In most cases, your employer pays your solicitor's fee for advising on a settlement agreement, typically a contribution of around £350 to £750 plus VAT, and often the full cost for a straightforward agreement. Because the law requires you to take independent legal advice before the agreement is valid, employers routinely fund it, which means many employees pay nothing at all.

If you have been offered a settlement agreement, the cost of getting advice is one of the first worries, usually followed quickly by relief when people learn how it actually works. Here is exactly what the fees are, who pays them, and when you might pay something yourself.

Deen & Co advise on settlement agreements across London and the UK. See our fees in detail.

Why you have to take legal advice at all

A settlement agreement is not legally binding unless you have received advice from a qualified independent adviser (usually a solicitor) on the terms and effect of the agreement, specifically its effect on your ability to bring claims. This is a legal requirement under the Employment Rights Act 1996, designed to protect you.

Because of this, the whole system assumes you will get advice, and employers build a contribution towards it into the deal.

Who pays the solicitor's fees?

Your employer, almost always, at least in part. Since advice is a legal precondition for the agreement they want you to sign, employers offer a contribution towards your legal costs as standard. This is normally written into the agreement itself as a fixed figure paid directly to your solicitor once the agreement is signed.

Common scenarios:

The contribution covers the full cost. For a standard, uncomplicated settlement agreement, the employer's contribution is often enough to cover the whole fee, so you pay nothing.
The contribution is a fixed sum, but the advice needed goes beyond it. If your case is complex (negotiation over the figure, discrimination issues, restrictive covenants, tax structuring), the work may exceed the standard contribution. Any excess is usually agreed with you upfront.
You want to negotiate, not just sign off. A basic contribution covers advising on the agreement. If you want your solicitor to actively negotiate a better deal, that is additional work, but it very often pays for itself in a higher settlement.

What is the typical fee?

For advising on a standard settlement agreement, fees commonly sit in the region of £350 to £750 plus VAT, frequently matched by the employer's contribution. More complex matters, or active negotiation, cost more, but again, the employer contribution and the improved settlement usually offset it.

A good firm will tell you at the outset:

Whether the employer's contribution will cover everything.
What, if anything, you would pay yourself.
What any negotiation would cost and what it might achieve.

You should never be surprised by a bill.

An important tax point

Where your employer pays your solicitor's fee directly to the firm (rather than paying you and asking you to pay the firm), that payment is tax free and does not count towards your £30,000 tax free allowance. This is one reason agreements are structured with fees paid directly, and a small detail that a good solicitor will make sure is right. More in Settlement Agreement Tax.

Will I ever have to pay myself?

Occasionally, yes, but usually only if:

Your matter is genuinely complex and the work exceeds the employer's contribution.
You instruct your solicitor to negotiate hard beyond simply advising on the agreement.
No settlement is ultimately reached (rare, but the advice still took place).

In all these cases, a reputable firm agrees the position with you before doing the extra work, so any cost to you is a decision you make with your eyes open, weighed against the likely gain.

How to avoid nasty surprises

Check the contribution figure written into your agreement.
Ask the firm whether that figure covers your case in full.
Confirm the fee is paid directly to the solicitor (for the tax benefit).
Agree the cost of any negotiation upfront, and what it is likely to win you.

The bottom line

Getting a settlement agreement reviewed rarely costs you anything, because your employer is expected to fund the advice the law requires you to take. Typical fees are modest, usually covered by the employer's contribution, and paid tax free directly to the firm. The only time you are likely to pay is for complex work or active negotiation, and that is a choice you will make knowing what it is likely to gain.

Worried about the cost of advice? In most cases your employer covers it, and Deen & Co will confirm your position before we start. Check our fees or get in touch.

FAQ

Who pays for settlement agreement solicitor fees? Your employer, in most cases. Because the law requires you to take independent legal advice for the agreement to be valid, employers routinely contribute to, and often fully cover, your solicitor's fee.

How much does a settlement agreement solicitor cost? Advising on a standard agreement typically costs around £350 to £750 plus VAT, usually matched by the employer's contribution. Complex cases or active negotiation cost more.

Do I have to pay tax on the legal fees in a settlement agreement? No. Where your employer pays your solicitor's fee directly to the firm, it is tax free and does not count towards your £30,000 tax free allowance.

This article is general information, not legal advice. Fees vary by firm and matter, so ask for a clear quote before instructing.

Settlement Agreement Solicitor Fees: What You Will Pay and Who Covers It