HOW TO NEGOTIATE YOUR SEVERANCE PACKAGE
This is a question we frequently get asked and the accurate, if unhelpful answer, is that it depends
upon the situation in which you find yourself. Every employer, every employee and the circumstances of a termination are different and the exact way of negotiating always depends upon an analysis of the individual elements.
However (have you noticed that every sentence uttered by a lawyer contains a “but” or a “however”) we are operating in an environment where there are known statutory rules, relatively standard contractual terms and common behaviour patterns so we can make useful general observations on the correct way to proceed in most situations. What I set out below are generalisations. There are always exceptions to every generalisation and, in such a case, you will have to adopt a different strategy
The first and probably the most important answer to the title question is to keep a sense of perspective. By this I mean to recognise that there are limits to what you can claim in a Tribunal which is invariably the contrast with the severance package on offer.
In a straight unfair dismissal claim this might be the maximum statutory limit currently £93,878 or one year’s net loss of wages whichever is the lower for compensation plus a basic award which is the same arithmetical calculation as for a statutory redundancy payment. If you type in “statutory redundancy calculator” into the internet you will find out the amount for this very quickly. For a low paid employee with, say 2 years service, the maximum claim might not be very great at all. It might be the case that the employee has obtained a job on the same salary during the currency of their notice period and, as a consequence, fully mitigated their loss such that the compensatory award is nothing. The comfort for the employee in this situation is that they have not lost any money even if they are pretty miffed about the unfair dismissal.
Even if there is a discriminatory element in the situation and this forms part of the negotiations the Tribunal is constrained by its own guidelines, known as Vento bands after a case by that name. They are not ungenerous but they do set limits upon what can realistically be claimed and, therefore, what can realistically be negotiated.
The second point is to recognise that, as an employee, you are almost always in weaker position both financially and contractually. Sometimes the price for dismissing an employee unfairly can be very cheap. If they don’t have many years’ service and go on to find a job on the same salary and benefits package very quickly the compensation can be as little as a couple of thousand pounds. Pointless banging the table and demanding, say, a year’s net salary when the employer knows the claim is worth little. Not finding a job too quickly can be a useful negotiating tactic!
The third point is that you get two bites of the negotiating cherry. A requirement of the process is that you have to see a legal adviser who can advise you on the agreement and also negotiate on your behalf. We get told a lot by employers that they have already agreed the financial deal with the employee and in many instances they are simply taking advantage. The key element in the process which results in the employer achieving the certainty that they will not receive a Tribunal claim is that the employee gets expert legal advice. Unsurprisingly when informed of the true position and a full appraisal of their legal rights it is not uncommon for employees to realise that when they were negotiating on their own they were not fully aware of their rights and the employer has been trying to get away with a relatively cheap deal. To balance this little dig at employers in many instances we find it is because the employer is not fully aware of an employee’s rights either!
Fourth you have to remember that this is a negotiation. There are statutory limits upon what can be claimed but some general rules still operate. Never accept the first offer is one of those. There are almost no circumstances in which you cannot argue for more compensation and put forward a credible contrast between claims you might have and the proposed compensation figure.
Fifth never worry about what anyone else thinks. I hear lots of examples of key board warriors and know it all best friends telling employees they should take their employer “to the cleaners” or “they should not let them get away with it”. Complete nonsense. You need to accept the figure with which you feel comfortable. Being able to afford to fight is one of the most important. Anyone can negotiate hard if they have a few million pounds in the bank for the very simple reason they can afford to lose. It’s why the Courts are littered with rich people tearing chunks out of each other. How far you can push something is very personal and you must achieve the best outcome for you not the best outcome for the mythical best friend.
Sixth never forget that the aim here is to move on to something else. Could be another job, could be retirement, could be a career change. I have a working rule of thumb that if an employee leaves employment with the equivalent of 6 months net pay however that is made up (i.e accrued holiday pay, notice, compensation etc) in 99% of cases they will be fine, it isn’t scientific nor is it a limit if there is more to negotiate but long experience tells me it is the point where you know you will be OK.
Seventh don’t worry about doing too much research on Google. I have to say this is not what I normally believe in. The internet is a fantastic resource when used well and since I spend a lot of time fixing things when not being a lawyer I don’t know how I coped without You Tube and all those people telling me the best way to do things. In this case you are required to go to an expert to get the advice which is incredibly unusual in a legal context. Take advantage of that. Ask as many questions as you want especially when the employer is paying all or most of the fees.
I appreciate the above comments will not help you negotiate the specifics of your termination of employment but I hope they give you some general pointers of how you should go about dealing with the situation in which you find yourself.