When you’re offered a settlement agreement, three questions usually come to mind. Why am I being offered a settlement agreement? How much should I receive? And what happens if I sign?
A settlement agreement is a legally binding contract that ends your employment and prevents you from bringing future claims against your employer. However, it’s completely voluntary, and you have the right to negotiate. Understanding what a fair offer looks like and getting independent legal advice (which your employer pays for) can significantly increase your settlement amount.
Why Do Companies Offer Settlement Agreements?
Companies offer settlement agreements to end employment on agreed terms and avoid future legal disputes.This can happen for numerous reasons, including:
- Issues with conduct or performance
- A breakdown in the working relationship
- Redundancy or restructuring
- A role becoming unnecessary
- A desire to avoid lengthy internal procedures
Employers also value settlement agreements because the employee waives the right to bring claims in the Employment Tribunal or courts. It gives the company certainty and closure.
How Do You Maximise a Settlement Agreement?
You maximise a settlement agreement by understanding whether you have potential legal claims and if you can use them as leverage to negotiate a better offer.
Our employment solicitors will look at how you were treated and if the processes were followed correctly. We will determine whether any unfair dismissal, discrimination or contractual breaches may have occurred.
If a claim has arisen, your employment solicitor can negotiate on your behalf for:
- A higher financial payment
- Better confidentiality wording
- An improved reference
- Removal or amendment of restrictive covenants
Before negotiating, you should also be aware of potential legal fees. Our employment solicitors will explain the likely costs and the risks involved. You can then make an informed decision.
How Much Is a Reasonable Settlement Agreement?
A reasonable settlement agreement depends entirely on the circumstances of your case, your length of service, salary and whether any legal claims may exist.
We will ask:
- What process (if any) your employer has followed
- Why the agreement has been offered
- Whether allegations have been made
- Whether redundancy, misconduct, underperformance or discrimination is involved
A package that is reasonable in a long-standing redundancy case may be completely unreasonable where unfair dismissal or discrimination appears to have taken place. This is why personalised legal advice is essential.
Useful Comparison Table: What Influences a “Reasonable” Settlement Offer?
| Situation | What You Might Expect | Comments |
| Genuine redundancy, long service | Enhanced redundancy pay + tax-free payment | Usually more generous packages |
| Performance issues (fair process) | Standard contractual payments + modest ex gratia | Depends on severity and evidence |
| Unfair dismissal risk | Higher compensation offer | Employer avoids tribunal exposure |
| Discrimination claim | Significantly enhanced offer likely | High legal risk for the employer |
| Misconduct allegations | Lower offers unless the process is flawed | Claims may increase negotiation power |
How Much Do Solicitors Charge for Settlement Agreement Advice?
We usually charge the fee contribution provided by your employer, which is normally £250–£ 1,000 + VAT.
This contribution is designed to cover the cost of:
- Reviewing your settlement agreement
- Advising you on all clauses
- Confirming the agreement is legally valid
- Signing the adviser’s certificate
At Settlement Agreement Advice, we guarantee that we do not exceed the employer’s contribution without your permission.
If you decide to negotiate better terms, we will explain any additional fees before doing any extra work. In some cases, negotiation is offered on a no-win, no-fee basis.
How Long Does the Settlement Agreement Process Take?
The settlement agreement process can take as little as one day if no negotiation is required.
We often review agreements, hold the consultation and sign the certificate on the same day we receive the document.
Where negotiation is needed, the process may take longer. This is especially true if letters must be drafted or if the employer needs time to consider revised terms. Even then, most cases are resolved within a few days to one week.
We will work to achieve the quickest possible conclusion while still securing the best terms for you.
What Should Be Included in a Settlement Agreement?
A settlement agreement should include clear details of your termination, all payments owed, legal protections and your ongoing obligations.
Typical clauses include:
- Termination date
- Payment schedule, including notice, holiday pay, bonuses and salary owed
- Ex gratia (tax-free) payment
- Waiver of legal claims preventing tribunal action
- Confidentiality and non-derogatory undertakings
- Agreed reference wording for future employers
These are common clauses, but every agreement must be reviewed individually. Here at Settlement Agreements Advice, our employment solicitors will check whether the clauses are fair. We will make sure they are correctly drafted and determine whether additional protections should be added.
Get Expert Legal Advice on Your Settlement Agreement
Don’t sign your settlement agreement without understanding whether you’re getting a fair offer. Our specialist employment solicitors will:
- Review your agreement within 24 hours
- Identify any legal claims that could increase your payment
- Negotiate better terms on your behalf (often on a no-win, no-fee basis)
- Guarantee the employer’s contribution covers all basic advice with no hidden fees
Your employer pays the legal fees. You have nothing to lose by getting expert advice. Get in touch now for a consultation with our specialist employment solicitors.
