Should You Accept a Settlement Agreement or Claim Unfair Dismissal?

If you feel you’ve been unfairly dismissed by your employer, you may be able to claim compensation in an employment tribunal.

However, before embarking on this route, you should consider whether it would be better to enter into a settlement agreement, whereby you give up your right to bring a claim in exchange for your employer paying you a sum of money.

Here are a few questions to help you make the right decision.

How likely is it that an unfair dismissal claim will succeed?

Any litigation is uncertain. Neither party can be completely sure of success.

In order to win an unfair dismissal claim, you will need to show that your employer acted unfairly in deciding to dismiss you.

For example:

• they did not conduct a reasonable investigation
• they failed to follow a fair procedure
• they did not have a fair reason to dismiss you
• even if they had a fair reason, a dismissal was a disproportionate penalty

You should seek legal advice on your situation. Your solicitor will advise you how likely it is that a tribunal will find that your dismissal was unfair.

How much compensation would you receive if your unfair dismissal claim succeeded?

If you succeeded in an unfair dismissal claim, you would usually be entitled to two types of award:

1. Basic Award

This is calculated in roughly the same way as a redundancy payment. You can do the calculation here.

2. Compensatory Award

The purpose of the compensatory award is to compensate you for your financial losses resulting from your dismissal.

This usually means your lost earnings up to the date you start another job. To calculate this, you will need to know:

• your monthly take home pay (ie after deductions) and
• a rough estimate of how many months you expect to be out of work

Multiply the number of months by the amount of your take home pay and that’s the figure you can expect a tribunal to award you if you’re successful.

This means that, if you’re likely to find another job straight away, your losses are likely to be very low and possibly nothing. Even if your claim succeeds, you may find it’s not worth the trouble.

However, if it’s going to take you many months to find another job, your compensation will be much higher and a tribunal claim may well be worthwhile.

Do you have the appetite for an unfair dismissal claim?

Legal proceedings are stressful.

A tribunal claim will probably take at least 6 months to reach a hearing. This can be an emotionally draining process. The hearing itself can be very upsetting, particularly if you’re cross-examined. And the details may end up in the press.

Not everyone feels able to cope with this experience and this is something you should take into consideration when deciding which route to take.

A settlement agreement is much quicker (usually takes a few days to complete) and provides a degree of certainty that you wouldn’t have in a tribunal claim.

It’s confidential, too, so there’s no danger of the situation becoming public knowledge.

So, should you accept a settlement agreement instead?

If the amount your employer is offering you in a settlement agreement is greater than the value of an unfair dismissal claim, you should certainly accept.

Weigh up the prospects of success against the amount you may recover. For example, if you have 60% chance of successfully recovering £10,000, you may want to accept £6,000.

However, if your case is much stronger than that and you could reasonably expect to win a much higher amount, then you should try to negotiate a better deal.

We recommend that you only issue tribunal proceedings as a last resort.

Free Consultation About Your Settlement Agreement

If you have received a settlement agreement, you will need to make sure you receive legal advice on it.

We advise clients throughout the UK. Call us now for a free consultation.

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