This is the sixth blog in our series ‘simplifying settlement agreements’ where we tackle these agreements clause by clause and give you the essential information in a nutshell. Our director Emma Reid explains how to calculate settlement agreement amounts and what to look out for.

How do I calculate my settlement agreement amount?

The short answer is that there is no universal formula to calculate the amount that an individual should receive if they enter into a settlement agreement. It should always be remembered that a settlement agreement is just that, an agreement between two parties. Much as it may be possible to arrive at an estimate potential sale price for a house (after taking into account several factors and making various assumptions) with settlement agreements there is no way to be absolutely sure of the amount that will be paid as it always depends on two parties being willing to negotiate and managing to reach agreement. As with any house sale, successfully agreeing an amount which both parties are satisfied with often involves assessing a wide range of factors on an individual basis including non-financial elements of the settlement proposal.

What factors influence the amount of settlement payments?

The most important factor in reaching agreement on a settlement agreement amount is the strength of any legal claim you may have. This is because the fundamental purpose of a settlement agreement is to waiver those legal claims and certain rights that employees have. This is a highly individual question. It requires an experienced solicitor to assess your particular circumstances, apply the law and employ their negotiation skills to make the best of your bargaining position. Assessing the strength of legal arguments and the likelihood of success in a negotiation is nuanced and dependent on individual circumstances meaning that this is well out of the reach of any ‘settlement agreement calculator’. Settlement agreement calculators are misleading for this reason and should be approached with circumspection. We would urge you instead to pick up the phone and have a chat with our experienced and friendly team who know settlement agreements inside out, will take into account your individual circumstances and who can negotiate the best possible deal for you as soon as possible.

Want to know more?

If you have been offered a settlement agreement by your employer, we would be happy to guide you through the process. Our team of employment solicitors is highly experienced in advising and negotiating on settlement agreements, providing specific expert advice tailored to your particular circumstances. Contact us at info@ergolaw.co.uk or on 0131 618 7007 to ensure that you are well informed and achieve the best possible deal in your circumstances.

You can also find out more about settlement agreements here or take a look at our other blogs in the simplifying settlement agreement series.