UK · Templates

Settlement agreement response letter

Never sign a settlement agreement on the day it is offered. Reply in writing confirming you are considering it, requesting time (usually 10-21 days), and confirming you will take independent legal advice. Never waive rights in the response.

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Why a response letter matters

Settlement agreements bind you permanently on the terms in the document. Signing without proper review or advice can waive discrimination, unfair dismissal, whistleblowing and other claims worth tens or hundreds of thousands of pounds. Take time and take advice.

Standard response template

[Date]

Dear [HR Contact / Line Manager],

Thank you for the settlement agreement offer dated [offer letter date]. I confirm that I have received the draft agreement.

I would like to take the time provided under the statutory requirements to consider the terms carefully and to obtain independent legal advice as required by section 203 Employment Rights Act 1996.

I request confirmation that:

  1. The employer will pay reasonable legal fees for my adviser (typically £500-£1,500 plus VAT).
  2. The offer remains open for at least [21 days / the period stated in the offer letter].
  3. The proposed effective date of termination is [date] as stated.
  4. All calculations (statutory redundancy, PILON, holiday pay, ex-gratia) have been provided in itemised form.

I will respond substantively once I have taken advice. Please treat this letter as a preservation of all my legal rights - nothing in it constitutes acceptance of any terms.

Yours sincerely,

[Your Name]

Where you want to negotiate

[Date]

Dear [HR Contact],

Thank you for the settlement offer. Having taken independent legal advice, I propose the following amendments before signing:

  1. Ex gratia payment: increase from £[X] to £[Y] to reflect [reason - length of service, discrimination claim value, unfair dismissal risk].
  2. Reference: attach the agreed reference wording to the agreement and treat as binding.
  3. Restrictive covenants: reduce the [non-compete / non-solicit] period from [X] months to [Y].
  4. Payment timing: 50% on effective date of termination, 50% within 30 days of signed release.
  5. Legal fees contribution: increase from £[X] to £[Y] to reflect the complexity of the advice.

I remain willing to reach a mutually acceptable agreement on these amended terms. Please respond within [7 working days] to allow the process to complete before the offer deadline.

Yours sincerely,

[Your Name]

Never include

  • Acceptance of any specific term - keep responses conditional on final agreement.
  • Waiver of any legal right.
  • Emotional criticism of the employer.
  • Threats of tribunal claim (even where legitimate - keep negotiations separate).
  • Detailed grievances - these go elsewhere.

Legal fees

Section 203 ERA 1996 requires you to take independent legal advice from a qualified adviser before a settlement agreement can bind you. Employers typically contribute £500-£1,500 plus VAT to legal fees. For senior or complex packages, negotiate a higher contribution.

Delivery

Email to HR with your line manager copied. Use subject "Settlement Agreement Response - [Your Name]". Save the sent copy and delivery confirmation.

Timeline expectations

Standard settlement negotiation timeline:

  • Day 0: Offer received.
  • Day 3-5: Initial response acknowledging and requesting time.
  • Day 5-10: Legal advice appointment.
  • Day 10-14: Negotiation response with proposed amendments.
  • Day 14-21: Employer counter-response and negotiation.
  • Day 21-28: Final agreement signed.
  • Day 28-45: Effective date of termination and payment.

Useful calculators

Related guides

Authority pages

Frequently asked questions

How long do I have to respond to a settlement agreement?
The offer letter usually states a deadline (typically 10-21 days). Best practice is 10 working days minimum for review and legal advice. ACAS guidance recommends 10 calendar days at least.
Should I sign immediately?
No. Take at least 10 days for review and legal advice. The employer must pay reasonable legal fees for your adviser (typically £500-£1,500 plus VAT) as part of the statutory requirement.
Can I negotiate the terms?
Yes. Most settlement offers are opening positions with room to move. Common negotiation levers: ex gratia amount, reference wording, restrictive covenant reductions, payment timing, legal fees contribution.
What if I refuse the offer?
The offer typically lapses. You continue to work under the existing contract. Employment may or may not continue depending on the underlying situation (redundancy, performance, disciplinary). Consider whether a tribunal claim is viable.
Do I have to get legal advice?
Yes. Section 203 ERA 1996 requires independent legal advice from a qualified adviser before a settlement agreement can bind you. The employer must contribute to the legal fees.

Sources and further reading

General information about UK employment law, not legal advice. For your situation, contact ACAS or an employment-law solicitor.