Can I Refuse a Settlement Agreement? What Happens Next?

The short answer

Yes. You can refuse a settlement agreement. You do not have to accept an offer just because your employer has made one or set a deadline. You can ask for time to get independent advice, raise questions or make a counter-offer. If you do not agree, your employer may continue discussions, withdraw or change the offer, or deal with the workplace issue another way. Your employer must still comply with the law and any applicable procedures. Refusing the offer does not, on its own, establish whether any later employment decision is lawful. 

Before you respond, check what claims the agreement covers, what you would receive and what obligations would continue. If you may have an employment tribunal claim, seek advice promptly about time limits. Negotiations do not automatically stop the clock.

What is a settlement agreement?

A settlement agreement is a written agreement between an employer and an employee or worker. It can settle a particular workplace dispute, bring employment to an agreed end, or do both. In return for the agreed terms, the individual usually agrees not to bring specified legal claims listed in the agreement. The document may also deal with payments, notice, a reference, confidentiality and other continuing obligations. 

For a settlement agreement to waive relevant employment claims, legal conditions must be met. These include the agreement being in writing, identifying the particular complaints or claims being settled, and the individual receiving advice from an eligible independent adviser about the agreement and its effect on their rights. The adviser must meet the statutory requirements, including the required insurance or indemnity cover, and must be named in the agreement. The advice should relate to the actual terms proposed, not simply confirm that a document has been signed. 

What happens if I refuse a settlement agreement? 

If you refuse, there is no agreement on those proposed terms. Your employer may keep negotiating, make a different offer or decide not to continue with the proposal. It may instead address the underlying issue through a suitable process, such as a grievance, disciplinary or performance process, redundancy consultation or mediation, depending on the circumstances. If employment ends, the employer must still act lawfully and follow any relevant procedure. 

A refusal does not automatically mean that your job will end, and it does not guarantee that the offer will remain open. Ask the employer to confirm in writing whether the offer is still available, how long it is open for and what it proposes to happen next. Keep copies of the offer, your response and any messages about the discussions. 

Acas guidance says settlement discussions should not affect performance management or disciplinary procedures. At the same time, an employer may explain the likely alternatives if no agreement is reached, including that a fair process could continue and may result in dismissal. The facts and the way the discussion is handled matter.

Can I negotiate instead of refusing? 

Yes. You can ask questions, suggest changes or make a counter-offer. The employer does not have to accept your counter-offer, and you should not assume the offer will stay open indefinitely. If you need time to take advice, say so promptly and ask the employer to confirm an extended deadline in writing. 

Negotiations may cover more than the headline compensation figure. Depending on the circumstances, check whether the agreement deals separately with: 

• salary up to the leaving date, notice pay or payment in lieu of notice; 

• accrued holiday, bonus, commission, expenses, benefits and pension arrangements; 

• any redundancy payment and any additional compensation for settling claims; 

• the proposed termination date and whether you will work or remain available during notice; 

• the wording of an agreed reference and how future requests will be handled; 

• confidentiality, non-derogatory statements, return of property and post-termination duties; 

• any repayment clause, cooperation obligation or restriction on future work; and 

• the employer’s contribution to the cost of independent advice, and what that contribution covers. 

Tax and National Insurance treatment depends on the type of payment and the circumstances. The written agreement should set out the payment breakdown and any intended deductions. If the wording or tax treatment is unclear, ask your adviser before accepting. 

How long should I have to consider it?

You should be given a reasonable amount of time to consider the formal written terms and obtain independent advice. The Acas Code of Practice says, as a general rule, at least 10 calendar days should be allowed for this, unless both sides agree otherwise. What is reasonable depends on the circumstances. A longer period may be appropriate if the agreement is complex, you need further information or you need an adjustment to access advice. Ten days is Acas guidance, not an automatic statutory minimum in every case. 

If the deadline feels too short, reply promptly. You can say that you are considering the proposal, need time to obtain independent advice and request a specific revised date. If you are being pressured to sign immediately, keep a record and get advice before agreeing. 

Can my employer dismiss me if I refuse? 

Your employer may continue with a lawful workplace process if no agreement is reached, and a process could lead to a decision about your employment. Whether a dismissal is fair and lawful depends on the reason, the evidence, your circumstances and whether the employer follows the required process. Refusing a settlement agreement does not, by itself, decide those questions. 

If your employer says you will be dismissed if you do not sign, note exactly what was said, when and by whom. The Acas Code identifies telling someone before a disciplinary procedure that they will be dismissed if they reject an offer as an example of possible improper behaviour in settlement discussions. The legal effect depends on the facts. If you are concerned that the proposal is connected to discrimination, whistleblowing or another protected right, seek advice promptly.

Are settlement discussions confidential? 

Not always. Section 111A of the Employment Rights Act 1996 can protect some pre-termination settlement discussions from being used as evidence in ordinary unfair dismissal claims. It does not apply to every type of claim, and improper behaviour may affect the protection. The separate “without prejudice” rule generally applies to genuine attempts to settle an existing dispute. Simply labelling a letter or meeting “without prejudice” or “protected” does not guarantee that it cannot be referred to later. 

If the discussions involve allegations of discrimination, whistleblowing, harassment or pressure, do not assume the conversation is automatically confidential. Get advice on the facts and the claim you may bring. 

What should I do before deciding? 

1. Read the whole agreement.

Check the claims being settled, payment breakdown, dates, reference, confidentiality wording and obligations that continue after employment ends. 

2. Ask for time if you need it.

Request a reasonable extension in writing and ask the employer to confirm whether the offer remains open while you obtain advice. 

3. Get independent advice.

A relevant independent adviser can explain the legal effect of the agreement and the claims it covers. Ask what the employer’s legal fee contribution includes; there is no general requirement for the employer to pay all your legal costs. 

4. Ask questions or propose changes.

You can negotiate the amount, payment arrangements, leaving date, reference, legal fee contribution or other terms. An adviser can help you understand which changes matter in your circumstances. 

5. Consider what happens if there is no agreement.

Ask the employer to explain its proposed next steps. Consider whether a workplace process, continued employment or another route may be appropriate. 

6. Check deadlines separately.

Do not assume that settlement discussions, a grievance or an internal appeal pause an employment tribunal deadline. Notify Acas within the applicable time limit if required and get advice urgently if a deadline may be near. 

If you are weighing up an offer, The Legal Practice Solicitors can review the proposed terms and explain what they mean for your position. Get advice on a settlement agreement. 

A short reply you can adapt 

“Thank you for sending the proposed settlement agreement. I am considering the written terms and would like a reasonable period to obtain independent advice. Please confirm whether the offer will remain open until [date]. I may come back with questions or proposed amendments after I have taken advice.” 

Adapt the wording to your circumstances. If a tribunal deadline may be approaching, do not wait for the employer’s response before seeking advice. 

Frequently asked questions

Can I refuse to sign a settlement agreement?

Yes. A settlement agreement is voluntary. You can refuse the offer, ask questions or negotiate different terms. 

Can my employer withdraw the offer if I refuse? 

The employer may change or withdraw its proposal depending on the wording and circumstances. Ask whether the offer remains open and until when; do not assume it will be available indefinitely. 

Is 10 days a legal minimum for signing? 

No. The Acas Code recommends allowing at least 10 calendar days as a general rule to consider formal written terms and get advice, unless both sides agree otherwise. It is not a fixed statutory minimum in every case.

Will I automatically lose my job if I refuse? 

No. Refusal alone does not automatically end your employment. Your employer may continue an appropriate process, which could lead to a decision about your employment. The reason and process matter. 

Do I have to use a solicitor? 

The agreement must meet legal conditions, including advice from a relevant independent adviser for the claims it settles. A qualified lawyer is one category of eligible adviser. Check that the adviser meets the legal requirements and is named in the agreement. 

Do settlement discussions stop tribunal time limits? 

No, discussions do not automatically stop a deadline. The rules for most employment tribunal claims are due to change on 1 October 2026. The applicable time limit depends on the type of claim and when it starts, so get prompt advice and check the current Acas guidance. 

Disclaimer

This article is for general information only. It is not legal or tax advice and does not create a solicitor-client relationship. Employment law is fact-specific and may change. This article addresses the law of England and Wales and should be checked before publication. Obtain advice on your own circumstances before signing or relying on a settlement agreement.