So, you've been offered a settlement agreement. This can be a daunting experience, and the first question that likely comes to mind is: "How much should I ask for?" There's no one-size-fits-all answer, but by strategically evaluating your position, you can negotiate a figure that is fair and advantageous to you. In my role as a settlement agreement solicitor I advise and represent employees in the resolution of claims and disputes with their employer, in my latest blog I share best practices and advice on how to best negotiate for a fair settlement agreement.

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What is your leverage?

Your leverage is the key to a successful negotiation. The more leverage you have, the higher you can aim. Here's what to consider:

Length of Service & Salary

‍A long-serving employee with a high salary has a strong position. Your employer will want to avoid a potential unfair dismissal claim, and the longer you've been there, the more compensation you may be entitled to in a tribunal. Your salary forms the basis of many calculations, so a higher salary means a higher starting point for negotiation.

Contractual Benefits

‍Don't forget to factor in other benefits like bonuses, company car, private healthcare, and pension contributions. These all have a monetary value and should be included in your settlement calculations.

Job Role and Sector: Is your role highly specialized? Do you have unique skills that would be difficult to replace? This gives you a stronger bargaining position. Also, consider your industry. In sectors with high demand for skilled workers, you can often negotiate a better deal. A key factor to consider is the inclusion of a restrictive covenant, or a non-compete clause. If your employer is trying to prevent you from working for a competitor, you can argue for higher compensation to reflect the limitation on your future career prospects.

Performance Record

‍A flawless performance record and glowing appraisals are a huge asset. They make it much harder for your employer to argue that your termination was due to performance issues, strengthening your claim for a larger settlement.

What are the downsides?

Just as there are factors that strengthen your position, there are also those that can weaken it. Be realistic about these as they will impact what you can realistically ask for.

Poor Disciplinary & Performance Record

‍If you have a recent disciplinary warning or a poor performance record, your employer has a stronger case for a fair dismissal. This will reduce your leverage and your chances of securing a large settlement.

Lack of Evidence

‍Do you have concrete evidence to support your claims of unfair treatment or a potential discrimination case? A lack of emails, documents, or witness statements will make it very difficult to argue your case, and your employer knows this.

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Settlement agreements vs. litigation

This is a crucial distinction. Negotiating a settlement agreement is fundamentally different from negotiating during live litigation. A settlement agreement is a voluntary process to avoid a potential claim, whereas litigation is an active legal battle.

When negotiating a settlement agreement, your strategy must be to present a compelling case without formally launching legal proceedings. You are highlighting the potential risks and costs to your employer if they don't settle, but you are not yet in a position to force their hand. Your approach should be one of strategic diplomacy – outlining your strengths and their weaknesses in a clear and concise manner, but leaving the door open for a collaborative resolution.

In contrast, negotiating during litigation involves presenting evidence, arguing points of law, and responding to your employer's formal legal arguments. The strategy is to win the case, and the negotiation is a byproduct of that process.

Ultimately, when negotiating a settlement agreement, your strategy must focus on highlighting your leverage and the potential risks to your employer. By realistically assessing your position and focusing on a collaborative yet firm approach, you can significantly increase your chances of securing a favourable outcome.

I founded Settlement Agreement Expert with the purpose and objective of providing employees with quick, simple and no-cost independent legal review and advisory services. For advice on your situation, including any settlement agreements get in touch today, call 0330 043 8845, email clive@solicitor.help, or request a call back.