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In this article one of our specialist employment solicitors, Chris Hadrill, provides a brief introduction on how much you should expect to receive for your settlement agreement (or, to put it another way, what a reasonable value is for a settlement agreement).

If you’ve been offered a settlement agreement or are looking to approach your employer to negotiate a settlement agreement then one of the first questions you will undoubtedly ask yourself is: “how much is my settlement agreement worth?”. Generally, when we’re considering how much a settlement agreement we’re looking at the ex-gratia (tax-free) value of compensation that you are being paid as compensation for the loss of your employment (to put it another way, we’re assuming for the purposes of this article that you’re going to be paid your minimum legal entitlements (notice pay, holiday etc.) under your settlement agreement and we’re therefore looking at what can be negotiated on top of your minimum legal entitlements.

In determining what monetary value is appropriate for your settlement agreement your solicitor will generally analyse your particular situation based upon two types of analysis: firstly, what (in your solicitor’s experience) would your solicitor normally expect you to be paid under your settlement agreement given your circumstances; and, secondly, given the particular circumstances of your individual case what is an appropriate amount for your particular settlement agreement?

In respect of the first question, the answer to this will obviously depend on what your circumstances are: if you have accepted voluntary redundancy then it is (generally) not possible to seek to negotiate the value; however, if you’re an employee being made compulsorily redundant (i.e. you’ve been told that you will be made redundant) and you’ve got more than two years’ continuous employment with your employer then what we generally tend to expect you to be offered as the ex-gratia (tax-free) amount is a sum of between one and three months’ gross salary as compensation for the loss of your employment (in addition to your notice pay, holiday pay, statutory redundancy pay (and any bonus, commission etc. if relevant)). The reason for this valuation is that the ex-gratia amount in a redundancy situation is normally principally based upon the loss of earnings (if any) that you will suffer as a result of the termination of your employment.

Although it may be possible to roughly estimate what value of compensation is reasonable in redundancy (and other unfair dismissal situations), the situation becomes a bit more complicated if you have other types of claims (for example, if you have a ‘whistleblowing’ and/or discrimination claim). In these circumstances the value of your claim will depend on, among other things, what has happened (i.e. what detriments you are alleging you have suffered), how hurt you have been as a result of what has happened, whether your employer’s conduct has been (broadly) malicious in nature), and what loss of earnings you have suffered as a result of what has happened – broadly, the more serious the case and the longer it takes you to get a new job, the more valuable (in monetary terms) your case is.

It is always advisable to get expert legal advice from an experienced specialist employment solicitor on your case, for two reasons: 1) in certain situations (particularly where you believe that you’ve been discriminated against, harassed, victimized or penalised due to ‘blowing the whistle’) your case may be complex and it may be difficult for you to untangle the various points of law – a specialist employment solicitor will be able to quickly analyse your case and provide you with the relevant advice; and 2) your employer will normally pay for most, if not all, of the cost of this advice.

As a final point, and this ties in with all of the above, you must have a reasonable and realistic expectation as to what’s achievable in settlement agreement negotiations: Employment Tribunal cases are generally not worth millions of pounds (although there are exceptions) and your employer (or their legal representatives) will generally be experienced in these types of negotiations and have a set view on what level of payments are appropriate – however, it’s your solicitor’s job to let you know what they think your case is worth and to do their best to achieve what you want in the circumstances.

 

About Chris Hadrill

Chris is a specialist employment lawyer at Redmans. He specialises in contentious and non-contentious employment matters, including breach of contract claims, compromise agreements and Employment Tribunal cases. He writes on employment law matters on a variety of websites, including Direct 2 Lawyers, Lawontheweb.co.uk, LegalVoice, the Justice Gap and his own blog. Contact Chris by emailing him at chadrill@redmans.co.uk

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Excellent advice and customer service.

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I would definitely recommend Redmans. Very impressed with service provided. They were extremely proactive in handling my case which made things easier for me. Provided sound advice and resolution. Special credit for this goes to Chris who dealt with my case with great determination and consideration.

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Excellent, quick and informative. Chris was a real star and gave me confidence during the uncertainty if a redundancy settlement.

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Redmans were quick to respond to my enquiry and dealt with my case professionally and personably. I received sound advice and was put at ease by Chris Hadrill, Partner.

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Contacted them regarding my end of employment agreement. Chris Hadrill dealt with it and was done and handed back to employer same day more than happy with there service.

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