Settlement Agreement Calculator

Settlement Agreement Calculator

Calculating your settlement payout is never 100% clear cut as every individual's situation is different. Our easy-to-follow guide to calculating your settlement agreement offers advice on what factors are involved in coming to a future and should give you a good idea of what you are entitled to. 

Whether you have been made redundant or can't work due to poor health or other issues, or you are facing any type of disciplinary action, we are here to help you work out how much you are due. 

How to calculate your settlement agreement 

Firstly, get your paperwork in order!

It's important to make sure you have all the right documents to hand to help calculate your settlement agreement. Make sure you are able to locate all that apply to you:

  • Your Employment Contract.
  • The last 3 months payslips.
  • P60 (form) - This is the tax summary your employer should give you at the end of the tax year.
  • P11D – You'll have one of these if you receive taxable benefits such as company cars or interest-free loans.
  • Details of any Bonus schemes you are part of 
  • Details of any Commission that is part of your contact
  • Pension information including how much you and your employer both contribute. 
  • Details of any company Shares you hold
  • Benefits such as gym memberships.
  • Details of Redundancy Policy and Redundancy Pay 
  • Sickness Pay Rules
  • Details of any other benefits you can think of whether you think they are included in your contract or not.

 This may sound like a lot, but the more information you have proving your income and related company benefits, the better chance you have of negotiating a fair exit package. 

Please get in touch if you need help finding any of these documents. 

The next step is to calculate the total value of your income plus your benefits on a gross and net basis for a year. (Gross income is your total earnings before tax and net income is your income after tax has been deducted.)  

IMPORTANT: If your employer has shared these figures with you, always check that your calculations are the same. 

 What else do you need to factor in to calculate your settlement agreement? 

 In order to work out your settlement agreement figure, you'll also need to find out: 

The date you started working for your employer.

How many complete years of service you've got with your employer.

Check your notice period: 

It's also worth considering when your notice period started and making sure that you were properly served with your notice period. For example, your employment contract may state that notice must be given in writing, and you were given the information verbally. You may argue that notice has not yet been served, and your notice period has not yet started. 

How long is your notice period? 

Check your employment contract if you are not sure how long your notice period is.

If you haven't been given a contract or it doesn't state your notice period, then it will be the statutory minimum. To calculate a statutory minimum notice period, it's one week for each year you have worked for the company (up to a maximum of 12 weeks).

Are you being dismissed due to misconduct? 

If you are being accused of gross misconduct, then it may be that your employer wants you to leave immediately without notice and won't pay you for your notice period. 

In situations such as this, you may not be worth even trying to negotiate a settlement agreement. This will depend on the specific circumstances surrounding your dismissal, and it's always going to be a good idea to speak to a specialist settlement agreement solicitor who can help you understand your situation and what you are entitled to. 

We may also help you to negotiate to get your notice period paid in lieu and help ensure that you don't immediately lose any benefits or their equivalent value.

Calculate your holiday pay

 Refer to your employment contract to find out your holiday entitlement. You are still entitled to any holiday pay you have not taken up to the date of your employment ending.

 Were you made redundant?

 If you have been made redundant and given a settlement agreement by your employer, then you will be entitled to a redundancy payment as long as you have been with the company for over two years. You are entitled to a statutory redundancy payment on top of your notice period pay and holiday entitlement pay.

 The amount of statutory redundancy pay you are entitled to depends on how long you have worked for your employer, how old you are and how much you earn. You can use the Government Redundancy Calculator to work out your statutory redundancy payment amount and to find if what your employer is offering you is better or worse than your statutory payment rights. 

Were you off work due to ill health?

If you've lost your job after being off work due to illness or poor health and you have been offered a settlement agreement, before accepting it, you should also check to see if you are entitled to permanent health insurance

Permanent health insurance will be part of your employment package, but if you qualify, you will be provided with an income if you cannot work for health reasons. 

 Please be aware that if you do have Permanent Health Insurance, it will most likely be terminated once your employment ends.

Were you dismissed for performance issues?

 If you are being dismissed because your job performance has not been adequate, you will still be entitled to your notice pay unless you have been found guilty of gross misconduct. 

As an alternative to entering into disciplinary proceedings, a settlement agreement can offer an easier, more manageable solution to the end of employment. 

Calculate your settlement agreement figure 

As you can see, there are many factors that contribute to the final settlement figure. While each case is different and there are many variables that can alter the final amount, you can't beat getting the advice of a settlement agreement solicitor. 

The financial aspects of a settlement can be complex and confusing, please get in touch so we can provide you with a reasonable idea of what might be awarded in an employment dispute.