Calculating and assessing the value of your settlement offer involves consideration of several factors that can influence the amount and range of compensation you will want to negotiate with your employer. In his latest blog, Clive Mackintosh, an experienced settlement agreement solicitor explores the key areas of consideration, along with useful advice and insights.

Strength of your case

The stronger your potential claim is, the higher your settlement offer will be, subject, of course, to the relevant law and specific facts and circumstances of your dispute.

Unfair dismissal

If you have a compelling case for unfair dismissal, or other similar employment law breach, your settlement offer is likely to be higher because your employer will already have received legal advice on the financial value and exposure to any compensatory award. If your dispute links to a potential unfair dismissal claim, you will need to calculate your offer based on a legal formula which an Employment Tribunal would follow to assess your compensation. Compensation for unfair dismissal is calculated using a basic award and a compensatory award formula. The basic award is a fixed sum calculated on your age, length of service, and weekly pay. The compensatory award, on the other hand, is calculated based on your net loss of earnings, length of unemployment and other losses, such as loss of pension, loss of commission or bonus.

Basic award

Your basic award is calculated using the following formula:

Under 22 years: 0.5 weeks' pay for each year of service.
22–41 years: 1 week's pay for each year of service.
41years or older: 1.5 weeks' pay for each year of service.

The basic award is capped at a statutory limit, which changes annually.

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Compensatory award

Your compensatory award is calculated by multiplying your net weekly salary by the number of weeks you were or are likely to be unemployed. The Tribunal will also consider your loss of future income, statutory rights, and other direct losses.

Contractual compensation

You should include in your settlement valuation offer, your entitlement to:‍

Notice Pay: This is the amount you would have received if you had been given proper notice of termination or the amount your employer must pay on giving you notice to terminate your employment.‍
Holiday Pay: Additionally, you are entitled to claim any accrued but untaken holiday pay owing to you at the date of termination of employment.‍
Pension Contributions: If you are a member of your employer’s occupational pension scheme, or other similar scheme, you will be entitled to claim a loss of pension contributions your employer is legally obliged to make into your pension for the period you remain unemployed. You can still claim a loss of pension contribution even if you obtain new employment if your new employer’s pension contributions are less than what your old employer paid.‍
Compensation for Injury to Feelings: In cases of discrimination, harassment, victimisation, bullying or whistleblowing, you are entitled to claim compensation for the emotional distress caused. This will be assessed based on the level of distress and upset you have suffered.

Employer fear

Depending on the circumstances of your dispute, the nature of your job, the sector within which you work and the brand value of your employer, it is very often the case that your employer will be fearful of your dispute becoming public, which will certainly be the case if you were to issue an Employment Tribunal or Civil Court claim.

This reputational fear is a crucial factor when calculating your settlement offer. It allows you to go beyond what your employer may think your claim or offer is worth, simply because it would want to keep the circumstances of your dispute private. Put simply, let us say your employer has received legal advice that your claim or offer is worth between £40,000 to £50,000. That will not prevent you from getting an agreed settlement offer of say £60,000 simply because in the eyes of your employer, it is worthing paying you an extra £10,000 to avoid publicity, avoid the expensive legal costs of defending your claim, and most importantly keeping your settlement private and confidential.

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Discrimination

When calculating your offer in relation to a potential discrimination claim, the first thing you need to understand is that there is no financial limit to what an Employment Tribunal can award you. When assessing compensation for unlawful discrimination an Employment Tribunal (ET) will consider the effect of the discrimination on you, the seriousness of the treatment you suffered, your vulnerability, and the impact on your career. This includes the Employment Tribunal considering:

Severity of the treatment: How upsetting the conduct was for you.
Vulnerability: Whether you have a recognised medical condition, or have experienced stress or loss of confidence
Impact on career: How the discrimination has affected your career.
Position of the discriminator: The role of the person who committed the discrimination.
Frequency of the discrimination: Whether the discrimination you suffered was a single incident or part of a series of ongoing acts of discriminatory conduct.

VENTO Bands

An Employment Tribunal will have regard to a form of benchmarking known as the ‘Vento Bands’, when assessing your compensatory claim for injury to feelings. These bands are updated annually. These bands are considered separately from any claim for monetary loss you may have also suffered such as loss of earnings, future loss of earnings, bonuses, commission, or pension loss.The Vento Bands are made up of ‘lower, middle, upper and exceptional ‘benchmarks which are used as a guide by the Employment Tribunal for assessing the right level of compensation to award you.

Lower band: If your claim is less serious, you can expect to be awarded between £1,200 and £11,700.
Middle band: If your claim is more serious, you can expect to be awarded between £11,700 and £35,200.‍
Upper band: If your claim or dispute is in the most serious category you can expect to be awarded between £35,200 and £58,700.‍
Exceptional cases: And in circumstances of exceptional behaviour on the part of your employer, you would be entitled to claim more than £58,700. Remember there is no financial limit to what a Tribunal can award you.

For advice on concluding your settlement agreement contact Clive Mackintosh today, call 0330 043 8845, email clive@solicitor.help, or request a call back.