The short answer
Yes. A settlement agreement is voluntary, so its terms can be negotiated before signature. There is no automatic right to a higher payment, however, and a counter-offer may be accepted, rejected or met with a revised proposal.
Effective negotiation is not simply asking for more money. It involves comparing the offer with the likely alternative, identifying legal and commercial risk and prioritising terms that matter to the individual.
What can be negotiated?
The financial package
Possible areas include the compensation payment, enhanced redundancy pay, bonus or commission, holiday, benefits, pension contributions and legal costs. Contractual sums already due should be separated from genuine additional consideration for settling claims.
Notice and termination date
The parties may negotiate whether notice is worked, spent on garden leave or paid in lieu, and whether benefits continue. Notice pay is generally taxable and should not be disguised as tax-free compensation.
Reference and announcement
An agreed reference can be as important as money. The wording should ideally be attached to the agreement, with clarity about oral references, regulatory duties and responses to specific questions. Internal and external announcements can also be agreed.
Confidentiality and comments
The scope, exceptions and mutuality of confidentiality and non-derogatory statements can be negotiated. No clause can remove rights to make protected disclosures or reports that the law protects.
Restrictive covenants
Existing restrictions may be repeated, amended or newly introduced. Consider whether they affect the next job, clients, colleagues or competing work. An employee may seek narrower restrictions, confirmation that existing provisions fall away or additional payment for new obligations.
Shares, options and benefits
The treatment of shares, options, medical insurance, car allowance, training fees and pension arrangements may depend on separate scheme rules. The settlement should not promise something the employer cannot deliver under those rules.
What creates negotiating leverage?
Relevant factors may include:
- The merits and likely value of possible claims;
- Procedural weaknesses in redundancy, dismissal or grievance handling;
- Discrimination, whistleblowing or family-leave issues;
- Contractual entitlements;
- The employer’s desire for speed, confidentiality or certainty;
- The employee’s seniority, client relationships or handover value;
- The cost and disruption of continuing the process; and
- Both parties’ appetite for risk.
A serious legal allegation should not be invented or exaggerated. Credible negotiation is grounded in documents, facts and proportionate outcomes.
How should a counter-offer be made?
The response can identify drafting corrections, sums already owed, key risks and a proposed package. It should remain measured and usually be marked in accordance with the legal basis for confidentiality advised in the case. Labelling correspondence “without prejudice” does not create protection where the legal conditions are absent.
The employee should avoid resigning, deleting evidence, breaching confidentiality or allowing tribunal deadlines to expire while negotiating. Settlement discussions do not automatically stop limitation time. Acas Early Conciliation may affect calculation of a tribunal deadline, but advice should be taken before it expires.
What is a reasonable increase?
There is no fixed percentage. A claim’s theoretical maximum is not the same as a sensible settlement value. Litigation risk, legal costs, mitigation, tax, delay, evidence and the value of non-financial terms all matter.
Sometimes the best improvement is a better reference, later termination date, release from restrictions, continued benefits or faster payment rather than a larger headline sum.
Could negotiation cause the offer to be withdrawn?
Potentially. Until agreement, an offer may be time-limited or withdrawn, subject to its terms and wider legal principles. A solicitor can help frame a counter-proposal and preserve an acceptable fallback where possible, but no outcome can be guaranteed.
Should the employer continue its process?
Normally, yes. If the offer arises during redundancy, capability or disciplinary action, the employer should not assume settlement negotiations replace the need for a fair process if agreement is not reached. Improper pressure may undermine statutory confidentiality and create additional risk.
Frequently asked questions
Can I ask for more than the first offer?
Yes, but explain the legal or practical basis and consider the risk of rejection or withdrawal.
Can legal fees be negotiated?
Yes. The employer may agree a higher contribution where extensive amendments or advice are reasonably needed.
Should I negotiate directly or through a solicitor?
Either is possible. Solicitor-led negotiation can help where claims, drafting or relationships are complex.
Does a deadline mean I must sign immediately?
No. The Acas Code gives at least 10 calendar days as a general rule for considering formal written terms, unless agreed otherwise. Seek advice promptly if the proposed period is shorter.
Speak to The Legal Practice Solicitors
Our Employment Law team can explain a settlement agreement, check the payment and waiver provisions and advise on proposed amendments or negotiation where appropriate. We also advise employers on drafting, process and risk
Telephone: 0208 903 7017
Email: employmentlaw@thelegalpractice.co.uk
Office: 122-126 Wembley Park Drive, Wembley Park, London HA9 8HP
Disclaimer
This article is provided for general information only and does not constitute legal or tax advice or create a solicitor-client relationship. Employment law and taxation is fact-specific and may change. Obtain advice on the individual facts before acting. The law referred to is the law of England and Wales and is stated as at 26 August 2026.
