Increasing uncertainty over the economic outlook suggests a more unstable jobs market ahead, with many companies looking at how they can cut costs. The credit crunch and recent stock market turmoil have taken their toll and some investment banks have already announced job losses. If you are in the unfortunate position of facing redundancy, a little knowledge of what to expect can help to ease the pain.

The golden rule at any dismissal meeting is not to agree or disagree with any departure terms that may be offered. Ask for any proposals to be put in writing and then consider carefully what you wish to achieve; is it simply obtaining the biggest payoff possible or are other issues also important to you, such as obtaining help with finding another job?

It is important to assess the strength of your negotiating position. Are there decision-makers who may be sympathetic and able to help you to achieve a better deal, or is your position very isolated?

Once you have an offer, the next step is to compare it with your legal entitlement. On dismissal, you have two potential claims, one contractual and the other statutory.

If you are dismissed without notice or justification, the starting point for calculating contractual compensation is an amount equal to the value of the net salary and fringe benefits – such as pension contributions or the use of a car – that you would have received during your notice period.

The length of your notice period is key in calculating the value of your contractual claim. However, if you have a long notice period – typically in excess of between three and six months – the employers may argue that you have a duty to seek to minimise your losses by seeking and accepting suitable alternative work. Therefore, if your employer discovers during negotiations that you have already lined up another well-paid job, the compensation that you are offered could be reduced drastically.

Distinct and separate from an employee’s contractual rights are those provided for by statute. These include the right not to be dismissed unfairly. Employees who have at least one year’s continuous employment at the date of dismissal may have a claim for unfair dismissal. The employer, to avoid such claims, must follow a statutory disciplinary procedure that includes inviting the employee to a meeting and providing that employee with a right of appeal against any dismissal decision. A failure to follow this procedure will make the dismissal unfair automatically.

Awards in respect of unfair dismissal are made up of two parts: the “basic award” and the “compensatory award”. The basic award is subject to a maximum of £465 (depending on age) for each completed year of employment, up to a maximum of 20 years. The compensatory award is determined by an employment tribunal and is generally aimed at compensating the employee by reference to how long it will take him or her to find another job. The award is currently subject to a maximum of £60,600. For more on claims for unfair dismissal, see the box below.

In addition to your strict legal entitlement, there are a number of ways in which you may be able to improve the settlement. Some employees are granted share options. Except in limited circumstances, such as redundancy or ill-health, share options that have not been exercised by the dismissal date usually lapse with immediate effect, even if the employee is dismissed without justification.

Many option schemes include a discretion that enables the employee to exercise the option within a set period after termination of employment. It is usually worth trying to persuade the employer to exercise that discretion, on the basis that it is a real benefit for the employee and does not increase the headline figure that will be payable to the employee.

Other points on the employee’s shopping list may include the provision of outplacement consultancy to help in the search for a similar job, or, better still, a cash contribution towards the provision of such services. An attempt should be made to ensure that fringe benefits, such as private medical insurance and life assurance are kept in place at least until the employer’s normal group policy renewal date.

You should also explore the possibility of retaining useful pieces of equipment, such as a laptop computer or mobile phone, which are of little value to the employer but may be of great help to you.

If you have a company car, you should investigate the possibility of buying it from your employer at its book value. For accounting purposes, the book value of the employer’s car is depreciated by a uniform amount each year. This rate of depreciation often does not reflect the market value of the car, which is usually more.

Finally, you should not lose sight of the importance of obtaining a good reference to assist in the search for another job. The author is an employment specialist at the City law firm Bird & Bird

For more news, views and analysis of the legal world, go to timesonline.co.uk/law

Where to turn in a dispute

Employment tribunals are judicial bodies that determine disputes between employers and employees. Claims for unfair dismissal must usually be submitted to the Employment Tribunal Service within three months of the date of dismissal. In certain circumstances, the timescale can be extended, but late claims are usually time-barred.

Contractual claims of up to £25,000 can also be submitted to an employment tribunal; otherwise they must be pursued in the county courts or High Court.

In normal circumstances, up to £30,000 of any compensation payment for dismissal can be paid free of tax. If an employee is paid more than £30,000, the employer is obliged to deduct only basic-rate tax from the excess, provided that the settlement is properly structured. Employees are required to account for the additional tax in their annual tax returns.

If you are not sure whether your complaint is one that a tribunal can handle, call the Employment Tribunal Service helpline on 0845 7959775 or visit www.employmenttribunals.gov.uk .