With Settlement Agreement negotiations people can be influenced by unhelpful material- from friends or the Internet. For example, a recent search on the term: how much should I ask for in a settlement? brought up an article beginning… As a general rule ask for 75% to 100% higher than you would actually be satisfied with.
Getting people to be realistic has not been made any easier by the Internet!
Asking for 100% per more than the target is unlikely to lead to an amicable and prompt settlement with all the advantages for employees already worried about the ‘Cost of Living’ crisis. The positive impact of Settlement Agreements includes confidentiality which is very helpful when looking for a new job. In fact, taking a ‘best case’ approach might lead to the deal being withdrawn leaving an employee with the prospect of a dispute not a settlement with all the associated problems: legal costs, lost tax efficiency and lost reputational protection not to mention stress.
Settlement Agreements - Narrowing the Issues
To guide parties in a settlement negotiation, people need tangible facts.
Tribunal awards mainly focus on future lost earnings so there is a common interest in the employee being in the best position to find work quickly so in most cases best case scenarios don’t help. Technical issues and basic principles normally result in much more realistic awards.
Here are some tangible facts to guide the parties in ‘protected conversations’ or ‘without prejudice’ discussions:
A - Employment Tribunal Compensation Statistics – to 2020
|
Type of claim |
Average award |
|
Unfair dismissal |
£10,812 |
|
Race discrimination |
£9801 |
|
Sex discrimination |
£17,420 |
|
Disability discrimination |
£27,043 |
|
Religion discrimination |
No awards |
|
Age Discrimination |
£38, 794 |
|
Sexual Orientation |
£27,936 |
B - The law on calculating loss for unfair dismissal
The main principles are contained in a small piece of legislation…which includes at (4) below the duty to mitigate losses by looking for work and a hyperlink to the exact text:
123 Employment Rights Act – the Compensatory award (extract from You Gov)
(1) Subject to the provisions of this section and sections 124 [F1, 124A and 126], the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer.
(2) The loss referred to in subsection (1) shall be taken to include—
(a) any expenses reasonably incurred by the complainant in consequence of the dismissal, and
(b) subject to subsection (3), loss of any benefit which he might reasonably be expected to have had but for the dismissal.
(3) The loss referred to in subsection (1) shall be taken to include in respect of any loss of—
(a) any entitlement or potential entitlement to a payment on account of dismissal by reason of redundancy (whether in pursuance of Part XI or otherwise), or
(b) any expectation of such a payment, only the loss referable to the amount (if any) by which the amount of that payment would have exceeded the amount of a basic award (apart from any reduction under section 122) in respect of the same dismissal.
(4) In ascertaining the loss referred to in subsection (1) the tribunal shall apply the same rule concerning the duty of a person to mitigate his loss as applies to damages recoverable under the common law of England and Wales or (as the case may be) Scotland.
https://www.legislation.gov.uk/ukpga/1996/18/section/123
C - Mitigation and the job market
The press is full of references to a staffing crisis so employees who have a neutral reason for dismissal such as ‘redundancy’ or ‘restructuring’ would be well advised to focus on all the work which is out there… Employment Tribunals (and employers) may take some persuading that employees should not have found work promptly with losses in the 3-6 months zone.
In an article in the Times on 20th July 22, David Smith a specialist recruiter refers to no less than 1.3 million job vacancies, a statistic which ‘unusually exceeds the number of unemployed people’. Here’s a link to the article:
To get anywhere near the maximum award employees will have to show they will face significant hurdles as they look for work. Older people or people with disabilities may get higher awards because of the obvious difficulties they may face in the job market but for most people, the best way forward is to get another job.
Same Day- Settlement Agreement Advice
For advice and guidance on Settlement Agreements, contact Gordon Turner- This email address is being protected from spambots. You need JavaScript enabled to view it. or visit https://www.gtemploymentlawyers.co.uk/settlement-agreements.html
07527 261 926