What’s a reasonable employment law settlement payment?
If you or your employer want to explore terms to bring an end to your employment, or you’re pursuing an employment law case, and you have been offered a settlement, how do you know if it’s worth taking? Let’s find out more.
Settlements are exceptionally important in employment law cases. It’s in everybody’s interests to settle a case to avoid going to tribunal as it makes things faster, less stressful and, perhaps most crucially, less costly. It can also prevent damage to your reputation, whether you’re the employer or the employee in the case.
Where there’s an employment dispute, perhaps because you have been dismissed or your employer wants to end your employment, there’s a good chance that, at some point, you’ll talk about a settlement. But how do you know what’s acceptable? How do you know whether you should take the settlement or refuse it, knowing that you may need to go through the stress of a tribunal? In this article, we’ll talk more about settlements and give you some things to consider if or when you’re offered one.
What is a settlement?
Settlements are agreements between the employer and employee that can happen at any stage, whether during employment, before a case goes to tribunal or even during tribunal proceedings.
Typically, it involves a payment from the employer to the employee in order to terminate their employment. However, sometimes it could be where an employer agrees not to pursue a disciplinary process where there is a chance that the employee could be dismissed without notice. The upside for the employee here is that they can move on with their career without a disciplinary sanction on their record. If an employment tribunal claim is underway, it could involve a payment to bring an end to the proceedings and allow both parties a clean break.
During the back and forth of an employment law case, there are so many incentives to settle. For both sides, employment tribunals are:
● Time-consuming - It can take months or even years for a case to reach a final judgment, during which time both sides will find it difficult to move on
● Stressful - Being involved in an employment law case is stressful, especially for the employee, who will wonder whether they have the strength to take on an entire company
● Costly - Both sides may want lawyers to help them pursue or defend the case, which, of course, can be extremely expensive
● Unpredictable - Both sides think they’re in the right, but only one will be when the case is finalised
You can understand why an employer will sometimes offer a settlement. Once they do, it’s up to the employee whether to accept it. But if you’re in that position, how do you know if it’s an acceptable offer, or if your being short-changed, just because they want you not to take it further or drop your claim?
How do employers calculate settlements?
Several factors should be taken into account when deciding what to offer employees as part of a settlement.
Ordinarily, it would include payments that an employee would be entitled to on termination of employment, or agreement that the employee may take outstanding holiday and be paid for, rather than required to work their notice. However, it can also include an additional non-contractual payment, often referred to as an ‘ex-gratia’ payment or ‘compensation for loss of office’.
The sum of the additional payment could depend on factors including:
● The reason for the employment ending
● The employee’s seniority
● Length of service
● The conduct of the employee during this period
● Any employment law issues at play
Generally, negotiations are based on a number of months of the employee’s salary.
What’s acceptable?
This is the tricky part. The employer might offer you an amount in good faith, but it may be totally unreasonable to you. The key to answering this question lies in how likely you are to be successful in your case, and, if you were successful, how much compensation you might expect.
But how can you know this? This is where an employment lawyer comes in.
At Couchman Hanson, our employment solicitors don’t just know the law; they have years of experience bringing employment claims. They know the employment tribunal process inside and out, and they know how much compensation you’re likely to be awarded if your case goes to tribunal.
Our specialist employment solicitors at Couchman Hanson can:
● Help you to understand your options
● Negotiate on your behalf
● Provide you with tips and tactics to get the best possible settlement
Creating an acceptable and legally binding settlement
If you’re wondering whether you really need an employment lawyer to help you fight your case, or you’re worried about the cost, you need to consider this:
When you reach a settlement with your employer, the parties will want to record its terms in a settlement agreement (a legally binding agreement setting out the terms reached). Such agreements will usually require the employee to agree not to pursue claims and to maintain confidentiality in return for the payment.
It is a legal requirement that the employee seeks legal advice on the terms and effect of a settlement agreement from an independent solicitor. Employers will generally contribute towards the costs of an employee seeking this advice.
You’re likely to need an employment lawyer at some point during your case, but having the weight of a solicitor behind you from the outset often provides greater leverage in settlement negotiations.
Find out more from Couchman Hanson
If you’re bringing an employment law case and you want to explore a settlement, you think you may be offered a settlement agreement in the future, or you’ve been offered one already, it’s time to talk to Couchman Hanson.
At Couchman Hanson, our solicitors genuinely care about getting the best outcome for you. We’re highly professional, with ‘city-level’ talent and experience, but also friendly and welcoming. Everything we do fits with our values of integrity, honesty and authenticity.
Call 01428 722189 or visit couchmanhanson.co.uk