Settlement Agreement Calculator
Break down what you are actually being offered, how each element is taxed, and what lands in your bank account.
The offer, element by element
Take these from the schedule of payments in the draft agreement. If it quotes one lump sum, ask for it to be broken down — the split changes the tax.
Tax free. Counts towards the £30,000 exemption.
The "goodwill" element. Also uses the £30,000 exemption.
Always taxed as earnings, whatever the agreement calls it.
Always taxable.
Normal earnings, taxed as usual.
Ready to value the offer
Enter each element of the package to see the tax treatment and net figure.
What a settlement agreement does
A settlement agreement is a legally binding contract in which you accept a payment in return for waiving your right to bring claims against your employer. It is only valid if specific statutory conditions are met.
Independent advice is mandatory
The agreement is not binding unless you have taken advice from an independent adviser, who must be named in it. Employers normally contribute to the cost.
You are giving up claims
Including unfair dismissal and discrimination claims. Once signed, you generally cannot go to a tribunal about anything it covers.
Terms are negotiable
The first offer is rarely the final one. References, the announcement wording and the payment split are all commonly negotiated.