumstances, room for negotiating the financial value of the settlement agreement and/or other terms. One of the first pieces of advice that I give most clients with settlement agreements is that it’s almost always worth at least one attempt to increase the value of any settlement agreement.
Check the terms of any settlement agreement offered carefully
When you receive your settlement agreement it’s recommended that you review it thoroughly in order to determine what financial package you’re being offered and how the terms of the agreement offered match up with your expectations. You should also give a copy of your settlement agreement to your instructed solicitor so that your solicitor can offer you advice on what amendments, in their experience, should be made to the settlement agreement.
Further reading: what terms should a settlement agreement include?
Consider carefully the costs and benefits of signing a settlement agreement as compared to litigating
After you’ve gone through a few rounds of negotiation with your employer, and if the package that you’re being offered under your settlement agreement isn’t what you wanted, carefully discuss with your solicitor what the various costs and benefits are to signing your settlement agreement or rejecting the settlement agreement and potentially litigating; discussing this in detail will allow you to make an informed decision about what you want to do going forward.
Make sure that your settlement agreement is legally compliant
Your settlement agreement will need to meet certain legal conditions in order to be valid and binding – make sure that your solicitor checks whether all the conditions are met before you sign it (as you don’t want to find out at a later date that your settlement agreement isn’t binding or valid).