Key Takeaways
- The amount you should accept in a settlement agreement depends on your legal entitlements such as notice, holiday, and redundancy pay, plus any ex gratia payment for waiving claims.
- There is no fixed minimum, but a reasonable settlement agreement often includes between one and six months’ salary, depending on your situation and the strength of your claims.
- Factors that affect your settlement agreement payout include the reason for leaving, evidence of unfair dismissal or discrimination, your length of service, and industry practice.
- Payments for injury to feelings, redundancy, or compensation can often be structured to maximise the £30,000 tax-free allowance, but tax advice is crucial for larger or complex settlements.
- Our solicitors help negotiate higher compensation, stronger references, and amendments to restrictive covenants, where your offer might not reflect your true legal leverage.
- Accepting an early offer usually means you cannot later negotiate, so it is vital to have your settlement agreement independently reviewed and discussed with an SRA regulated solicitor before signing.
- Our settlement agreement advice is free for employees, with legal fees paid by your employer, and we offer same-day appointments online across the UK.
- Settlement Agreement Lawyers are rated Excellent with over 1,400 five-star reviews on Trustpilot, Google and other platforms, giving you peace of mind throughout the process.
How Much Should I Accept in a Settlement Agreement?
If you have been offered a settlement agreement, you are right to ask: how much should I accept in a settlement agreement? There is no fixed legal minimum. A reasonable settlement typically includes your notice pay, any holiday pay owed, statutory redundancy if applicable, plus a compensation sum. For many employees, this ex gratia payment commonly falls between one and six months’ gross salary, but the right amount depends on your circumstances and legal entitlements. It is a legal requirement to take independent legal advice before signing, and your employer will usually pay for our service, so it costs you nothing.
Agreeing to a settlement means you will be giving up your right to bring claims against your employer, so it is vital the offer fairly reflects your position, and that payments are structured in the most tax-efficient way. Our solicitors not only provide the mandatory advice to make your agreement binding (at no cost to you), but can also help you negotiate for a better payout where appropriate.
In this guide, you will learn how to calculate what is reasonable in your situation, key factors that affect your settlement agreement payout, tax rules, negotiation tips, and which non-financial terms to watch out for before you sign. For tailored advice with same-day appointments, call our solicitors on 0800 054 1144 or book your settlement agreement advice online.
How much should I accept in a settlement agreement?
“How much should I accept in a settlement agreement?” is the single most important question for anyone presented with a settlement offer in England or Wales. Unlike statutory redundancy or notice pay, there is no fixed legal formula for most settlement sums. Instead, your offer should reflect: what you could win at a tribunal, compensation for giving up claims, any statutory and contractual entitlements, your length of service, and the employer’s need for a clean break.
A reasonable settlement agreement should at minimum pay you everything you are already owed: notice pay, accrued holiday pay, and, if applicable, statutory redundancy. Beyond that, a fair settlement usually includes an ex gratia (goodwill) payment to compensate you for waiving legal claims such as unfair dismissal, discrimination, or breach of contract—especially if your employer wants you to leave promptly or avoid tribunal proceedings.
Most offers start at the statutory minimum but can often be negotiated higher, particularly if you have strong claims, significant length of service, or evidence of discrimination or whistleblowing. Useful tools such as our Settlement Agreement Calculator can help you estimate whether your package stacks up against what you might recover if you went to a tribunal.
Check that no part of your existing statutory rights is being counted as “compensation”—for example, your accrued holiday pay and notice period must be included on top of any ex gratia sum, not used to pad the headline figure of your offer.
What is a settlement agreement and when is it offered?
A settlement agreement is a legally binding contract between employee and employer under which you agree to waive your rights to bring specified claims against your employer—most notably claims for unfair dismissal, discrimination, or redundancy pay—in exchange for a financial payout and (usually) other terms such as a reference. These agreements are typically offered at the end of an employment relationship, whether due to redundancy, performance issues, grievances, or mutually agreed exits.
Employers may use settlement agreements to avoid drawn-out disputes or litigation, often where there is risk of claims relating to redundancy, discrimination, whistleblowing, or breach of contract. In redundancy situations, the agreement is commonly used to secure a “clean break” and prevent further claims. In cases of potential unfair or constructive dismissal, the employer may prefer a confidential settlement rather than face a tribunal.
All binding settlement agreements must be in writing, relate to specific complaints or claims, and be signed not only by the employee, but also by an independent legal adviser (typically a solicitor) confirming that they have advised you on its effect. There are strict legal requirements under s.203 of the Employment Rights Act 1996 for settlement agreements to be valid.
A senior manager facing redundancy was offered a settlement agreement of statutory redundancy pay plus £10,000 ex gratia. By highlighting her age discrimination concerns and length of service, our solicitors negotiated a further £8,000, along with a detailed reference and agreed announcement.
Do I have to take independent legal advice before signing?
Yes, under English law you must obtain independent legal advice (ILA) before a settlement agreement is valid and binding. The requirement exists to protect employees and ensure they understand the effect of waiving their statutory rights—whether those are rights to redundancy pay, to bring an unfair dismissal or discrimination claim, or to challenge deduction from pay.
Your employer will almost always cover the cost of this advice. When you sign, your adviser will provide a certificate confirming their advice, and the final agreement will only take effect once this is received by your employer. Settlement agreement advice can be provided remotely, and our solicitors routinely deliver same-day service across England and Wales.
Do not be pressured into signing or resigning before you’ve had independent advice. Even if your employer suggests a deadline, you are entitled to take the time to seek legal advice and negotiate the terms.
Why is independent legal advice required under s.203 ERA 1996?
The legal requirement for independent legal advice arises under s.203 of the Employment Rights Act 1996. This section makes clear that any agreement waiving statutory employment rights—such as claims for unfair dismissal or redundancy pay—is only valid if the employee has received advice from a relevant independent adviser, usually a solicitor, on the terms and effect of the agreement.
The purpose is to prevent employees unknowingly signing away significant rights. Without this advice, any attempt to waive your statutory rights would be void—even if you and your employer both have agreed to the terms. The adviser (our solicitor) must provide a certificate confirming that advice has been given before the agreement is effective.
A client unaware she was losing her right to an equal pay claim nearly signed without advice. Our solicitor’s review prevented her from waiving a potential £15,000 claim for a modest ex gratia sum, prompting a revised and fairer offer.
What does a solicitor check in your settlement agreement?
Our solicitor has a duty to explain the real impact of every clause in your settlement agreement. This includes reviewing your contract of employment, holiday and notice entitlements, redundancy rights, tax treatment, and any restrictive covenants. Our solicitor also checks that you are at least receiving everything you are owed as a minimum, that the sums offered reflect your claim’s strength, and that no harsh restrictions or hidden repayment or indemnity obligations are being imposed.
Other key points we check include confidentiality and reference clauses, the lawfulness and fairness of any restrictive covenants, and ensuring clauses do not go beyond what is permitted under law. If anything is unclear or unfair, our solicitor will advise you on how to negotiate amendments.
Always ask for a copy of your most recent payslip, employment contract, and any bonus or commission scheme details when instructing us. Having these ready helps ensure nothing is overlooked and maximises your settlement.
What payments should a reasonable settlement agreement cover?
A reasonable settlement agreement contains both your contractual/statutory entitlements and a compensatory sum for waiving legal claims. At a minimum, it must include full payment for accrued but untaken holiday, notice pay (or payment in lieu), and any redundancy pay you are due under statute or contract.
The compensatory, or “ex gratia”, payment is where negotiation comes in. Its size depends on the circumstances of your exit, the strength of claims you are giving up (e.g. unfair dismissal, discrimination, whistleblowing), loss of earnings, prospects of finding another job, injury to feelings, and industry or organisational norms.
Beyond headline figures, we also scrutinise whether pension contributions, bonuses, commission, or other benefits should be preserved as part of your package. If you are dismissed mid-bonus year or near a salary review, this may justify a further uplift.
A redundancy offer for a long-serving employee omitted payment for 6 days’ outstanding holiday worth £900 and an annual bonus. After intervention, both were included, raising the overall settlement by £2,000.
Core entitlements: notice pay, holiday pay, and redundancy pay
You must receive at least statutory notice pay (or a payment in lieu, known as PILON), calculated based on your years of continuous service, plus any additional notice in your contract. Accrued but unused holiday should be paid out at your usual daily rate. If your exit is due to redundancy, statutory redundancy pay is required, calculated using your age, years of service, and weekly pay, with a statutory cap. Use our Redundancy Calculator to estimate your entitlement.
Failure to pay these basics—or muddling them with “compensation” to inflate the ex gratia sum—is a red flag that your settlement is too low or incorrectly drafted. Your ex gratia payment should always be on top of these sums.
Double-check your final holiday entitlement figure; employers often miscalculate entitlement after your last working day, especially where holiday year-ends or bank holidays intervene.
Ex gratia compensation: what is typical and what counts as fair?
Ex gratia payments compensate you for giving up the right to bring legal claims against your employer. Typical ex gratia sums can start at as little as a few weeks’ pay, but may stretch to six months or more of gross salary in cases of strong claims (discrimination, whistleblowing, or blatant unfair dismissal). There’s no statutory scale, but reasonableness depends on your leverage, claim value, job seniority, and how badly the employer wants closure.
Tribunal compensation for unfair dismissal is capped (as of 2024) at the lower of 52 weeks’ gross pay or £115,115, but discrimination awards are uncapped—and settlements in those cases are frequently substantially higher. Factors such as the employer’s size, sector norms, and PR risk also affect sums offered.
A client on £40,000 facing dismissal for alleged poor performance had no evidence of discrimination. Our solicitor negotiated a three-month gross salary ex gratia sum (£10,000), plus all owed basics—a settlement superior to statutory redundancy.
Factors affecting your settlement agreement payout (claim strength, length of service, industry norms)
Several factors drive how much you should accept in a settlement agreement:
- Claim strength: The more robust your potential claims (discrimination, whistleblowing, unfair dismissal), the greater your negotiating power and settlement value.
- Length of service: Long-serving employees are owed stronger notice and redundancy pay, and their “loss of opportunity” is higher.
- Loss: If your new employment prospects are weak, settlements trend higher.
- Industry and employer norms: Some professions routinely offer higher settlements to secure reputational protection.
- Personal circumstances: For example, disability or maternity protection under the Equality Act 2010 can justify higher payments.
These are weighed case-by-case, taking account of likely tribunal outcomes, legal costs saved, and what competitors might offer for similar disputes.
Document any evidence you have supporting a possible claim—such as emails about redundancy selection or grievances about discrimination—before negotiating, to strengthen your bargaining position.
Checklist: is my settlement agreement offer fair or too low?
- Does the offer include at least your net notice pay and all accrued holiday?
- Have redundancy rights been calculated accurately?
- Is the ex gratia sum at least in line with your length of service, your claim’s strength, and comparable tribunal awards?
- Are bonuses, commissions, or benefits owing?
- Does the employer cover legal costs?
- Will you get a reference or other non-financial benefit?
If the answer to any of these is no, your offer may be too low—especially if your ex gratia payment is less than what a tribunal might award after costs and risks are accounted for.
An employee initially offered a settlement worth just statutory minimums and no reference. With our solicitor’s intervention, the ex gratia sum was doubled and a positive reference agreed, meeting industry benchmarks.
Call our settlement agreement solicitors on 0800 054 1144, or book your settlement agreement advice online for a rapid, confidential review of your offer. Our advice is always free to employees because the employer pays the solicitor’s fees.
How is tax calculated on settlement agreement payments?
Taxation is one of the trickiest parts of a settlement agreement. It is vital to distinguish between sums you are owed contractually (notice pay, holiday, bonuses)—which are taxable as employment income—and genuinely compensatory payments (such as ex gratia compensation or damages for injury to feelings), which may benefit from the £30,000 tax-free exemption under section 403 of the Income Tax (Earnings and Pensions) Act 2003.
Payment in lieu of notice (PILON), holiday pay, and outstanding bonuses are always taxable and subject to National Insurance. Statutory redundancy pay is tax free. Only genuinely ex gratia payments or damages (not contractual sums disguised as compensation) can fall within the tax-free allowance.
Understanding the relevant tax position can maximise your take-home payout and avoid unpleasant surprises. HMRC expects employers to calculate and deduct tax on all taxable elements, but if the contract is unclear, you may be liable for any underpaid tax and National Insurance later.
Ask for a breakdown of payments and how tax will be deducted before you sign. Never assume an ex gratia sum is entirely tax-free—especially with large pay-outs or complex notice arrangements.
What part of my settlement agreement is tax free?
Statutory redundancy pay, and the first £30,000 of non-contractual compensation for loss of employment in a settlement agreement, is tax free under section 403 of the Income Tax (Earnings and Pensions) Act 2003. Any amount above £30,000, as well as contractual sums for notice, holiday, and bonuses, are fully taxable.
Below is a simple table summarising which elements are typically taxable and which are not:
| Type of Payment | Taxable? | Notes |
|---|---|---|
| Statutory Redundancy Pay | No | Always tax free |
| Contractual Notice Pay | Yes | Tax and NI due |
| PILON (Payment in Lieu) | Yes | Tax and NI due, including PENP adjustments |
| Accrued Holiday Pay | Yes | Tax and NI due |
| Ex Gratia up to £30,000 | No | Tax free threshold |
| Ex Gratia exceeding £30k | Yes | Tax and NI above threshold |
A director received £40,000 ex gratia compensation after redundancy; the first £30,000 was tax free, but £10,000 was taxed under PAYE. Our solicitor ensured the final agreement reflected this, preventing future HMRC issues.
Notice pay, PILON, and Post-Employment Notice Pay (PENP) explained
Notice pay is a notorious area for confusion. If you receive your full notice period as “garden leave”—working or remaining employed—you are taxed through payroll as normal. If your contract allows “Payment in Lieu of Notice” (PILON), you are paid your notice as a lump sum, taxed under PAYE and National Insurance.
Since 2018, HMRC rules require almost all notice pay (including where not expressly provided in your contract) to be taxable via so-called “Post-Employment Notice Pay” (PENP). This means employers must calculate what notice you should have worked and ensure any payment for this period is taxed fully, even if you are simply paid off without working.
Check if your contract contains a PILON clause. If not, but your employer is paying you off immediately, ensure they tax the entire PENP correctly or HMRC may demand further tax from you months later.
Tax treatment: compensation, injury to feelings, and ex gratia sums (£30,000 exemption)
Ex gratia compensation for genuine termination of employment benefits from a £30,000 tax-free cap. Above this, PAYE must be deducted. Damages for “injury to feelings” in discrimination cases are also usually tax free, unless paid in respect of termination itself.
Bonuses, holiday pay, or accrued contractual sums disguised as “compensation” do not qualify. The £30,000 exemption only applies to non-contractual, compensatory sums. Our solicitors check your agreement’s wording to prevent accidental tax liability or loss of exemption.
An employee in a discrimination case accepted £35,000 ex gratia compensation, wording the agreement so that injury to feelings (£5,000) was separately listed and tax free, and ex gratia was split to maximise the tax-free threshold.
When should I seek specialist tax advice?
You should consider specialist tax advice if your total settlement is over £30,000, contains particularly complex elements (share options, overseas considerations, or pension arrangements), or if there is ambiguity around what constitutes contractual versus non-contractual pay.
Most standard settlements are straightforward, but directors, high earners or those with multiple contract types stand to benefit from a bespoke tax review. Our solicitors flag any situations where HMRC may challenge the tax treatment and discuss the need for extra advice where appropriate.
If you are offered an unusually high or complex settlement (for example, with share options or international elements), seek additional advice early to avoid costly tax surprises down the line.
Key clauses and risks to check before you sign
A settlement agreement is about much more than just how much you should accept. It contains numerous legal clauses that affect your future career, finances, and reputation. Key sections include post-termination restrictions (restrictive covenants), confidentiality, references, warranty and indemnity clauses about tax, and often complex “clean break” terms that bar future claims.
Each must be scrutinised for fairness and accuracy. Unreasonable restrictions may severely limit your future earning potential. Questionable tax warranties may make you liable for sums you never received. A thorough review by our solicitors ensures you don’t inadvertently take on the employer’s risks or bar future rights—particularly in cases of discrimination or where future employment could be affected.
A departing employee was asked to sign a “non-compete” clause lasting 12 months across the entire industry. Our solicitor persuaded the employer to limit it to 3 months and to only direct competitors, unlocking future offers.
Restrictive covenants: are they fair and enforceable?
Restrictive covenants are clauses preventing you from working for competitors, poaching clients or staff, or disclosing information after leaving. While common and sometimes valid for protecting business interests, they must be reasonable in duration, geography, and scope. UK courts will not enforce overly broad restrictions.
Our solicitors will review any non-compete, non-solicitation, or confidentiality clauses, advising on actual enforceability and seeking to narrow or remove those that are too harsh.
Push back on any covenants lasting more than 6 months unless absolutely justified by your seniority or access to critical confidential information.
Confidentiality, references, and clean break clauses – what to look for
Most agreements include mutual confidentiality and “non-derogatory” clauses—both sides agree not to speak ill of the other. Reference clauses should specify the wording to be given to future employers or, at minimum, commit to a factual reference.
A well-drafted “clean break” clause should confirm you are waiving only known claims up to the date of signature—not your right to pursue breaches arising after you leave, such as pension or bonus issues that emerge later.
An employee secured an agreed, positive reference—approved in writing as part of the settlement—guaranteeing future employers would not be told of ongoing disputes.
Tax indemnities and repayments: what do they mean for you?
Settlement agreements often contain tax indemnity clauses. These make you liable to repay the employer if HMRC later claims tax or National Insurance on your payments. While standard, they must not make you liable for tax on sums you have not actually received (for example, the employer paying too little tax on your behalf).
A fair indemnity clause ties your duty to repay only to the actual net amount received, and the employer should promise to notify you quickly if any HMRC enquiry arises.
Always review indemnity wording with care—if unclear, insist the employer agrees to pay or challenge any HMRC demand first before seeking repayment from you.
Common negotiation points and pitfalls
Negotiable points include:
- The amount and structure of the ex gratia payment
- Duration and scope of restrictive covenants
- The exact reference wording
- Treatment of bonuses, shares, or commission
- Payment timings
- Whether outplacement or career support is provided
Common pitfalls include waiving unknown future claims or accepting harsh restrictions that hamper your future employability. Our solicitors routinely secure enhancements far above initial offers by pressing these points.
One client had an offer improved by £5,000 and restrictive covenants cut from 12 months to 3, after our solicitor challenged the initial terms and produced market comparators.
If you need expert advice on whether your settlement agreement is fair and how to negotiate better terms, call our settlement agreement solicitors on 0800 054 1144, or book your settlement agreement advice online. Our legal costs are always covered by your employer, so our detailed advice is free to you.
Step-by-step: The settlement agreement signing process (remote and same-day)
The signing process, especially when handled remotely, is straightforward and efficient with our solicitors. Here’s a step-by-step outline:
- Contact our solicitors and book your ILA appointment (book online here).
- Provide all relevant documents (settlement agreement draft, contract of employment, recent payslip, any correspondence).
- Our solicitor reviews the agreement, highlights any risks, and explains the offer’s legal and practical consequences in plain language.
- We discuss negotiating improvements if the offer is low, needs clarity, or contains unreasonable terms. We contact your employer if instructed.
- Once agreed, you sign the agreement and our solicitor signs the ILA certificate.
- Both documents are returned to your employer, who arranges payment within the agreed time—typically 7–28 days.
Remote appointments can often be arranged same day for urgent exits or tight deadlines, all paperwork completed securely by phone, email and electronic signature.
Never feel rushed to sign or agree to anything before your solicitor’s review—statutory time for advice is yours to use, and employers expect you to take this step.
How long do you have to decide?
While there is no statutory minimum “cooling off” period, ACAS recommends employees be given at least 10 calendar days to consider settlement agreement offers. Some employers try to impose shorter deadlines, but rushing is risky. You are always entitled to reasonable time to review advice and consider negotiation, especially if pressured to resign or sign immediately.
A client notified of redundancy on Friday was told to accept by Monday. Our solicitor secured a full week’s extension to allow proper negotiation and review, resulting in a significantly improved final offer.
What happens during a remote settlement agreement appointment?
A typical remote appointment with our solicitor includes a full review of your settlement agreement: checking sums offered, clarifying tax treatment, advising on the enforceability of restrictive covenants, and running through any risks or negotiation points. We answer your questions, suggest practical changes, and can speak directly with your employer to negotiate improvements if you instruct us.
Once the agreement is finalised, our solicitor signs the independent legal advice certificate and sends everything securely to you and your employer.
Have your questions and key goals ready before the call—identifying what you want from the settlement helps us tailor your advice and negotiation strategy more effectively.
What if you want to negotiate changes?
If you want to negotiate changes—whether more money, a better reference, or reduced restrictions—inform our solicitor at your appointment. We can draft counterproposals, speak with your employer, and leverage our expertise and knowledge of market rates and tribunal outcomes to fight for a better offer.
There is no legal limit to negotiation rounds, and most employers expect some pushback. Document all agreed changes in the final written agreement, and never rely on verbal promises.
After raising a discrimination concern, an employee’s ex gratia payment rose from £2,000 to £12,000 through negotiations conducted by our solicitor, plus a neutral reference and reduced restrictive covenants.
Why Choose Settlement Agreement Lawyers?
There are many reasons to trust our firm for your settlement agreement advice: deep experience, specialist focus, and strong client track record. Our process is designed to maximise both your financial outcome and future career potential while reducing stress and risk at every stage.
We provide honest, practical advice, uphold the highest professional standards as SRA-regulated solicitors, and ensure you understand both the immediate offer and any ongoing consequences. Read more about the types of exit situations we cover—redundancy, unfair or constructive dismissal, discrimination, and others—on our dedicated settlement agreement advice page.
Browse our client success stories to see how often we improve upon initial offers—real-world proof that expert negotiation and clear, practical advice deliver better outcomes.
Free for employees, fee capped at employer’s contribution
Our settlement agreement advice is completely free for employees: your employer always covers our legal fees, and our charges are capped at their standard contribution. There are no hidden costs or surprises. We focus solely on your best interests—maximising your payout and protecting your legal rights.
An employee worried about solicitors’ costs discovered our employer-paid service enabled full advice, negotiation, and signing—all at no personal cost.
Same-day appointments and secure remote service across the UK
We offer nationwide, same-day appointments—entirely remote for security, efficiency, and convenience. Documents are exchanged by secure email, calls are arranged at times to suit you, and e-signatures make the process fast even on tight deadlines. This means wherever you are in England or Wales, you can get quick, specialist advice tailored to your settlement.
Let us know your time constraints up front—our diary and process are designed to meet redundancy or exit deadlines with rapid turnaround.
SRA-regulated solicitors specialising in settlement agreements
Our solicitors are regulated by the Solicitors Regulation Authority (SRA), with a specialist focus on employment law and settlement agreements. We maintain rigorous professional standards, ensuring your rights and best interests remain protected throughout the process. You benefit from dedicated expertise and safe, trustworthy advice.
A client facing an urgent, high-value exit relied on our SRA accreditation for confidence the advice and negotiation were both robust and recognised by all parties.
Expert negotiation to maximise your compensation and protect your interests
We routinely add value for clients by negotiating higher ex gratia payments, stronger references, and narrowing restrictive covenants. Because we advise daily on market rates and typical settlements, our advice is practical and evidence-based—giving you the confidence to push for the best terms, not just the first offer.
If you want to maximise settlement, mention specific comparable cases—such as what others in your company or industry have received—instructing us to use these as benchmarks.
1,400+ five-star reviews and client satisfaction
We are proud to have over 1,400 five-star reviews from satisfied employees, reflecting our commitment to client service, outcomes, and support throughout what is often a stressful life event. See our client stories for examples of real results secured for clients in redundancy, discrimination, whistleblowing, and more.
A client praised our ability to demystify legal jargon, secure a doubled payout, and protect her reputation with an agreed reference, reflected in her five-star review.
Frequently Asked Questions About How much should I accept in a settlement agreement?
What is a reasonable amount to accept in a settlement agreement?
A reasonable settlement agreement should pay you all statutory entitlements plus an ex gratia payment reflecting the value of claims you’re waiving. This usually ranges from a few weeks to several months’ salary, but higher if you have strong claims such as discrimination or whistleblowing.
Is there a legal minimum I should get in a settlement agreement?
There is no legal minimum settlement sum for the ex gratia element. However, your employer must pay any accrued holiday pay, notice pay, and statutory redundancy (if applicable). The value above that is dependent on negotiation and your individual circumstances.
Should I negotiate my settlement agreement offer?
Yes, it is wise to negotiate a settlement agreement offer. Employers generally expect negotiation and our solicitors can help you achieve a better package, whether by increasing compensation, agreeing a better reference, or limiting future restrictions.
How is tax applied to settlement agreement payouts in the UK?
Tax rules vary: notice pay, holiday pay, and bonuses are taxable as earnings. The first £30,000 of non-contractual ex gratia compensation is tax free, but anything above, plus contractual payments, is subject to PAYE and National Insurance.
What else can I ask for besides money in a settlement agreement?
In addition to compensation, you can request a reference, payment for unused benefits, outplacement support, or the removal or limitation of post-termination restrictions. Well-negotiated non-financial terms can be equally important for your future.
Can I refuse my employer’s settlement agreement offer?
You can refuse a settlement agreement or request improved terms. There is no obligation to accept if the compensation or conditions are unfair. Our solicitors can advise whether pushing back or rejecting is the best step in your case.
What if my settlement agreement offer is too low?
If your offer seems too low, you have the right to negotiate for more. Our solicitor can help you assess if your entitlements are accurate and whether your ex gratia and other sums are in line with what a tribunal might award.
Will I get a reference as part of my settlement agreement?
References can and often should be agreed as part of a settlement, but they are not included automatically. Our solicitors can negotiate the specific wording to ensure it supports your future job search and protects your reputation.
Get Expert Settlement Agreement Advice on What You Should Accept
Knowing how much to accept in a settlement agreement requires a detailed look at not just your legal entitlements—notice, holiday, and redundancy pay—but also the value of any legal claims you may be waiving and the reality of your employment situation. From how ex gratia compensation is calculated, to ensuring each payment is taxed correctly, to checking restrictive covenants and reference clauses, every aspect should be scrutinised before you sign. Our solicitors guide you through this process so you can make an informed, confident decision, and, where needed, negotiate for better terms.
With our service, you benefit from free independent legal advice (your employer covers our fees), fast same-day remote appointments wherever you are in England or Wales, and the assurance that your case is reviewed by SRA-regulated experts who specialise in settlement agreements. We routinely secure improved offers, better references, and fairer exit terms for employees by using our experience and up-to-date market knowledge.
For clear, practical advice and a confidential review of your settlement agreement offer, call Settlement Agreement Lawyers on 0800 054 1144, or book your settlement agreement advice online for a same-day remote ILA appointment.
