Employment exit settlement offers: Responding, accepting and breaking the deadlock

It may well be that you have already been made an offer by your employer, so you need to respond, and you may want to do that in writing.

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    Responding to an offer

    If you respond, then you need to take account of the offer already made and remember that you are responding to an offer, not making an approach yourself.

    You are actually in a good position to secure a settlement agreement on favourable terms as your employer wants to achieve this and has already made an offer.

    Therefore, the structure of your letter needs to be slightly different from the ‘3 step’ approach – i.e Introduction, Facts of the dispute and Resolution – which we recommend for without prejudice letters that you yourself initiate.

    (See our article 10 tips on how to write without prejudice letters and emails.)

    Your letter in response to a settlement offer

    1) In your introduction,  start by saying that you are surprised and a little hurt that your employer wishes to terminate your employment. Then state how hard you have worked and how much your job means to you.

    This will elicit sympathy and create goodwill.

    2) In the second part of your letter, respond to the issues your employer has raised with you and that they are relying upon in order to offer you a settlement: fight your corner without being aggressive or making accusations.

    Correct mistakes if your employer has made them. Let them know that you are not prepared to accept their version of events and then present your own version of events.

    Use evidence in support of your arguments if you can, but make sure you use evidence in the way discussed in our article on gathering evidence.

    The idea in this section is to build a case based on your employer’s reasons for offering you a settlement and let your employer know that getting rid of you isn’t going to be as easy, or as cheap, as they think.

    3) The final part of the letter – the resolution – should be the same as if you were taking the first steps. The idea is to acknowledge there is an issue and then set out your counter-proposal to settle it.

    You should be able to get an idea of a realistic response to the initial ex gratia offer by noting what your employer has offered you.

    So, if they have offered two months’ gross salary plus notice (the common starting point), then you should be looking to achieve between four and five, and therefore responding to that offer with six months’ gross salary plus notice.

    When your employer doesn’t play ball: breaking deadlock

    It may not surprise you to learn that most of the time employers don’t simply roll over after the first letter or your initial response to their offer and give employees everything that they want.

    This is where the value of keeping some of your firepower in reserve comes into play.

    It is likely that, following a well-crafted letter, your employer will have made an improved offer; but, it is also likely that this offer still falls short of what you want and can realistically achieve: it’s time to roll out the big guns.

    You should aim to respond to your employer in writing, but this time, use some of those strong arguments that you’ve been holding in reserve for just such a time as this.

    While your language should continue to be professional, now is the time to explain that you consider the company’s actions to be unlawful and that you have a potential claim in the employment tribunal.

    Make it clear that you do not wish for these issues to end up in an employment tribunal unless they are settled now but that’s where things may end up.

    Your letter should also say that, while you welcome the fact that your employer has increased its offer, it is not sufficient for you to accept.

    Set out how the facts relate to the claim you have, mention witnesses and introduce any evidence you have so that, at this stage, your employer should have all the evidence they need to determine the risk you present.

    Make it clear that while you remain calm and professional, you are prepared to stand your ground and are not going to be a pushover.

    Now also may be the right time to instruct a solicitor if you haven’t already done so. You have an offer on the table and a settlement agreement is likely, so you just need the final push to get you what you want.

    A solicitor entering the fray is sometimes enough for your employer to recognise that this is going to get serious unless they come to an acceptable deal.

    It also shows that you have at least some of the same resources available to you that they have and that often breaks the deadlock.

    A quick letter or call from your solicitor can help get you what you want, and it’s not going to cost you very much given that you have already made a lot of the running.

    Bear in mind that you will need a solicitor anyway to advise you on and sign your settlement, so if you can instruct one now, then it may solve two problems.

    Accepting an offer

    It’s sometimes difficult to know when to accept an offer, but the general rule is that when both parties are not happy about the deal, then this is a good time to accept. What do we mean by this?


    The art of a compromise is to make a compromise

    This means that both parties think that they are giving something away that they are not necessarily entire happy with.

    Sometimes (probably in 25% of the cases we deal with) this doesn’t happen, and the employee is entirely happy with the deal, which is fantastic, and you’ll know when this is because you’ll be popping the champagne corks.

    However, in the majority of cases, both the employer and the employee leave the negotiation not entirely happy with everything, but both with a deal they can work with: this is the usual scenario in our experience.


    When it’s OK not to be happy with the final offer

    What we often find is that, although the employee may have not been entirely happy with the final offer (i.e. they may wonder if they could have received more), it is something that they planned to accept had the offer been made.

    So in the next day or two, they become satisfied with the deal and are very pleased with the overall situation and relieved to be moving on with a good sum of money.

    So how do you know when this situation arises?

    Well, it’s not necessarily when your employer says that this is a ‘final offer’ as this can be a negotiation tactic. If this happens, you will have to work out whether you believe them to be bluffing or not.

    In our experience, if an employer says, ‘final offer’, then you can probably get them to move a little bit more. If they do move a little more, then now is the time to accept.


    Another tactic is to propose a compromise on the employer’s latest offer

    Suggest that if you meet in the middle then that would be acceptable, but with the intention of taking slightly less than that.

    You would say,  “If you would be willing to move to £X, then I will accept your offer”, or, “then we will have a deal”.

    For example, if your employer is offering an ex gratia payment of £16,000, and you are offering £24,000, then you suggest that, if they move to £20,000, then you have a deal. 

    This is sometimes enough to generate an offer of £19,000, as the employer will think that they are winning because they are offering less than you suggested.

    They don’t know that this is what you wanted them to do all along. This is the time to accept.

    What to do if your employer won’t move

    If your employer is unwilling to move on the ex gratia element of the package and you have tried everything to get them to move, either instruct a solicitor or try to come to an agreement on another element of the package that will give you higher remuneration.

    For example, ask for your car allowance to be paid for the same duration as your PILON, or for your benefits that would have accrued during your notice period (such as your pension, healthcare plan etc), to be paid as damages.

    If they offer this, then it’s probably time to accept.

    What to do when you’re ready to accept an offer

    If you feel you have reached the stage where you wish to accept an offer, then you need to write to your employer telling them that you will accept the offer ‘subject to contract’.

    This means that while you are willing to do the deal, the deal isn’t done until you’ve signed the contract. This is very important, as it allows you or your solicitor to alter elements of the deal as and when they arise.


    Next steps

    If you would like advice or help with negotiating a settlement offer, then Monaco Solicitors are ideally placed to help you. We are a small but well-established firm that only handles employment cases for employees.

    We have years of experience in successfully negotiating settlement agreements on behalf of our clients and can help you at any stage in the process, including signing off your final settlement agreement.

    If you’d like a no-obligation consultation with one of our experienced employment lawyers, then get in touch:

    • Via this link
    • By phone on 020 7717 5259
    • Email: communications@monacosolicitors.co.uk