Settlement Agreement Calculator

If you’ve been offered a settlement agreement you might be wondering how much compensation you are entitled to. Unfortunately, despite what you might read or have been told, there is no hard and fast rule about how much compensation your employer should offer you. There are just too many variables to consider and each individual case is different.

However, a good starting point would be to consider: –

Contractual benefits

You should receive all contractual benefits to the termination date. These will include: –

Salary
accrued holiday pay
pension
additional benefits, such as private health insurance
Notice pay or payment in lieu of notice (PILON).
If you are entitled to a bonus or commission, then you should check with your employer whether this is going to be included in the settlement. Other benefits, such as whether your employer is intending to compensate you for the loss of share options, should also be considered. Will you be classed as a ‘good leaver’?

NB: All contractual benefits are taxable and subject to national insurance deductions.

Compensation

Your employer will usually offer you a termination payment as compensation for loss of employment and in exchange for waiving your right to bring certain legal claims against them. This is sometimes referred to as an ex-gratia payment and is in addition to any contractual benefits due. The first £30,000.00 of the termination payment is paid tax free and can include a statutory redundancy payment (SRP). If you are being made redundant you can check that the SRP is correct by logging onto the Government’s website.

https://www.gov.uk/calculate-your-redundancy-pay

Sometimes, depending on the terms of your contact of employment or the circumstances of your case an employer will offer an enhanced termination payment.

Additional benefits

Sometimes employers will pay for outplacement support services to help with your next career move. This can be particularly useful if you have worked for your current employer for a number of years and perhaps haven’t had cause to apply for jobs or attend interviews for a long time and therefore feel that you are ‘out of practice.’

A good Reference may be important to you. If you are leaving your employer on good terms it may be that a well written Reference will help you find another job more quickly. However, it may be company policy to provide only a factual Reference confirming dates of employment and job title.

In some circumstances you may wish to agree an ‘announcement’ with your employer, in other words an agreement about what other employees should be told about the reason for you leaving.

Will your employer offer you garden leave? This may be something you would wish to ask.

Your employer will usually contribute £500.00 – £750.00 + VAT towards your legal fees. In most cases this is sufficient and the invoice is sent direct to your employer.

Is the settlement agreement offer fair?

Your employer will usually have a figure in mind that they are prepared to offer you but there are a number of factors which may be relevant depending on the individual circumstances:

Most termination payments are equivalent to 1 – 3 months gross salary, but seniority is a factor. The more senior your role and the longer you have been employed the more you can expect to receive – sometimes up to 12 months.
If you have a strong case and clear evidence to support a claim then you may be able to negotiate as higher settlement.
Sometimes an employer will want to resolve a dispute or a redundancy situation quickly rather than go through a lengthy process and this can lead to a higher offer.

However if you are happy with the offer your settlement agreement can be concluded fairly quickly.

If you have been offered a settlement agreement call Diane Massey for free no-obligation discussion on 01925 937070.

You can also email Diane Massey at Dianemassey@dsmlegal.co.uk and request a call back at a time convenient to you. We offer:

A fast turnaround.
Telephone and email consultations or personal attendance at our offices in Warrington town centre.
Evening and weekend telephone consultations.

Settlement Agreement Calculator