Negotiating a Settlement Agreement – 10 Mistakes to Avoid


If your employer has presented you with a settlement agreement, they seek to terminate your contract with your agreement. If upon considered reflection you feel like the reasons for termination or the conditions of the settlement are unfair then you should know that you are not obliged to accept the offer and can enter a negotiation process with them.

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Employers often have a better understanding of employment law and might seek to use that to their advantage by forcing through a settlement which is to your prejudice. With proper legal advice, you will better understand how to navigate the settlement process and will likely leave on more favourable terms. You may even be able to retain your job if you so wish. 

Ten Mistakes to Avoid when Negotiating a Settlement Agreement 

Settlement negotiations can no doubt be tricky if you have never taken part in one before as an employee. For most employees, the thought of negotiating a settlement agreement can set them off guard as it is a process that one generally will experience a seldom amount of times in life. So when one is presented with such a dilemma, it may stir up some emotions that might cloud better judgement. For this reason, we will present ten mistakes you should avoid when presented with a settlement agreement. 

1.Thinking You are Obliged to Sign The Agreement

Unless the terms of the agreement are undeniably fair and to your favour, you should understand that you are not forced to sign the agreement. Think of it as an opening offer from your employer with room to negotiate. Your legal advisor should tell you which of your demands are likely to be met and help you understand your position. If your employer refuses your demands, then you are still not obligated to sign.

2.Failing to React to a Settlement Agreement

Although you are not obligated to sign the agreement, you are however required to react to the notification within a time frame. The employment tribunal understands that such issues should not loom over an employer’s head for an unreasonable amount of time. As such, ACAS ( the independent public body that advises on employment rights and best practise ) advises in its code that you should have a minimum ten-day period to seek legal advice and respond to the settlement agreement. 

If you do not respond at all to the settlement agreement, then your employment will be terminated, most likely on your employer’s terms. 

3.Not Seeking Advice from a Qualified Employment Solicitor

Without proper legal advice, you are unlikely to know what kind of settlement you are entitled to before it is too late. Moreover, your employer is more likely to take you seriously if they know you are backed by a reputable firm. Knowing that your requests are likely founded in law, there is more chance they will accept your demands rather than taking you to a stressful and drawn-out employment tribunal. 

A good legal advisor will also make sure that you avoid any procedural mistakes which might jeopardise your chances of qualifying for your most favourable settlement and can advise you on the most logical and robust employment tribunal settlement tactics if the case does happen to go that far. 

4.Thinking You can Only Negotiate Financial Compensation 

The terms of negotiating a settlement agreement are quite flexible and are not just bound to gaining financial compensation. You might overlook some terms which are non-monetary but are important to future employment or money-making prospects. This may include agreed references which you may need to present to future employers, and non-compete clauses which you may want to negotiate to have rescinded or modified. 

It may even be the case that you would actually like to stay in your job, in which case a good solicitor can advise you on your chances of a favourable result at the employment tribunal.

5. Presenting a Settlement Agreement Counter Offer 

You may have no chance when negotiating a settlement agreement with a large organisation. Surely your employer has more experience and resources at their disposal; however, they do have a business to run and far more on their plate. Your employer will want the situation over and done with as soon as possible. With proper legal advice, this can work to your advantage. 

Your employer will not want the matter to go to an employment tribunal, so with that in mind, do not underestimate your position. Be ready to propose a strong counteroffer to the terms of the settlement agreement they are proposing, and if in doubt about what is logical in this sense, seek advice from a reputable employment lawyer


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6. Not Properly Preparing Your Case and Not Knowing Your Rights

All events leading to your dismissal are relevant to your case, and as such, your legal council should be informed as they may help strengthen your case. You benefit from confidentiality with your solicitor, and they are there to help you get the best possible result, so make sure you instruct them swiftly after receiving the settlement agreement so you can build the best possible case and know all your rights. 

By giving your solicitor all the facts and explaining everything you would like to get out of the settlement agreement, you are less likely to look back with regret.

7. Failing to Note All Reasons for Dismissal in The Settlement Agreement

If you have an income protection policy, make sure to check if this policy covers the reason for your dismissal. If it is, then make sure that this specific reason is mentioned in the settlement agreement in order for you to make a successful claim on your policy.

8. Thinking The Settlement Agreement Covers All Your Potential Claims

Your employer will want to wrap everything up in one settlement agreement. However, if any new claims arise in the future which were unknown at the time, then you will still be entitled to bring them up at a later date.

9. Failing to Respect The Confidentiality Clause

It is likely that your employer will want to include a confidentiality clause in the settlement agreement to prevent you from talking about the incident. It is also possible that you would prefer to include one too so your employer cannot spread the word, which is harmful to your future job prospects. If you do eventually sign a confidentiality clause, it is imperative that you respect it or else you might be liable for breach of contract.

10. Missing Your Deadline for The Employment Tribunal 

In case you cannot arrive at a mutual agreement with your employer or you feel aggrieved by an incident in the workplace, then you have the option of taking the matter to an employment tribunal. However, please note that you have a time limit of 3 months after the incident or dismissal before this option expires. 

It is highly advisable that if your case does go to an employment tribunal that you study the law yourself or consult a legal expert to gain valuable insights into the best employment tribunal settlement tactics which can work in your favour. 


Why it’s important to Consult an Employment Lawyer when Negotiating a Settlement Agreement 

When you are going through the settlement agreement process, it is really important that you fully understand your rights and can present them in a way that will benefit your case. Therefore, having the right team or individual to support you in this stressful moment is key, as winning a settlement agreement and gaining a decent amount of financial compensation can provide you with security whilst you start searching for your next job. 

Also, the way that the settlement agreement is negotiated and finally determined will impact the dismissal itself, so damage controlling this effectively is important, so the repercussions do not affect your future employability in any way. At Gulbenkian Andonian, our Settlement Agreement Solicitors in London have four decades of experience and a proven track record of success in settlement agreement negotiations and ensuring that the clients that come to us are given the best legal advice and are looked after during and after such a stressful process. 

For more info on how we can help and ensure you understand your rights, do not hesitate to contact us immediately.

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