How to Make a Counter-Offer on Your Settlement Agreement

How to make a counter-offer on a settlement agreement

If your employer offers you a settlement agreement and you don’t feel it’s enough, it may be time to negotiate for more. Getting the counter-offer right will make all the difference.

Why make a counter-offer?

Often an employer starts with a deliberately low offer, expecting you to negotiate in response. So, if you don’t maker a counter-offer, you may find you’re missing out on money that they’re willing to pay you.

Even if your employer considers their first offer to be fair, there may still be scope for negotiation. After all, the employer may not appreciate the full value of your legal rights.

How much should you ask for?

The amount you ask for should take account of:

  • Whether your employer has acted fairly and reasonably
  • The reason your employer wants to end your employment
  • How long you’re likely to be out of work
  • The terms of your employment contract and any staff policies

There are a number of issues to consider. You may find it helpful to read this article about how much you should expect in a settlement agreement.

When should you make the counter-offer?

The ACAS Code of Practice recommends that staff are given 10 days to consider any offer of a settlement agreement. But do you really need that long?

After all, there may be advantages in responding sooner, particularly if you’re finding the process stressful. That’s why we recommend that you take no longer than you need to make a decision and plan your counter-offer.

Should it be without prejudice and/or as part of a protected conversation?

The without prejudice rule is that any discussions which you intend to lead to resolving a dispute are off the record. This means that neither party can use those communications in evidence. However, the problem with the without prejudice rule is that it only applies if there’s an existing dispute.

That’s why protected conversations are important. They enable employers and their staff to have settlement discussions, even when there’s no existing dispute.

In practice, the difference between the without prejudice rule and the rules concerning protected conversations are often of no practical significance.

Our advice is that you carry out negotiations within a protected conversation and without prejudice. That way, it’s completely clear that the discussions are off the record.

This article contains some useful information about how to have a protected conversation.

To whom should the counter-offer be addressed?

Should you send your counter-offer to the HR department? Or Your line manager? Or perhaps the managing director?

As a rule of thumb, it’s usually best to send the counter-offer to the person who sent you the original offer. If necessary, they can consult with others before responding to you.

Do you need legal advice before making a counter-offer?

Although the law requires you to get legal advice on your settlement agreement before signing it, you’re going to be better off speaking to a solicitor at an early stage.

Many advisers offer a free initial consultation of up to half an hour, so you’ve got nothing to lose. Letting your employer know that you’ve spoken to a solicitor can add weight to your counter-offer.

Should you make the counter-offer in writing or verbally?

Whether you respond verbally or in writing depends on your negotiation strategy.

For example, you may be negotiating on the basis of good will, appealing to empathy or a sense of your the company’s moral responsibility.

In these circumstances, a face to face conversation may be best because it helps to maintain a constructive relationship. Meanwhile, emails can often be misunderstood or come across as threatening.

Nevertheless, if you’re negotiating on the basis of your legal rights, then it’s often better to set that out in writing. A suitable template is set out below.

Template for a counter-offer on your settlement agreement

Every situation is different and so the basis for your negotiation may vary from someone else’s. However, the template below will help you think about what you should include. Feel free to tailor it to your own circumstances.

Subject: Response to Settlement Agreement Offer

Dear [name]

Without prejudice and Subject to Settlement Agreement
Protected Conversation under Section 111A of the Employment Rights Act 1996

Following our meeting on [date], I have now had the chance to consider your settlement agreement offer and take legal advice on it.

Whilst I hope that we can resolve this matter amicably, my solicitor has advised me that the amount you are offering in the settlement agreement does not reflect the value of the claims I would be giving up. In particular, [brief details of unfair treatment by employer].

My solicitor has advised me that I could claim compensation of up to [£amount] in an employment tribunal. Nevertheless, I would prefer to avoid a claim if possible and I hope that we can reach a fair settlement.


I have given careful thought to the situation and on the basis of my solicitor’s advice, I confirm that I am willing to settle for:

• Payment in lieu of notice
• Compensation in the sum of [£amount]
• An agreed reference
• Payment of my legal costs for advice on the settlement agreement.

I hope you will that this is fair, particularly taking into account [include non-legal issues such as your contribution to the business, the difficult situation you will be in by losing your job, the economic climate etc].

Next steps

Provided you agree to the above offer, please let me have a draft settlement agreement for approval.

I look forward to hearing from you as soon as possible please.


[your name]

It may be helpful to include the name of  your solicitor and copy them in on the email.

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