The first golden rule in negotiating a settlement is to give a strong impression of your legal claims, and hence the risk that your employer is taking in fighting the claim. Secondly it is usually a good thing to give the impression that you are willing to fight the claim all the way.
Aside from this, settling an Employment Tribunal claim is more of an art than a science most employment lawyers will tell you.
Who should make the first offer?
In terms of a negotiating strategy, employment lawyers at Springhouse often recommend that claimants make the first offer of settlement. This seems counter-intuitive but will serve to set the ball park or tone of the negotiations.
Impression is everything
Provided you are behaving reasonably, your negotiating position need not reflect your actual legal position or intentions. In settlement negotiations impression is everything. Obviously the important caveat is that if settlement discussions are conducted unreasonably, or if reasonable offers to settle are rejected by claimants, they can risk costs awards being made against them.
Ultimately though a sensible settlement will usually look something like this A x B = C.
‘C’ is a sensible settlement sum.
‘A’ will be the maximum amount that you could win in a Tribunal. In unfair dismissal claims, this will consist of a basic award and a compensatory award. We deal with the calculation of these elsewhere, but the basic award is essentially the amount you would have received if you had been made redundant, and the compensatory award will reflect the amount of time you have been or will be unemployed. This is all subject to a maximum of 1 year’s gross salary, or the statutory cap, which changes from year to year.
The maximum award in discrimination cases can be far higher, as there is no statutory cap, and it is possible to claim for injury to feelings. Injury to feelings awards can include total loss of future earnings. In extreme cases individuals are unable to work again because of psychiatric injury they have suffered when there has been particularly bad discrimination. In these cases, loss of career earnings can be awarded and compensation can run into the millions.
Injury to feelings awards are set by what is known as the Vento Guidelines, in varying amounts depending on the seriousness and whether they are in Band 1, 2 or 3 under the Vento Guidelines.
Other factors that can push up awards will include loss of final salary pensions.
‘B’ will be the chances you have of succeeding at Tribunal. Again, there is no science in this, and one employment law solicitor will put different chance of success from another. Multiplying the maximum award by the percentage chances of success is a good rule of thumb for achieving a sensible settlement.
At the end of the day confidence is key. If the respondent “smells blood”, usually because they get the impression that you cannot afford to fight on, poor settlements can be achieved.
Furthermore it is not always sensible to be too aggressive in settlement discussions. After all, they are intended to resolve the situation, and a cooperative approach as if both parties were working on a common problem is often the best method.
At Springhouse we are seasoned veterans of negotiating settlement packages for claimants, and, indeed, of bringing Employment Tribunals successfully on their behalf. Proper representation can obviously work wonders.
If you are considering an Employment Tribunal claim, have brought one and would like to settle, or would like any assistance with it at all, please do not hesitate to contact our experienced employment law solicitors.