Settlement Agreement Solicitors
Independent advice, paid for by your employer. Same-day review for agreements received by 2pm.
A settlement agreement is only valid if you have received independent legal advice from a qualified solicitor. We cap our fee at your employer's contribution — so for standard advice and sign-off, you pay nothing.
Reviewed by Alex Bailey, Solicitor (qualified 2007) · October 2026
Definition
What is a settlement agreement?
A settlement agreement (formerly known as a compromise agreement) is a legally binding contract between an employer and an employee. It is used to bring the employment relationship to an end — or to resolve a dispute — on agreed terms. In exchange for a financial payment and other agreed terms, the employee waives their right to bring specified employment tribunal claims.
For a settlement agreement to be legally valid, it must be in writing, identify the particular claims being settled, name the independent adviser, and the employee must receive independent legal advice from a qualified lawyer or a certified trade union or advice-centre adviser with appropriate insurance. It must also state that the legal conditions for a valid settlement agreement have been met. If any of these conditions is missing, the agreement does not stop you bringing the claims it lists.
Settlement agreements commonly arise in redundancy situations, following a disciplinary or grievance process, or where an employer and employee have agreed to part ways. They can also be used to resolve ongoing employment disputes without going to tribunal.
Is my offer fair?
Understanding what you are being paid
A settlement payment has two parts. The first is what you are owed anyway — notice pay, holiday pay, salary to termination date, any earned bonus or commission, and statutory redundancy pay if you are being made redundant. The second is the extra amount you are being paid in exchange for giving up your employment tribunal claims.
Whether the extra amount is fair depends on the strength of your claims, how fairly the process was handled, how long it might take you to find a similar role, and your employer's desire for a quick, quiet exit.
Use the quick calculator to separate the two parts and see an indicative unfair dismissal value. For the full breakdown, use our settlement agreement calculator.
Check your offer in 2 minutes
Quick Check
Check your offer in 2 minutes
Enter your details to see what you are owed and the extra you are being paid.
For a full breakdown including unfair dismissal value, tax treatment and 2027 changes, use the full settlement agreement calculator.
Our Fees
What does settlement agreement advice cost?
For standard advice and sign-off, PDA Law caps its fee at the employer's contribution and invoices the employer directly. In most cases, you pay nothing.
If you want us to negotiate a better deal, or if your agreement is complex — involving share schemes, bonus clawbacks or detailed restrictive covenants — there is a fixed fee for that work, confirmed in writing before we start.
If your employer is late paying the agreed legal fee contribution, we will chase it without additional charge.
Fixed Fees (inc VAT)
Review + Advice + Signing Certificate (Standard)
£0 to you
Fee capped at employer contribution and invoiced to employer. Usually nothing to pay.
Review + Advice + One Round of Amendments / Negotiation
£900 inc VAT
Where you want us to propose changes or negotiate on your behalf.
Executive / Complex Settlement Agreement
£1,500 inc VAT
Share plans, restrictive covenants, detailed negotiation.
Typical timescale
Same-day review for agreements received by 2pm. Otherwise 24–72 hours. Urgent reviews available — let us know your deadline.
Negotiation
What can be negotiated?
Many settlement agreements are negotiable. Common areas include:
Read our guide on how to negotiate a settlement agreement for a step-by-step walkthrough of making a counter-offer and the mistakes to avoid.
Protected conversations and without-prejudice meetings
A "protected conversation" under section 111A of the Employment Rights Act 1996, or a "without prejudice" meeting, generally cannot be used as evidence in a later unfair dismissal claim. However, this protection can be lost if the employer behaves improperly — for example, by applying undue pressure. It also does not cover discrimination or whistleblowing claims. If you are unsure whether a conversation was properly protected, take advice before responding.
Tax
Tax on settlement payments
The first £30,000 of a genuine termination payment is usually tax-free.
Notice pay, salary to termination date, holiday pay and earned bonus are taxable in the normal way.
Statutory redundancy pay is tax-free but counts toward the £30,000 threshold.
Statutory maternity, paternity, adoption or sick pay cannot be signed away. It must be paid in full and is taxed as normal earnings, outside the £30,000 allowance.
Some genuine payments for injury or disability can be exempt — take advice on the specific wording.
Direct employer-paid legal fees are not a taxable benefit to you.
Pension contributions made as part of a settlement may be tax-efficient — discuss this with us.
Important Change
Changes from 1 January 2027
Qualifying period reduced: From 1 January 2027, employees need only six months' service (not two years) to bring an ordinary unfair dismissal claim. This significantly increases the number of employees who can bring claims — and therefore the leverage of employees in settlement negotiations.
Compensation cap removed: From 1 January 2027, the cap on the compensatory award for unfair dismissal is removed. Currently capped at £123,543 (or 52 weeks' pay if lower), there will be no upper limit from that date.
If your leaving date is on or after 1 January 2027, your bargaining position may be stronger. Send your agreement before signing — the leaving date affects your leverage.
How the settlement agreement process works
Four steps from receiving your agreement to signing, with same-day review for agreements received by 2pm.
Upload your agreement
Use our secure form to send the draft agreement and any letters about it. We confirm receipt the same working day.
We review and advise
We review the agreement in full, advise on the terms, explain your rights and options — in plain English.
You decide
Sign as offered, instruct us to negotiate improvements, or take a different route — the decision is always yours.
Certificate signed
We sign the independent adviser certificate, the agreement becomes legally binding and you move forward.
Why PDA Law
Why choose PDA Law for settlement agreement advice?
Same-day review
Agreements received by 2pm reviewed the same day. Otherwise 24–72 hours. We understand that employer deadlines are real.
Nothing to pay for standard advice
We cap our fee at the employer's contribution and invoice the employer directly. For standard advice and sign-off, you pay nothing.
Genuinely independent
We act for you — not your employer. Our advice is honest, clear and focused on your best interests.
Remote service
We advise clients across England and Wales. No office visit required. Advice by phone, video call or email.
Employment law specialists
Our employment solicitors have extensive experience advising employees on settlement agreements across a wide range of sectors.
Negotiation experience
Where the offer is not fair, we can negotiate on your behalf. We know what employers will and will not accept.
Who We Help
Who we advise
We advise employees and senior executives across England and Wales in all sectors, including NHS and public sector, education, financial services, manufacturing, retail and hospitality. For senior executives, we also advise on share schemes, bonus clawbacks and restrictive covenants.
4.8 stars · 374 Google reviews
Client Testimonials
What Our Clients Say
“Alex Bailey gave me honest, practical advice from the very first call. He explained my options clearly, told me what was realistic, and achieved an outcome that genuinely reflected the strength of my position.”
Richard H.
Employment law client, Chester
* Names changed to protect client confidentiality. Testimonials reflect genuine client experiences.
FAQs
Settlement Agreement — Frequently Asked Questions
Answers to the questions we are most commonly asked about settlement agreements.
What is a settlement agreement?
Is a settlement agreement the same as a compromise agreement?
Do I have to use my employer's suggested solicitor?
Will I have to pay for settlement agreement advice?
Do I have to sign a settlement agreement?
How long does Acas say I should have to consider a settlement agreement?
How much is a typical settlement agreement payment?
Can I negotiate a settlement agreement?
Is the settlement payment taxable?
Can I ask my employer for a settlement agreement?
Can I change my mind after signing a settlement agreement?
When will I receive the settlement payment?
What if my employer does not pay?
Can this be done remotely?
What changes from 1 January 2027?
Want to know how to negotiate a better deal? Read our guide: How to negotiate a settlement agreement.
Your Solicitor
Your Employment Law Solicitor
Alex Bailey
Solicitor — Commercial Litigation & Employment Law
Alex qualified in 2007 and has extensive experience in employment law across the North West and North Wales — from settlement agreements and unfair dismissal to discrimination claims and Tribunal representation. A career highlight was securing one of the highest disability discrimination awards in the local area.
Upload your settlement agreement
Same-day review for agreements received by 2pm · Usually nothing to pay
Related Services
Related employment law services
Settlement Agreement Calculator
Check whether your offer is fair. Separate what you are owed from the extra you are being paid.
Unfair Dismissal
Advice on whether your dismissal was fair and what claims you may have.
Redundancy
Guidance on redundancy pay, consultation rights and whether the process was fair.
Workplace Discrimination
Advice on discrimination claims based on protected characteristics.
Whistleblowing
Protection for employees who report wrongdoing in the workplace.
Employment Law Fees
Transparent pricing for all our employment law services.