Why do we calculate your settlement agreement value like this?
Employed for over 2 yearsHalf a month's money increase for this as it is possible that your employer would be willing to pay you a bit extra to leave so that you are not using up their sick pay.
Unfair dismissal, whistleblowing and discriminationBefore you've been there for 2 years you don't have unfair dismissal rights, so they can just simply tell you that you're fired. The situation is different with discrimination and whistleblowing. If you are victimised for these reasons, then you don't need to have 2 years' service, so you could claim in the Employment Tribunal after being employed for just one day.
2 months’ gross income: Ex gratia paymentWhy do we have a starting point of 2 months' gross income as an ex gratia payment? Well, we look at what most employees are awarded if they were to win an Employment Tribunal claim. Judges would tend to award you an amount of money to compensate you for your lost wages whilst you tried to find another job. But if you were out of work for say over 6 months, then you would need to have a very good reason for not getting a job in that time. (For example you might be a very specific specialist in your field, or your type of job might be becoming more and more rare.) You would need to produce detailed evidence of your job hunt in order to prove that no jobs were available.
Tax and Settlement AgreementsSo on that basis, the maximum which you're likely to receive in a tribunal is 6 months' wages. But you would also be taxed on this after a tribunal, unlike with a settlement agreement whereby the first £30,000 tends to be tax free. So an employment tribunal award might only look like 4 months' wages net to you. So for 4 months' wages net, after a long court battle which could take more than a year (and which you could quite easily lose), it is surely worth agreeing 2 months' money via a settlement agreement, with no risk of losing and no legal costs and stress of a tribunal.