There is no formula

No law requires a fixed number of months’ salary. A settlement figure is built from what you are already owed, plus a sum reflecting the value of the claims you are giving up, discounted for the risk you would not win them and for the years it would take to find out.

Work through it in five steps.

Step one: strip out what you are already owed

Employers frequently present a package as generous when most of it is money due anyway. Separate out:

• salary to the termination date
• notice pay, worked or in lieu
• accrued untaken holiday
• commission and bonus already earned
• outstanding expenses
• statutory redundancy pay
• contractual enhanced redundancy pay
• pension contributions for the notice period
• contractual benefits

What remains is the genuine ex gratia element. That is the only part actually being negotiated, and it is often far smaller than the headline number.

Step two: value the claims you are waiving

Identify every potential claim: unfair dismissal, wrongful dismissal, discrimination on any protected ground, harassment, victimisation, failure to make reasonable adjustments, whistleblowing detriment and dismissal, unlawful deduction from wages, holiday pay, failure to consult collectively, breach of contract, equal pay, and the protective award where a group is affected.

Figures last reviewed [date].

The Vento bands apply to claims presented on or after 6 April 2026. In Scotland the bands remain subject to paragraph 12 of the original Presidential Guidance — a distinction most published guidance omits.

Why discrimination claims are worth more. No cap, no qualifying service, an injury to feelings award on top of financial loss, potential aggravated damages, interest, and in some cases damages for psychiatric injury. A dismissal that is also discriminatory is a fundamentally different negotiation from one that is merely unfair.

Why you should not simply claim the ceiling. Compensation is based on actual and projected losses evidenced by the claimant, reduced for failure to mitigate, for contributory fault, and for the chance you would have been dismissed anyway.

Step three: quantify your actual loss

This is where most of the money is, and where most employees under-prepare.

Build a schedule of loss: gross and net salary; employer pension contributions; car or allowance; private medical; bonus and commission you would have earned; share options or LTIPs lost; the realistic period you will be out of work, evidenced by conditions in your sector and region; the likely salary of your next role if lower; pension loss.

You must take reasonable steps to mitigate by seeking suitable work. Keep a record of applications — you will be asked for it.

For discrimination, add injury to feelings by reference to the band that genuinely fits, supported by medical evidence if you have sought treatment.

Step four: price the delay

Employment tribunal waiting times are long, and in the busiest regions full merits hearings are listed well ahead.

This cuts both ways. It gives employers a reason to hold their nerve. But an employer who fights carries legal costs, management time, disclosure obligations and reputational exposure for years, with an uncapped compensatory award waiting at the end for any dismissal from January 2027. And money received this month is worth substantially more than a larger sum years away, particularly if you are out of work now.

Use delay as a reason to settle well. Do not let it be used on you as a reason to settle cheaply.

Step five: value the non-financial terms

Frequently underpriced, sometimes worth more than another few thousand pounds:

• an agreed reference annexed to the agreement, with the employer bound to give it and to say nothing inconsistent verbally
• the agreed reason for departure
• release or narrowing of restrictive covenants, which can be worth an entire year’s salary if a non-compete would otherwise keep you out of your sector
• internal and external announcement wording
• a later termination date, extending pay, benefits and pension — and in some cases pushing you past a qualifying threshold
• outplacement support
• retention of equipment or phone number
• continuation of private medical cover through a course of treatment
• payment within 14 or 28 days, with interest for late payment

Making a counter-offer that works

Do not simply ask for more. Set out, in a structured letter:

1. what you are contractually owed, itemised
2. the claims you would bring, with the legal basis for each
3. the procedural and evidential weaknesses in the employer’s position
4. your schedule of loss, with supporting evidence
5. the non-financial terms you require
6. the figure, and how you reached it
7. a realistic deadline

Employers settle against risk and cost, not against indignation. Show them the risk.