Negotiating a Settlement Agreement: How to Get a Better Deal

Written by: Owen John, Employment Law Partner, Darwin Gray | Last updated: 24/10/2026 | Reviewed by: Owen John

Key takeaways

• You don’t have to accept the first offer, settlement agreements are routinely negotiated.
• Your leverage comes mainly from the strength of any claims you’d be giving up.
• It’s not just about money: references, restrictions, confidentiality, and timing are all on the table.
• How you respond early matters. A measured, well-advised approach usually gets further than an emotional one.
• A specialist solicitor negotiating on your behalf often more than pays for themselves.

Can you negotiate a settlement agreement?

Yes. This is the single most important thing to understand, and the thing people most often miss. A settlement agreement is an offer, not a final demand, and the terms are regularly negotiated. Employers usually expect some back and forth, and their opening figure often has room in it.

Many people sign the first thing they’re handed, either because they don’t realise they can push back, or because they’re worried that pushing will make the offer disappear. It rarely does. Done properly, through a specialist solicitor, negotiation is a normal part of the process, not a risk to it.

That’s a big part of what we do. We don’t just check the document and certify the advice, we assess whether the deal is genuinely fair, and where it isn’t, we go back and push. People regularly leave with a materially better package than they were first offered.

Where your leverage comes from

Negotiation isn’t about demanding more and hoping. It’s about understanding your position and using it. Your leverage usually comes from:

• Potential claims. If you have a realistic unfair dismissal, discrimination, or whistleblowing claim, your employer is paying to make that risk go away. The stronger the claim, the more that’s worth.
• Flaws in the process. A botched redundancy, an unfair disciplinary, a protected conversation where your employer behaved improperly, all of these weaken their position and strengthen yours.
• The employer’s need for certainty. If they want a quick, quiet, clean exit, that’s valuable to them, and therefore to you.
• What you’re being asked to give up. New restrictive covenants, strict confidentiality, a non-derogatory clause, these have value, and you can trade around them.

Working out your leverage is the first thing we do. It tells us what’s realistic and how hard to push.

What’s actually negotiable

It’s easy to fixate on the headline payment, but plenty is on the table:

• The compensation figure, the ex gratia payment is usually where the main movement is.
• The reference, agreeing the exact wording so you’re not left exposed. See getting a job after a settlement.
• Restrictive covenants, narrowing, shortening, or removing them.
• The tax treatment, making sure it’s structured efficiently.
• Timing and announcements, how and when your departure is communicated.
• Outstanding entitlements, bonus, commission, shares, pension, benefits, and keeping equipment like a laptop or phone.
• The legal costs contribution, so your advice is covered.

How to strengthen your position

A few things make a real difference:

• Don’t react on the spot. You’re entitled to time to consider (the ACAS Code suggests at least 10 calendar days). Listen, then say you’ll take advice.
• Get advice early. The sooner we see the offer, the more we can do with it.
• Stay measured. Settlements are commercial. A calm, evidence-based approach, “here’s why this offer undervalues the position”, gets further than anger.
• Know your bottom line. We’ll help you work out what you’d accept and what you’d walk away for, so you negotiate from a position of clarity.

What if negotiating backfires?

It’s the fear that stops people pushing: “what if they just withdraw the offer?”. In practice, that’s rare. An employer who’s offered a settlement usually wants the certainty it brings, and a reasonable, professionally-made counter-proposal doesn’t threaten that. If an offer is withdrawn, you’re generally no worse off than if you’d never had it, you still have whatever claims you had before. We’ll always talk you through the realistic risks before making any move, so nothing happens without your say-so.

Frequently asked questions

Can I negotiate my settlement agreement, or do I have to accept it?

You can almost always negotiate, and you certainly don’t have to accept the first offer. Settlement agreements are routinely negotiated, and employers usually expect some back and forth. The opening figure often has room in it, especially if you have potential claims or there were flaws in how you were treated. A specialist solicitor negotiating on your behalf frequently secures a better package than you’d get by signing straight away.

Will negotiating make my employer withdraw the offer?

It’s a common worry, but it’s rare in practice. An employer who’s offered a settlement usually wants the certainty and clean break it provides, and a reasonable, professionally-made counter-proposal doesn’t put that at risk. Even in the unlikely event an offer were withdrawn, you’d generally be no worse off, you’d still have whatever claims you had before. We always explain the realistic risks before making any move, so you stay in control.

What can I negotiate in a settlement agreement besides money?

Plenty. The reference wording (so you’re protected for your next role), restrictive covenants (narrowing or removing them), the tax structure, the timing and wording of any announcement, outstanding entitlements like bonus, commission, shares or pension, keeping equipment, and the legal costs contribution. Sometimes these non-cash terms matter more than an extra few hundred pounds. We look at the whole package, not just the headline figure.

How do I strengthen my position when negotiating?

Don’t respond on the spot, you’re entitled to time to consider (the ACAS Code suggests at least 10 days). Get advice early, so your solicitor has room to work. Stay measured and commercial rather than emotional. And know your bottom line before you start. Most of all, understand your leverage, the strength of your claims and any flaws in how you’ve been treated, because that’s what a negotiation actually turns on. We help you work all of this out.

Talk to us about negotiating your settlement

If you think your offer could be better, we’ll assess your position and negotiate on your behalf. We’re Darwin Gray, one of Wales’ leading employment law firms, and we do this every week. In most cases your employer covers the cost of our advice. You’ll deal directly with your solicitor, and as the only firm in Wales offering full Welsh language employment advice at every level, we can help in Welsh or English.

Get a free, no obligation chat with our employment team. Call 02920 829 100 or use our contact form.

Related information

Settlement agreements for employees

How much should you get?

Protected conversations

Restrictive covenants

Disclaimer: This guide is general information, not legal advice, and employment law changes. For advice on your situation, please speak to a qualified employment solicitor.

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