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William Laughton
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Settlement Agreement Negotiations – Top 10 Tips

Settlement agreement negotiations could arise for numerous reasons. There may be an existing dispute where matters are looked to be resolved quickly. Alternatively, the employer might be attempting to navigate around lengthy redundancy processes. Whatever the reason, employees must understand how to negotiate a settlement agreement best, and we discuss this below.

1. Prepare Properly

Settlement agreement negotiations are a new experience for many. Therefore, individuals may feel overwhelmed and rush into a decision. However, employees must take their time before accepting an offer.

a. Review Your Documents Thoroughly

Employees should review the documents provided by their employer, including their contract and settlement agreement papers. Concerning the employment contract, employees should understand their contractual rights and obligations. Such terms could cover issues like pay and notice periods.

Furthermore, employees should carefully review any settlement offer before signing it. They must understand the terms of the agreement, and if they need clarification on something, ask their solicitor.

b. Talk to Current and Former Colleagues

Friends and colleagues may have previously had disputes with the employer. If so, a better understanding of how it was resolved could be obtained. Therefore, such people could be a valuable resource in preparation to try and negotiate a settlement agreement.

c. Take Specialist Legal Advice

As mentioned, this process will be new for many. Therefore, obtaining expert legal advice as soon as possible is recommended. That’s because they have vast experience, meaning they could guide you through the process to ensure you reach an optimal outcome.

d. Do Your Research

An employment law specialist would advise about an employee’s legal position and how best to proceed. Despite this, it’s beneficial to do some research to gain a better understanding of the negotiation process. Doing so could help employees make more informed choices when acting on their solicitor’s advice.

2. Think about What Outcome You Want

Another thing to consider before settlement agreement negotiations is the desired outcome.

a. Leaving or Staying

Firstly, an employee should consider if they want to stay or leave once an agreement has been reached. Commonly, someone’s employment will terminate upon settling, but this doesn’t always have to occur. This will come down to the individual case and whether a good working relationship can exist following the settlement.

b. Financial Objectives

Next, one should consider any financial compensation they want to negotiate. The amount an employee receives will be influenced by several factors, including their bargaining power.

Yet, it is important to consider, among other things, notice pay, untaken holidays and lost earnings whilst searching for another job. An individual should be realistic, but by evaluating this before trying to negotiate a settlement agreement, they can better understand what they’re aiming towards.

c. Non-Financial Objectives

Finally, besides economic gains, the settlement could include other terms. The employer may want a confidentiality clause, whilst the employee may want a specific agreed-upon reference for future employers.

3. Choose Your Negotiation Tactics

When entering negotiations, there are several tactics an employee could employ.

a. Formal Grievance

Raising a grievance could help when looking to negotiate a settlement agreement. It could highlight the employer’s vulnerabilities to a claim or push them towards a settlement to avoid legal action. Alternatively, the employee’s negotiating position could be strengthened if it is dealt with incorrectly.

b. Hardball or Diplomatic

Should an employee be in a strong negotiating position, they may decide to take a firmer approach. The employer could have less room to manoeuvre and potentially give in to the employees’ wishes.

However, if both parties are in similar positions, or the employer is in a stronger one, diplomacy may be advisable. That’s because the employer would be less pressured to yield, meaning they may be more inclined to offer a favourable settlement if the employee appears willing to negotiate.

c. Appeal to Goodwill or Push on Legal Claims

Employees may opt to appeal to their employer’s better nature if there’s a good relationship. They could outline how they have been a hard-working employee and hope to reach a settlement that reflects this.

However, the employee may want to mention possible legal action if this isn’t the case. They could say, “My solicitor has advised that I could take my case to a tribunal. However, I wish to avoid this, so I hope to receive a reflective offer.”

4. Choose Who to Negotiate With

Sometimes, who an employee speaks to could impact the outcome of their settlement agreement negotiations. A senior employee may have more flexibility with whom they address their negotiations. Furthermore, they may be able to pull some strings that positively impact their talks.

Despite this, all employees, even junior ones, should consider whom they approach. From a friendly colleague in HR to their line manager, approaching the correct individual could make a difference.

5. Know When to Negotiate Yourself and When to Outsource

Supposing employees have a good relationship with their employer, they may believe they can negotiate an optimal settlement themselves. However, if this isn’t the case or they have doubts during the process, they may want expert advice.

Even if an employee has a good relationship with their employer, instructing a solicitor could be advisable. This is because they are likely to have more experience dealing with settlement agreement negotiations. As such, they could offer tips they have learned to help the employee.

6. Be Polite and Courteous, Generally

When attempting to negotiate a settlement agreement, having good manners won’t hurt the outcome. However, being rude and disrespectful could influence the employer to offer a less generous agreement.

7. Take Good Records

There could be lots of correspondence whilst an employee attempts to negotiate a settlement agreement. Said correspondence may involve what is said during meetings, which could be forgotten. Therefore, it is good to maintain a central record to keep up with everything said. Even better, the employee could email their employer a round-up of the correspondence to ensure they agree with it.

8. Know When You’ve Reached the Limit of What is Possible

Usually, after some rounds of negotiations, employees will learn what their employer will and won’t negotiate. Pushing for things an employer clearly won’t budge on could harm their final settlement.

Therefore, when it appears the employer is making their best and final offer, it is important to know when it’s enough. An employee’s solicitor would help determine when this is and advise when best to take a deal.

9. Be Realistic

Making ludicrous offers could end settlement agreement negotiations in their tracks. If an employer believes the employee’s expectations are unrealistic, they may decide not to negotiate. Therefore, it is essential to research, take legal advice, and proceed carefully.

10. Preserve Goodwill with Your Employer

If, from the outset, an employee maintains goodwill, it could go a long way during negotiations. For example, should an employee offer to work their notice, leave their work satisfactorily, and leave quietly, their employer could be influenced to offer a better settlement.

Contact us today if you have questions or want help with your negotiations. Settlement Agreement Lawyers are employment law specialists with years of experience helping several clients.

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About Author

William Laughton

William is a senior copywriter at Redmans Solicitors. Having studied law, he went on to pursue a career in legal writing. He writes about all areas of the employment law sector, including employment tribunals, well-being and human resources. Outside of work, William loves all things sports and fitness.

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