Settlement Agreement Calculator
Free settlement agreement calculator
Our specialist employment solicitors have created a settlement calculator that you can use to assist you with your negotiations. We have also created a helpful guide on how to use the calculator and what to expect (and not expect) from it
Use our settlement agreement calculator below
Settlement agreement calculator
What Is a Settlement Agreement Calculator?
A settlement agreement calculator is a tool designed by our employment lawyers to help employees estimate the financial compensation they may be entitled to when negotiating a settlement agreement with their employer.
The settlement calculator takes into account various factors such as employment length, salary, benefits, and redundancy pay to provide a clearer picture of what a fair settlement might look like.
Further reading: settlement agreements – a guide for employees
Why Use a Settlement Agreement Calculator?
There are a variety of reasons why you might find a settlement calculator helpful, including (among others)
Understanding Your Potential Compensation
A settlement agreement calculator helps you gain insight into the amount you could reasonably expect as part of a settlement. This includes redundancy payments, notice period pay, and compensation for any unused holiday. This will allow you to understand what compensation could be fair for your settlement agreement, enabling you to set the boundaries of what you can expect in financial terms.
Assessing Fairness of Employer Offers
Using the settlement calculator allows you to assess whether an offer made by your employer is fair and in line with broad averages and legal guidelines. You can compare the result of the calculator with what your offering in order to ascertain how to take the next steps in the negotiations (i.e. whether to accept their offer, negotiate it, or reject it).
Saving Time and Reducing Uncertainty
Rather than manually calculating complex entitlements, a calculator provides quick and easy estimates, helping streamline the negotiation process. This can save you time, stress and, potentially, money, whilst hopefully optimising the outcome of the settlement negotiations with your employer.
How Does a Settlement Agreement Calculator Work?
The calculator typically requires you to input certain details about your employment situation. It then uses this information to estimate the potential value of your settlement agreement.
Factors that influence your settlement amount
Length of employment
The duration of your service is a key factor, as longer service periods may lead to higher redundancy and compensation entitlements, depending on the approach that your employer takes.
Salary and benefits
Your regular salary, including additional benefits like pensions and bonuses, plays a significant role in determining your settlement. The general rule is that, all things being equal, the higher your salary is the higher the value of payout that you can expect.
Statutory redundancy entitlement
Depending on your age and length of service, you may be entitled to statutory redundancy payments. You will need two years’ or more continuous employment in order to be entitled to statutory redundancy pay.
You can gain an understanding of what statutory redundancy pay you can expect by using our statutory redundancy calculator.
Enhanced redundancy pay
Some employers will pay enhanced redundancy pay to their employees in redundancy situations – you will need to check your employer’s policies (and, potentially, your contract of employment) in order to determine whether your employer offers enhanced redundancy pay.
Your employer may be less inclined to negotiate in a voluntary redundancy situation.
You can also use our enhanced redundancy pay calculator here.
Notice period pay
This is compensation for the notice period you would normally be required to work before leaving your role. Your contract of employment will normally set out what your notice period is, but if it does not, or if you do not have a contract of employment, then you will be entitled to statutory notice pay (in broad terms, one weeks’ notice for every full year that you have worked with your employer, up to a maximum of twelve weeks).
Further reading: our guide on notice pay
Payment in lieu of notice (PILON)
If your employer does not require you to work your notice period, you may receive a payment in lieu of notice. Your employer does not have to pay you in lieu of notice (this is something that employers can choose to do, or not to do), but employers quite often do pay employees in lieu of notice where they are terminating employment (check your contract to determine whether there is a ‘PILON clause’ entitling your employer to pay in lieu of notice).
Holiday pay, commission, and bonus payments
Calculations may also include compensation for any accrued but unused holiday as well as any bonuses and commission due. Our calculator does not factor in these payments, as the value of the payments is specific to your employment (and contractual) situation, so you should add the value of these payments on to the result generated by the settlement agreement calculator.
Tax-free vs. taxable compensation
Certain elements of your settlement may be tax-free up to a specific threshold, while others could be subject to tax deductions.
You should read our guide on ex-gratia payments in order to understand more about when you can expect to receive tax-free payments (and how that payment should be treated tax-wise).
The industry that you work in
Some industries pay more than others, as a general rule of thumb, when making settlement payments to employees – in our experience, payments tend to be most generous in the financial services industry, pharmaceuticals, legal industry, and at senior levels of corporate businesses. However, this is only a general rule and will depend on the specific nature, and policies, of your employer (and the circumstances of your matter).
Compensation for legal claims
If there are potential legal claims, such as discrimination, harassment, sexual harassment, victimisation or breach of contract, these can also affect the settlement amount.
Information you need to use the calculator
How long you have been employed by your employer for
The settlement calculator assumes that you have been employed for two years or more by your employer; if you have been employed for less than two years employers tend to be a lot less generous in their payments (as, prior to having two years’ continuous employment you are not entitled to pursue a claim for unfair dismissal or entitled to a statutory redundancy payment).
Accurate dates are essential to calculate your length of service and redundancy entitlements.
Annual salary
Provide your gross annual salary. You will then need to account for additional benefits on top of your salary and make sure that you are provided with these benefits for your period of notice/PILON (subject to the terms of the PILON clause).
Notice period
Provide details of the length of your notice period, so we can calculate what the value of your notice pay is (basic salary only).
Your age
Your age will play a factor in the amount of settlement offered, for a number of reasons: older employees will, as a general rule of thumb, tend to have been employed by their employer for longer than younger employees; and older employees may find it more difficult to find a new job due to persisting age discrimination (and so may need a higher value of settlement payment to compensate them).
How to use our settlement agreement calculator
Enter employment details
Start by inputting how long you have been employed for (in years) and your age.
Input salary
Provide your gross salary.
Review compensation estimate
The calculator will generate an estimate of your potential settlement, including a breakdown of key components.
What are the benefits of using a settlement agreement calculator?
Quick and easy estimates
The calculator provides instant results, saving you time and effort.
Initial negotiation preparation
Having an estimate allows you to approach negotiations with confidence and realistic expectations.
Confidence in evaluating offers
With a clearer understanding of your entitlements, you can better assess whether an employer’s offer is fair.
Limitations of a settlement agreement calculator
Does not account for your employer
All employers have different approaches to settlement offers and negotiations, and it can be difficult to anticipate how a particular employer will deal with a particular situation – some are more generous, some are less generous; some are willing to negotiate, some are not; some take legal advice when making an offer, some don’t.
Does not account for complex legal claims
The calculator may not fully factor in compensation for legal disputes, such as discrimination, victimisation or harassment claims, and does not account for factors that are difficult to predict such as: your age; how long it may take you to find a new job; and what your salary may be in your new job.
Non-financial settlement terms excluded
Important non-monetary elements, such as the termination date of your employment, confidentiality clauses, non-derogatory clauses, announcements, and employment references, are not considered. These will need to be factored into the totality of the offer when you are negotiating with your employment.
When should you seek legal advice?
Reviewing the calculator result
An employment solicitor can help you interpret the calculator’s estimate and determine whether it aligns with legal entitlements. Our specialist employment solicitors have helped to create the settlement calculator and they will be able to provide you with advice which is specific to your situation and circumstances.
Negotiating better settlement terms
An employment lawyer can assist in negotiating a higher settlement offer and securing favourable terms – our lawyers have a vast amount of experience in advising employees on the termination of their employment, settlement terms, advising employees on settlement agreements, and negotiating offers.
Understanding non-financial aspects of the offer
Employment solicitors can advise on non-monetary aspects, including references, restrictive covenants, non-derogatory clauses, and confidentiality agreements. They can also assist in advising you on issues relating to shares and other forms of equity.
FAQs about settlement agreement calculators
How accurate are settlement calculators?
They provide useful estimates but may not capture all elements of a complex settlement situation – they are a general guide but you will need to speak with an employment lawyer in order to obtain a full understanding of what is reasonable and appropriate in your circumstances (including financial and non-financial terms).
Are calculated results legally binding?
No, the results are for informational purposes only and do not constitute a legal obligation. You should always obtain experienced and expert legal advice from an employment solicitor to supplement the results of the calculator.
Can a calculator help maximize my offer?
It can provide a useful starting point, but engaging a solicitor may help you achieve a better outcome.
How can a solicitor support you?
Reviewing the settlement agreement
A solicitor will ensure the agreement complies with legal standards and protects your rights. They will take you through the entirety of the agreement, and your contract of employment (as well as other relevant documents), and advise you on what is on the settlement agreement (and not in the settlement agreement, as the case may be).
Ensuring compliance with legal entitlements
They will seek to ensure that you receive the compensation and benefits you are entitled to under the terms of your contract and in your particular circumstances.
Securing the best financial and non-financial terms
Solicitors can negotiate better terms, including higher payouts and favourable non-monetary clauses.
Legal fees
Your employer will generally pay a contribution towards the legal cost of the work in advising you on a settlement agreement (payable once settlement agreement terms and agreed and signed), so our employment solicitors can seek to negotiate that your employer covers the cost of the advice that you receive (billing it to your employer).
Further reading: