One of the key things to be aware of when considering a settlement agreement, is that it is voluntary. It’s an agreement. And this means that both parties have to agree the terms. Now admittedly, a settlement agreement may not have been your first option but it may well be better than other alternatives available to you. So it pays to think carefully before you turn down the settlement agreement you have been offered. The following may be worth considering:

Why have you been offered a settlement agreement?

Has there been a break down in the relationship between you and your employer, or are you perhaps being made redundant? We’ve written an article specifically on when an employer might choose to offer a settlement agreement, and you can find out more here.

The point we’re making is that you have to ask yourself what will happen if you can’t agree terms or if you turn down the settlement agreement. What outcome are you hoping for?

It’s probably already started to feel a bit like a strategic game. Who has what card, and when will they play it? It’s not a nice feeling when things get like this. But if you reject an offer that’s been set out in a settlement agreement, or turn down the settlement agreement, you need to bear in mind your employer will already have assessed the situation carefully. It is possible, of course, that they are aware of vulnerabilities in their position and are hoping you won’t notice. And it’s also possible that they would seek to improve their offer if you turn the current one down. But that’s not a natural given, and some employers have even been known to withdraw an offer, which could leave you exposed.

However, all is not lost. You have to bear in mind that if a settlement agreement has been put on the table, it’s likely that your employer is looking to resolve the issue quickly and smoothly. They know that defending against litigation, or indeed initiating litigation themselves, is an expensive option.

What is the likelihood you can improve things for yourself if you turn down the settlement agreement?

Any dispute with an employer is likely to have at least an emotional impact on you, if not a financial one too. So if you are considering making a claim against your employer, the first thing you MUST do is get specialist legal advice. A cost/benefit analysis needs to be done, and only a solicitor experienced in dealing with grievance claims etc. can ascertain what the pros and the cons are.

What if I bring a claim instead?

The only answer to this question is that it depends on your circumstances. You would need to take legal advice from a specialist employment law solicitor before making such a decision. Any protected or ‘without prejudice’ conversations (see our article on this subject) that you have with your employer over the settlement agreement may make any details and offers made as a part of those conversations inadmissible at a tribunal for an unfair dismissal claim. And if you were considering a claim with regard to discrimination, again we would recommend you take legal advice from an employment law specialist before proceeding with this approach.