Who Pays The Fee For A Settlement Agreement Solicitor

In most cases, your employer will offer to pay or contribute towards the cost of getting legal advice on your settlement agreement. However, your employer is not legally required to pay your solicitor’s fees.

For a settlement agreement to legally resolve your employment claims, you are required by law to receive independent advice from a qualified solicitor or legal professional. That is why employers usually include a contribution towards legal fees in the agreement.

The amount offered varies. It may cover the full cost of straightforward advice, while more complex work or negotiations can cost more.

Does My Employer Have to Pay My Settlement Agreement Legal Fees?

No. There is no legal requirement for your employer to pay for your independent legal advice. However, employers will usually contribute. This makes practical sense. For a settlement agreement to validly waive the relevant statutory claims, you must receive advice from a relevant independent adviser.

Your employer therefore has an interest in making sure you can obtain the necessary advice. The legal fee contribution should be clearly stated in the settlement agreement.

Why Do I Need Independent Legal Advice on a Settlement Agreement?

A settlement agreement is not simply paperwork that needs a solicitor’s signature. By signing, you can give up your right to bring the specific employment claims covered by the agreement.

Your independent adviser must advise you on the terms and effect of the agreement, including how it affects your ability to pursue those claims. However, good settlement agreement advice should go further.

Your solicitor should understand what happened before the agreement was offered. This can help identify potential claims and determine whether the overall offer is fair. That does not mean every settlement agreement needs negotiating.

Sometimes the right advice is to negotiate, and sometimes the right advice is to sign. The important thing is understanding which applies to your situation. At Settlement Agreement Advice, we help anyone with a settlement agreement and will only suggest further negotiation where there is a high chance we can achieve a positive outcome.

How Much Will My Employer Contribute Towards Settlement Agreement Solicitor Fees?

The amount an employer contributes can vary from one settlement agreement to another. The agreement will usually specify a maximum amount, often expressed as a figure plus VAT.

Whether that amount is sufficient will depend on the work required. For a straightforward agreement requiring only advice and sign-off, we will not exceed the fee contribution offered by your employer. We will only recommend further negotiation where we consider there is an excellent chance of achieving a positive outcome for you, and even then, we will not exceed the employer’s fee contribution without your express approval.

What Does the Employer’s Legal Fee Contribution Cover?

The contribution will usually be intended to cover the cost of obtaining independent advice on the settlement agreement. This can include reviewing the agreement, explaining its terms and advising you on the effect of giving up the specified employment claims.

Your settlement agreement solicitor should also understand the circumstances surrounding the offer. This can help them identify issues that may affect whether the financial and non-financial terms are reasonable.

If additional work is required, particularly negotiations with your employer, this may not always be covered by the original contribution, though, we will never exceed the employer’s fee contribution without your express permission.

What If My Solicitor’s Fees Exceed My Employer’s Contribution?

If your legal costs exceed your employer’s contribution, you could potentially be responsible for the difference. This is why you should understand the likely costs before agreeing to additional work.

At Settlement Agreement Advice, we will never exceed your employer’s legal fee contribution without explaining the additional cost and obtaining your express agreement first. If we believe negotiation could genuinely improve your position, we will explain why and discuss any additional costs before proceeding.

If the offer is already fair, we will tell you that too.

Can Settlement Agreement Legal Fees Be Negotiated?

Yes. The employer’s contribution towards legal fees can sometimes be negotiated. This may be appropriate where the agreement is particularly complicated or further legal work is genuinely required. For example, additional costs could arise if there are significant amendments or negotiations between the parties.

However, negotiation should have a purpose. Increasing legal costs simply to negotiate an agreement that is already reasonable may not benefit you.

Your settlement agreement solicitor should consider whether there is genuine value in negotiating before recommending additional work.

Are Employer-Paid Settlement Agreement Legal Fees Taxable?

Legal costs connected with a settlement can generally be paid by your employer directly to your solicitor without tax or National Insurance being charged to you. This is provided the relevant tax conditions are satisfied.

This is different from your employer giving the money directly to you to pay your own solicitor’s bill.

The settlement agreement will normally specify the employer’s legal fee contribution and how it will be paid.

Who Signs a Settlement Agreement First?

There is no universal rule requiring one particular party to sign every settlement agreement first. In practice, the employee will often sign the agreement and their independent adviser will provide the required adviser certificate or declaration. The signed documents are then normally returned to the employer or their legal adviser for completion.

However, the exact signing process can vary. Some settlement agreements also contain a counterparts clause. This allows the parties to sign separate copies of the same agreement rather than everyone signing a single document. Electronic signatures are also commonly used.

What matters is that the agreement satisfies the legal requirements and is properly completed by the relevant parties.

When Does a Settlement Agreement Become Legally Binding?

A settlement agreement must satisfy specific legal conditions to validly settle statutory employment claims. Among other requirements, it must be in writing, identify the particular claims being settled and confirm that you have received advice from a relevant independent adviser.

Your adviser must also be appropriately insured and identified in the agreement. You should therefore not assume that an informal agreement about the amount of compensation automatically means the settlement agreement has been completed.

Your solicitor can explain when the agreement becomes binding in your particular circumstances.

What Happens If I Want to Negotiate My Settlement Agreement?

Settlement agreements are voluntary. You do not have to accept the terms initially offered by your employer. However, the fact that an agreement can be negotiated does not mean it always should be.

Before recommending negotiation, your solicitor should consider the circumstances surrounding your employment, any potential claims and the overall value of the package. There may be genuine scope to improve compensation, references, restrictive covenants or other terms.

But where an offer is already fair, unnecessary negotiation can increase costs and prolong the process.

Need Advice on Your Settlement Agreement?

You should know what your legal advice will cost before deciding what to do next.

Our specialist settlement agreement solicitors will review your agreement, explain your options and tell you whether we believe there is genuine value in negotiating.

We will never exceed your employer’s legal fee contribution without explaining the cost and obtaining your express agreement first.

Frequently Asked Questions About Settlement Agreement Legal Fees

Do I Have to Pay a Solicitor for a Settlement Agreement?

Employers will usually offer a contribution towards the cost of that advice, even though you are responsible for obtaining the independent advice required for a valid settlement agreement.

Check the legal fees clause in your agreement to see how much your employer has agreed to contribute.

What Happens If My Employer’s Legal Fee Contribution Is Not Enough?

Ask your solicitor whether the employer’s contribution will cover the work required. If additional work is necessary, you should be told about any extra costs before they are incurred.

It may also be possible to ask your employer to increase their legal fee contribution, particularly where additional work is genuinely required.

Will My Employer Pay My Solicitor If I Negotiate the Settlement Agreement?

Not necessarily, because an employer’s standard legal fee contribution may only be intended to cover advice on the agreement and the work required to complete it.

If negotiations require additional work, the employer may agree to increase its contribution. Alternatively, you may have to pay some of the additional costs yourself.

Your solicitor should explain the likely cost before beginning negotiations.