Settlement agreement solicitor fees in the UK
Settlement agreement solicitor fees in the UK typically range from £500 to £1,000 for an employee receiving Independent Legal Advice (ILA). Under the Employment Rights Act 1996, an employee's solicitor must sign the agreement for it to be legally binding — and employers almost always contribute £250–£500 toward the employee's legal fees as part of the deal.
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Cost table
| Item | Typical range (GBP) |
|---|---|
Employee ILA review (straightforward) + VAT | £350–£750 |
Employee ILA review (complex) + VAT | £750–£1,500 |
Employer contribution to employee fees standard offer | £250–£500 |
Negotiation / counter-offer (per hour) | £200–£400/hr |
Employer drafting fee | £500–£2,000 |
Factors affecting cost
- ·Length of service and seniority — packages and risk increase with both.
- ·Presence of restrictive covenants (non-compete, non-solicitation).
- ·Whether the exit involves discrimination, whistleblowing or TUPE issues.
- ·Whether share options, LTIPs or pensions require specialist treatment.
- ·Tax treatment of the termination payment (£30,000 tax-free threshold).
How to reduce costs
- ·Always negotiate the employer's contribution upward — £500–£750 is achievable for senior roles.
- ·Ask for advice on tax structuring — the £30,000 ex-gratia threshold can save thousands.
- ·Don't sign on the spot — you are entitled to 10 calendar days under ACAS Code (often 7 in practice).
- ·Get advice before raising a grievance, not after — sequencing affects negotiating leverage.
- ·Insist on a positive reference and agreed announcement wording in the agreement.
Frequently asked questions
Who pays for the solicitor in a settlement agreement?▾
The employer typically contributes £250–£500 toward the employee's legal fees. If your fees exceed the contribution, you pay the balance — but most straightforward cases fall within the standard contribution.
Do I have to sign a settlement agreement?▾
No. It is voluntary and only enforceable if you have received Independent Legal Advice from a qualified, insured adviser. You can negotiate, reject or counter-offer.
Is a settlement payment taxable in the UK?▾
The first £30,000 of an ex-gratia termination payment is tax-free. Notice pay, contractual payments and PILON are taxable in full. Restrictive covenant payments are also taxable.
How much should a settlement agreement payment be?▾
There is no fixed formula. Typical ex-gratia ranges from 1–3 months' salary for short service, rising to 6–12 months for senior employees with potential discrimination or unfair dismissal claims.
Can I get a settlement agreement reviewed by ACAS or Citizens Advice?▾
No — only a qualified independent solicitor, certified union official, or advice centre worker with insurance can validly advise on a settlement agreement.