Settlement agreement when the employee will not sign

An employee who refuses a settlement agreement has not refused to leave; they have refused the terms, or the timing, or the idea, and the employer's options depend on which. The protected conversation and the without prejudice rule mean that the refusal costs the employer nothing if the conversation was handled properly, the ordinary process continues from where it was, the offer can be improved or left, and a settlement can still be reached through Acas if a claim follows. What the employer must not do is treat the refusal as a reason for anything. I draft the agreement for the employer for a fixed fee of £795, delivered in three working days, with a note on the conversation that covers the refusal; a version including negotiation with the employee's adviser is £995.

Who this is for

Employers in England and Wales whose employee has declined a settlement offer or gone quiet, and employers who want to know what happens if the offer they are about to make is refused.

What matters when the employee refuses

Why employees refuse and what the refusal tells the employer

Employees refuse because the figure is too low against the claims they think they have, because they want to keep the job, because they distrust the process, because their adviser has identified a claim the offer does not reflect, or because they want to negotiate and the refusal is the opening; the employer should find out which (the adviser's letter usually says), because each has a different answer: a figure that is too low can be improved, an employee who wants to stay is managed under the ordinary process, distrust is addressed by time and a proper written offer, a new claim changes the exposure, and a counter-offer is a negotiation; the note helps the employer read the refusal.

The ordinary process and picking it up without contamination

If the conversation was a protected conversation under section 111A of the Employment Rights Act 1996 or a without prejudice discussion, the offer and the refusal cannot be referred to in the claims the protection covers, and the employer continues with the ordinary process (performance, conduct, redundancy, long-term absence) from where it was before the offer, as if the offer had not been made: the same managers, the same stages, the same standard, no acceleration and no reference to the offer in the process documents; an employer that dismisses two weeks after a refused offer, with a process that suddenly concluded, has made the refusal the reason, and the note explains how to keep the process clean.

Improving the offer and the point at which it stops being worth it

The employer can improve the offer (a higher figure, better terms, a longer time to decide) where the adviser's response suggests that a better offer would settle and the exposure justifies it, and the employer should decide in advance the figure above which it would rather run the process, because an employer that improves the offer three times has told the employee that refusal pays; the point at which settlement stops being worth it is where the extra cost exceeds the cost and risk of the process, and the note helps the employer set that point before the first offer rather than after the third refusal.

Acas, early conciliation and the settlement after a claim

If the employee threatens or brings a claim, they must first notify Acas for early conciliation under section 18A of the Employment Tribunals Act 1996, which is a further opportunity to settle, through the conciliation officer and on a COT3 form that binds without independent advice; many employees who refused a settlement agreement accept a settlement through Acas once the claim is real and the adviser has priced it, and the employer should treat early conciliation as the second round rather than as a failure; the agreement I draft can be reproduced in the form Acas uses, and the note explains the sequence.

The refusal that is a counter-offer

Most refusals come with a request: more money, a better reference, a later termination date, softer confidentiality, the covenants reduced, the fee contribution increased; the employer should treat the request as the negotiation it is, respond through me (the one round the fixed fee covers, or the negotiation service where the back and forth will continue), decide each point against the exposure, and keep the offer in writing and without prejudice throughout; an employer that responds to a counter-offer with silence has usually lost the settlement, and one that concedes everything has taught the employee to ask again.

Keeping the door open and the offer that is withdrawn

The employer can withdraw the offer after the period for acceptance has expired, and should say so in the offer letter, but should keep the door open where the ordinary process will take months and a settlement later would still save them: a short written note that the employer remains willing to discuss an agreed departure, without pressure and without a deadline, is the usual form; the agreement is drafted so that it can be put again with the figures and dates updated, and where the employee eventually signs, the terms meet the conditions in section 203 of the Employment Rights Act 1996 and section 147 of the Equality Act 2010 and the payments are made with the compensation inside the thirty thousand pound threshold that section 403 of the Income Tax (Earnings and Pensions) Act 2003 exempts, notice pay taxed as earnings under section 402B and the adviser's fees under section 413A, whenever the signing comes.

What it costs

Settlement agreement, £795. Drafted for your situation, with a note on how to have the conversation. Three working days.

Settlement agreement including reasonable negotiation with the employee's adviser, £995. The agreement in three working days. The negotiation then runs until the agreement is signed or it becomes clear it will not settle. Reasonable negotiation means what, in my experience, amounts to the standard back and forth on a settlement agreement. If the employee or their adviser is being unreasonable, for example by conducting themselves unprofessionally or requiring a substantial rewrite that needs material further legal advice to you, I will flag it and we will discuss how best to proceed, which may involve further fixed-fee work. That would be unusual.

Buying online forms the engagement on payment. The scope is what the settlement agreements for employers page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A bespoke settlement agreement drafted for the exit you are dealing with
• Proper waiver of the relevant statutory claims, so the agreement does what you are paying for
• Advice on the tax treatment, including the £30,000 exemption and what falls outside it
• Confidentiality, non-derogatory statements and an agreed reference
• Reaffirmation or replacement of restrictive covenants, which is often the real value
• A short note on how to open the conversation and keep it without prejudice or protected
• One round of amendments after the employee's adviser responds

What is not included

• Advising the employee, which their own adviser must do independently for the agreement to be valid
• Tribunal representation if the matter does not settle
• Payroll processing of the settlement sums
• Handling the settlement payment, since I do not hold client money

Questions I am often asked

The employee has refused our offer. Can we dismiss them now?

Not because they refused, and not with a process that suddenly concludes. Continue the ordinary process from where it was, as if the offer had not been made, and the protection means the offer is not evidence against you.

Should we increase the offer?

If the adviser's response suggests a better offer would settle and the exposure justifies it, once. Decide in advance the figure above which you would rather run the process, and do not improve the offer repeatedly.

Is there another chance to settle if they bring a claim?

There is, through Acas early conciliation, which the employee must go through before claiming, on a form that binds without independent advice. Many employees who refused an agreement settle at that stage.

Related guidance and services

• Settlement agreements for employers, £795, the service this page describes
• Employment contracts and handbooks, £595
• Shareholders agreement, £995
• Protected conversations before a settlement
• Settlement agreement when a tribunal claim has been started

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.