As I mentioned in today’s email, when you’re negotiating a settlement with an employee, you generally don’t want to pitch your opening offer so low that it’s insulting and escalates the tension. However, you’re also not going to go in with your best offer straight away, which leaves you nowhere to go in the negotiations if the employee turns you down. Here are three tips to help you decide on a realistic and attractive opening offer:

I recommend you start at about 30% of the maximum realistic value of the claim, unless there is a reason to do otherwise. A reason to start lower might be if you’re dealing with someone who is just keen to get some money and doesn’t have the resources or time for a protracted dispute, or if you know they’re not going to sue. A reason to start higher might be if you’re two weeks from an employment tribunal and you just want to get the deal done.

Think what you know about your employee. What baggage are they bringing to the table? Are they bad with money? Will they find a quick resolution with prompt payment attractive? If so, consider going in hard and fast with an attractive financial sum which is only available for acceptance for a short period. Or are they more worried about getting another job than the money? In that case, you might include some non-monetary elements in the settlement package – like a non-critical reference or support to transition to a new role – and perhaps hold back slightly on any financial offer.

You can stress any elements of the offer which show you’ve considered the employee’s own unique position. For example, you might offer to structure the payment for tax efficiency or to waive post-termination restrictions. This shows empathy and can help the negotiations to go smoothly.