Last Updated: 21 August 2026 I Reading Time: 6 minutes
Summary
Receiving a settlement agreement from your employer does not necessarily mean you have to accept the terms as they are presented. Settlement agreements are negotiated contracts, and the initial offer can be discussed before you decide whether to accept it.
Depending on your circumstances, a solicitor may be able to negotiate aspects such as the financial compensation, termination date, notice arrangements, holiday pay, reference wording and other contractual terms.
Getting independent legal advice is also a legal requirement for a settlement agreement to be valid for the purpose of waiving specified employment claims.
Quick answer
A solicitor may be able to negotiate several parts of a settlement agreement, including the settlement payment, notice and termination arrangements, holiday pay, contractual entitlements, job reference wording and certain other terms. The scope for negotiation depends on the circumstances, the strength of your position and what your employer is prepared to agree. An employer’s first offer is not necessarily its final offer.
In this article
- What is a settlement agreement?
- Can you negotiate a settlement agreement?
- What can a solicitor negotiate?
- Can you negotiate the compensation?
- Can notice and termination arrangements be changed?
- Can you negotiate a reference?
- What other terms can be negotiated?
- Why independent legal advice matters
- How GLP Solicitors can help
- Frequently asked questions
Key takeaway
- A settlement agreement is negotiable – you do not automatically have to accept the employer’s first offer.
- A solicitor may be able to negotiate the financial settlement payment.
- Notice periods, termination dates and payment in lieu of notice may also be discussed.
- Your solicitor can check whether you are receiving the holiday pay and contractual payments you are entitled to.
- The wording of an agreed employment reference can be negotiated and, where appropriate, attached to the agreement.
- Other clauses, such as confidentiality and post-termination obligations, may need careful consideration.
- You must receive advice from an independent adviser for a settlement agreement to be legally valid for waiving specified employment claims.
- It is important to understand exactly what rights and claims you are giving up before signing.
What is a settlement agreement?
A settlement agreement is a legally binding contract between an employer and an employee or worker. It is commonly used to resolve an employment dispute or to agree the terms on which employment will come to an end.
In return for agreed terms, the employee will usually agree not to pursue particular employment claims covered by the agreement. The agreement must identify the specific claims being settled rather than simply stating that it settles “all claims”.
Settlement agreements can include a financial payment, an agreed reference and arrangements for the end of employment, among other terms.
Can you negotiate a settlement agreement?
Yes. A settlement agreement can be negotiated.
The employer may make an initial proposal setting out the amount they are prepared to pay and the other terms they want you to accept. However, you do not have to accept the first offer.
The Acas Code of Practice recognises that settlement negotiations can involve proposals and counter-proposals before an agreement is reached. The parties may ultimately agree the terms or decide that no agreement can be reached.
This is where independent legal advice can be particularly valuable. A solicitor can review the proposed agreement, identify issues that may need attention and advise you about whether there may be scope to negotiate better or more appropriate terms.
What can a solicitor negotiate in a settlement agreement?
Every case is different, but a solicitor may be able to negotiate several important aspects of the agreement.
1. Financial compensation
One of the most obvious areas for negotiation is the settlement payment.
An employer may offer a particular amount in return for you agreeing to settle specified claims. Depending on the circumstances, your solicitor may be able to negotiate an increase.
The appropriate figure can depend on a range of factors, including:
- The circumstances surrounding the proposed termination.
- Your length of service and contractual position.
- Potential employment claims.
- Your financial and contractual entitlements.
- The strength of your legal position.
- The risks and costs for both sides if the matter is not settled.
There is no automatic amount that every employee is entitled to receive. The value of a settlement depends on the individual circumstances.
It is also important to distinguish compensation from payments you may already be contractually entitled to receive, such as salary, holiday pay or certain notice payments. Acas guidance treats these as separate elements of the agreement.
2. Notice and termination arrangements
The proposed termination date can also be an important part of negotiations.
For example, you may want your employment to end on a different date from the one initially proposed, depending on your circumstances and contractual notice period.
The agreement may also provide for:
- Working your notice.
- Payment in lieu of notice (PILON).
- Garden leave.
- An agreed termination date.
The financial consequences can differ depending on which arrangement is used. Acas guidance explains that PILON can include salary and other amounts due during the notice period, while holiday entitlement and other payments may also need to be addressed.
Your solicitor can check whether the proposed arrangements reflect your employment contract and whether they are appropriate in your circumstances.
3. Holiday pay and other contractual entitlements
You should not assume that everything you are owed is included within the headline settlement figure.
For example, you may have accrued but unused holiday when your employment ends. Statutory holiday accrued but not taken should generally be paid when employment ends, while entitlement to additional contractual holiday will depend on the terms of your employment contract.
Other payments may also need to be considered, such as:
- Salary up to the termination date.
- Bonus payments.
- Commission.
- Benefits.
- Payment in lieu of notice.
- Other contractual sums.
A solicitor can review the agreement and help ensure that these payments are properly identified rather than being overlooked.
4. The wording of an employment reference
A reference can be particularly important if you are moving to a new job.
Employers do not generally have to provide a reference. However, if the employer agrees to provide one as part of a settlement agreement, the wording can be agreed as part of the settlement.
Your solicitor may therefore negotiate:
- Whether a reference will be provided.
- The wording of the reference.
- Who will provide it.
- How the employer will respond to future reference requests.
- Whether an agreed reference is attached to the settlement agreement.
This can give both parties clarity about what will be provided to prospective employers.
5. Other contractual terms
A settlement agreement can contain a range of additional provisions.
Depending on the circumstances, your solicitor may review and negotiate terms relating to matters such as:
- Confidentiality.
- Return of company property.
- Restrictions on what can be said about the employer.
- Announcements to colleagues or clients.
- Post-termination obligations.
- The treatment of company equipment and information.
- The payment of legal fees.
Not every clause will be negotiable, and the appropriate approach will depend on the particular agreement.
For example, if an employer wants you to comply with particularly broad obligations after leaving, your solicitor can explain what those clauses mean and consider whether changes should be requested.
Can you negotiate the employer’s payment towards legal fees?
It is common for an employer to contribute towards the employee’s legal costs of obtaining independent advice.
However, the employer is not legally required to pay those costs. Acas recommends that employers should consider offering to pay the cost of independent advice, but this is a matter for agreement between the parties.
The settlement agreement should make clear what contribution is being offered and any applicable limit.
If the employer’s contribution is not sufficient to cover the legal work required, this can potentially be discussed as part of the negotiations.
Why is independent legal advice important?
A settlement agreement can have significant consequences because you may be agreeing to give up the right to bring particular employment claims.
For a settlement agreement to be legally valid for this purpose, it must satisfy specific legal requirements, including that the employee receives advice from an appropriate independent adviser. The adviser must also meet the relevant requirements concerning insurance and independence.
Independent advice is therefore about more than simply signing a document.
A solicitor can help you understand:
- What the agreement means.
- Which claims you are being asked to settle.
- What payments you will receive.
- What rights you may be giving up.
- Whether the terms appear reasonable in your circumstances.
- Whether there are terms that may need to be negotiated.
How long do you have to consider a settlement agreement?
You should not feel pressured into signing a settlement agreement immediately.
The Acas Code of Practice recommends that employees should generally be given at least 10 calendar days to consider the formal written terms and obtain independent advice, although what is reasonable can depend on the circumstances.
If you have been given a deadline, it is sensible to seek legal advice as soon as possible.
This can give your solicitor enough time to review the agreement, discuss the terms with you and, where appropriate, negotiate with your employer.
What happens if you do not agree with the settlement?
You do not have to accept a settlement agreement simply because your employer has offered one.
Settlement agreements are voluntary. If the proposed terms cannot be agreed, there may be other ways of dealing with the underlying employment issue, depending on the circumstances.
However, the decision about whether to accept, reject or negotiate an offer should be made after considering the potential risks and alternatives.
A solicitor can help you understand those options before you make a decision.
How GLP Solicitors Can Help
GLP Solicitors’ Employment Law team can advise employees who have received a settlement agreement and need independent legal advice.
We can review the agreement with you, explain the legal terms in plain English and advise you on the rights and claims covered by the agreement.
Where appropriate, we can also discuss potential amendments or negotiate with your employer on your behalf, including issues such as compensation, termination arrangements, contractual payments and references.
Our aim is to make sure you understand what you are agreeing to before you sign.
Frequently Asked Questions
Yes. A solicitor can negotiate with your employer on your behalf where there is scope to do so. This may include negotiating the settlement payment, termination arrangements, notice, holiday pay, reference wording and other contractual provisions. The extent of negotiation depends on the circumstances and what both sides are prepared to agree. Settlement agreements are voluntary, so you do not have to accept the employer’s initial proposal.
Yes, the amount offered can potentially be negotiated. There is no fixed settlement amount that applies to every employee. A solicitor can consider the circumstances of your employment, any potential claims, contractual entitlements and the risks for both sides before advising whether there may be grounds for seeking a higher payment. The employer is not required to agree to an increased offer, so negotiations may involve proposals and counter-proposals.
Depending on your circumstances, you may be able to negotiate financial compensation, the termination date, notice arrangements, holiday pay, contractual payments, an employment reference and other terms within the agreement. You may also need advice about confidentiality clauses and post-termination obligations. The exact terms will depend on your employment contract, the circumstances of the proposed settlement and what you and your employer are prepared to agree.
No. An employer is not legally required to pay for your independent legal advice. However, employers may offer to contribute towards the cost, and this can be included in the settlement agreement. Acas guidance states that employers should consider offering to pay the cost of independent advice, although there is no obligation to do so.
Potentially, yes. The parties can agree the termination date and how notice will be dealt with. Depending on the circumstances, this could involve working your notice, payment in lieu of notice or garden leave. Your employment contract and the terms proposed by your employer will be important when considering what should be negotiated.
Yes. If an employer agrees to provide a reference as part of a settlement agreement, the wording can be agreed as part of the settlement. It can be useful for the agreed reference to be included with the agreement so there is clarity about what will be provided to prospective employers.
No. A settlement agreement is voluntary and the initial offer does not have to be accepted. The parties can negotiate through proposals and counter-proposals before deciding whether they can reach an agreement. You should obtain independent legal advice before deciding whether to accept the terms, particularly because signing can mean giving up the right to pursue specified employment claims.
The Acas Code of Practice recommends allowing at least 10 calendar days to consider the formal written settlement agreement and obtain independent advice. What is reasonable can vary depending on the circumstances. If your employer has given you a short deadline, you should seek legal advice promptly rather than feeling pressured to sign without understanding the terms.