Settlement Agreement Legal Fees – Who Pays?

In most cases, your employer pays your legal fees. When you are offered a settlement agreement, your employer will almost always make a contribution towards the cost of the independent legal advice you are required to take. The most common contribution we see is £500 + VAT, which matches our minimum fee for advising on a settlement agreement – covering our preparation and your first meeting (usually around 60 to 75 minutes).

Where an employer offers less, they will often increase their contribution when told your adviser’s minimum fee is £500 + VAT; if not, we invoice you for the difference. Please note that if you decide not to sign the agreement, your employer will not make any contribution and you would be invoiced for the work carried out.

This page explains how the fees work – it is general information, not legal advice; for advice on your own agreement, please speak to our Employment team.

If you have been offered a settlement agreement (formerly known as a compromise agreement), it is normal to have concerns about settlement agreement solicitor fees and who is responsible for paying them. Below we explain who pays, how much advice usually costs, and how tax and VAT apply to the contribution. If you are a director, executive or senior professional, our senior executive settlement agreement advice covers the additional fee and negotiation issues that apply to senior exits.

Who pays the legal fees for a settlement agreement?

In the majority of cases, the employer pays a contribution towards the employee’s legal fees. This is because independent legal advice is a legal requirement for a settlement agreement to be valid.

The employer’s contribution is usually set out in the agreement itself and is paid directly to your solicitor once the agreement has been signed. If you work for the NHS, your legal fees are usually covered in full for NHS settlement agreements, including exits under MARS and voluntary redundancy schemes

How much does settlement agreement advice usually cost?

The cost of settlement agreement advice varies depending on the complexity of the agreement and whether negotiations are required. Our minimum fee for advising on a settlement agreement is £500 + VAT. This covers preparation and your first meeting, which usually lasts around 60 to 75 minutes.

If your agreement involves negotiation beyond the advice itself, any additional work is charged separately – we will always tell you before further costs are incurred.

What does the employer’s contribution cover?

The employer’s contribution typically covers:

• Reviewing the settlement agreement
• Explaining the legal terms and their effect
• Advising you on your rights and options
• Completing the solicitor’s certificate required for the agreement to be binding

In some cases, the contribution may also cover limited negotiations with your employer.

What if the employer’s contribution is not enough?

If the employer’s contribution does not fully cover the cost of advice, your solicitor should explain any additional fees before proceeding. You can then decide whether you wish to continue, negotiate the employer’s contribution, or limit the scope of advice.

The most common employer contribution we see is £500 + VAT. Where an employer offers less, they will often agree to increase it when the employee explains that their chosen adviser’s minimum fee is £500 + VAT. If the contribution still falls short, we invoice you for the difference – we will confirm the position with you before starting work. Please be aware that if you choose not to sign the settlement agreement, your employer will make no contribution and you would be responsible for our fees for the work done.

It is often possible to recover significantly more through negotiation than the cost of any additional legal fees.

Is free settlement agreement advice available?

In many cases, the employer’s contribution towards legal fees is sufficient to cover the cost of advising you on the settlement agreement, meaning there is no charge to you for the initial advice. Where advice extends beyond the employer’s contribution, this will always be discussed with you in advance so you can make an informed decision.

When should I speak to a solicitor about settlement agreement fees?

It is important to seek legal advice as soon as you receive a settlement agreement, particularly if you have been given a deadline to sign. Early advice ensures you understand the costs involved, your rights, and whether the terms offered are fair.

For personalised advice on settlement agreements, including legal fees and employer contributions, speak to our settlement agreement solicitors.