How Long Do I Have to Consider a Settlement Agreement?

Is There a Legal 10-Day Deadline for Settlement Agreements?

No. The 10-day period is not an automatic statutory deadline.

Instead, the Acas Code recommends that the parties should normally allow a minimum of 10 calendar days for the employee to consider the proposed formal written terms and obtain independent advice. What amounts to a reasonable period can depend on the circumstances of the particular case.

For example, you may need additional time if:

• the settlement agreement is lengthy or complicated;
• you need to obtain independent legal advice;
• you are negotiating changes to the agreement;
• there are several potential employment claims;
• you need additional information from your employer;
• you have a disability or require reasonable adjustments;
• the financial terms are complex; or
• you need more time to understand the tax implications.

Acas specifically states that employers should make reasonable adjustments for disabled employees who may need more than 10 days to obtain appropriate advice.

What Does the 10-Day Period Mean?

The recommended 10 calendar days should give you an opportunity to carefully consider the written settlement agreement and obtain independent advice.

This is important because signing a settlement agreement can mean giving up your right to bring certain employment tribunal or court claims covered by the agreement.

You should therefore avoid treating the document as something that simply needs to be signed and returned.

Instead, use the time available to understand exactly what you are agreeing to.

Can My Employer Give Me Less Than 10 Days?

An employer may propose a shorter deadline, and the Acas Code says the parties can agree otherwise. However, Acas recommends allowing at least 10 calendar days as a general rule.

If you are given an unusually short deadline, you can ask your employer for more time.

You should also speak to an employment solicitor as soon as possible. If you are being pressured to sign immediately, it is particularly important to obtain independent advice before accepting the terms.

Acas states that where an employee is not given enough time to consider an offer, the settlement discussions could potentially become relevant evidence in a subsequent employment tribunal claim.

Can I Ask for More Than 10 Days?

Yes.

The 10-day recommendation should not be treated as a maximum. The appropriate amount of time depends on the circumstances.

If you need additional time to obtain legal advice, understand the agreement or negotiate changes, you can ask your employer to extend the deadline.

For example, you could ask for additional time if your solicitor needs to review:

• the compensation offered;
• your notice arrangements;
• outstanding holiday pay;
• bonus or commission payments;
• pension arrangements;
• restrictive covenants;
• confidentiality provisions;
• an agreed reference;
• potential employment claims; or
• the proposed termination date.

A settlement agreement is a legal contract, so it is important to understand its terms before signing.

Do I Need a Solicitor Before Signing a Settlement Agreement?

Yes, if you want the agreement to be legally binding as a statutory settlement agreement, you must receive advice from a relevant independent adviser about the agreement and its effect on your rights.

The adviser can include a qualified lawyer who is independent of your employer.

Your employer may offer to contribute towards your legal fees. Acas says employers should consider offering to pay the cost of independent advice, although they are not legally required to do so.

It is worth checking how much your employer is prepared to contribute before instructing a solicitor.

What Should I Check During the 10 Days?

Do not use the consideration period simply to decide whether you like the amount of money being offered.

A solicitor can help you examine the entire agreement, including whether the financial package properly reflects your circumstances.

Important points to consider include:

1. Settlement payment

Check how much compensation you are being offered and whether the amount is negotiable.

2. Notice pay

Check whether you will work your notice, receive payment in lieu of notice or leave under another arrangement.

3. Holiday pay

Make sure any outstanding accrued holiday entitlement is dealt with correctly.

4. Employment claims

The agreement should clearly identify the claims you are agreeing not to pursue.

5. Tax

Different elements of a termination package can have different tax treatment, so you should understand how the proposed payments will be treated.

6. Confidentiality

Check carefully what confidentiality obligations you are agreeing to.

7. Restrictive covenants

Your settlement agreement may contain or change restrictions affecting what you can do after leaving your employer.

8. Reference

If an employment reference is important to you, consider whether an agreed reference should be included.

9. Termination date

Check that the proposed leaving date works for you and understand how it affects your notice, salary and benefits.

10. Legal costs

Check how much your employer will contribute towards the cost of your independent legal advice.

Can I Negotiate a Settlement Agreement During the 10 Days?

Yes.

The consideration period does not necessarily mean that you must simply accept or reject the employer’s first offer.

Settlement agreements are commonly negotiated. You may be able to negotiate the financial settlement as well as other terms, depending on your circumstances.

For example, negotiations could involve:

• increasing the settlement payment;
• changing the termination date;
• agreeing an employment reference;
• dealing with outstanding bonus or commission;
• changing confidentiality provisions;
• removing or amending restrictive covenants; or
• agreeing the employer’s contribution towards legal fees.

The strength of your negotiating position will depend on the circumstances, including the potential claims you may have and the evidence supporting them.

What Happens If I Do Not Sign the Agreement?

You are not required to accept a settlement agreement simply because your employer has offered one.

Settlement agreements are voluntary. If you reject the offer, the employment relationship or any underlying workplace dispute may continue through the appropriate process.

Depending on the circumstances, this could mean continuing with a grievance, disciplinary or performance process, redundancy consultation or another employment procedure.

It could also mean considering whether you have grounds for an employment tribunal claim.

Before rejecting an agreement, it is sensible to obtain legal advice so you understand the potential consequences.

What If My Employer Says I Must Sign Today?

Do not assume that you must sign immediately.

If you are being asked to sign a settlement agreement on the spot, ask for time to consider the formal written terms and obtain independent advice.

The Acas Code recommends a minimum of 10 calendar days as a general rule for considering the formal written terms and obtaining independent advice.

You should also avoid signing an agreement that you do not understand.

Once signed, a settlement agreement can have significant legal consequences because it can prevent you from pursuing the employment claims covered by the agreement.

How Quickly Should I Contact a Settlement Agreement Solicitor?

As soon as possible.

Although Acas recommends at least 10 calendar days in general circumstances, you should not wait until the final day to seek legal advice.

An employment solicitor may need time to:

1. review your settlement agreement;
2. understand your employment history;
3. identify potential claims;
4. assess the proposed compensation;
5. advise you on your legal position;
6. negotiate amendments with your employer; and
7. complete the necessary legal advice before you sign.

Starting the process early gives you more opportunity to negotiate if the initial offer is not appropriate.