Every employment situation is different, therefore the associated costs will also be. There are three areas of costs when considering a settlement agreement:
- Compensation payable to the employee
- Legal fees for the employee
- Legal fees for the advice you receive
The amount that you will need to pay to your employee to agree to a settlement will depend on:
- Their length of service
- The reason why you want to bring their employment to an end
- Whether they will be able to find alternative employment quickly
- Their current salary and benefits package
- The risk you perceive there to be of them pursuing matters to an Employment Tribunal if you were simply to dismiss
We can advise you of the appropriate level of offer to make, and the likely outcome of any Employment Tribunal litigation. Not only this, we can help you negotiate a fair deal for the termination package.
In addition to the compensation that you offer to the employee you will need to factor in a payment for their legal advice. As it is a legal requirement for your employee to take legal advice in order for a settlement agreement to be effective, most employers will pay a contribution to the cost of obtaining that advice. Often this will be £250 + VAT, however we can advise you on the appropriate budget as there are situations where the contribution may need to be greater, for example if there is a more senior employee departing, if there are complexities to the deal such as share options or restrictive covenants to be advised on and if there are significant litigation risks.
While it is not a legal requirement for an employer to seek legal advice from a solicitor, it is very rare that an employer would feel confident, or have the time, to draft a settlement agreement themselves, and conduct the subsequent negotiations. There is a charge for the advice you receive from us, for preparing the necessary documents and further negotiations. We operate on an hourly rate basis which means that we charge for our time according to the amount of time you use. £250 + VAT will allow you approximately an hour of time, and we would usually anticipate the fees for preparing and finalising a settlement agreement to be between £750 and £1,000 + VAT.
Our Peace of Mind members benefit from this service being included within their Peace of Mind membership, and therefore no additional fee will be required for them. To find out more about the other benefits of Peace of Mind membership, visit the website here or contact Martin Giles at email@example.com.