How much is the average settlement agreement in the UK?

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Struggling to understand how much compensation in a settlement agreement is a fair offer?  Given every settlement agreement is unique to individual circumstances, it can be difficult to determine whether the amount of money you’ve been offered is appropriate.  With a helping hand from the experienced settlement agreement solicitors at Freeman Jones Solicitors, you needn’t worry about unknowingly accepting a low offer.  To help you estimate how much you might be entitled to in a settlement agreement, we explore the average settlement agreement amount in the UK.

What is a standard settlement agreement?

Settlement agreements can vary significantly in both their terms and the amount of compensation an employee receives according to the specific case.  Every settlement agreement, however, must include a stringent set of conditions, as dictated by the Employment Rights Act 1996, to be considered legally-binding. These are relatively straightforward and include that the agreement be written with relation to a particular complaint or proceeding. Similarly, it also states that the relevant employee must receive professional advice from an independent advisor or solicitor to ensure they understand the legal jargon and implications of the settlement. The settlement agreement should also identify the advisor and the degree of legal protection that advisor possesses (commonly professional indemnity insurance) to cover them in the event that the employee suffers losses despite taking their advice. Another legal necessity of all settlement agreements is for them to acknowledge that all the statutory conditions have been met. Once these crucial components of the settlement agreement have been included, the type and number of clauses will vary on a case-by-case basis. In cases of employment termination, however, the typical settlement agreement involves the employee agreeing to waive their rights to bring any legal claim (such as unfair dismissal, discrimination, or breach of contract) against their employer in exchange for payment from the employer.  These standard settlement agreement arrangements also tend to include confidentiality clauses or non-disclosure agreements (NDAs), tax indemnities, and more information relating to the employee’s termination date, notice period, pension, and legal fees. A standard settlement agreement is ultimately a legal contract designed to either bring the staff member’s employment to an end or for an employer to agree to stop treating an employee unlawfully or unfairly. Both parties are required to abide by the terms and conditions once the document has been signed. The employer and employee should therefore thoroughly read and, crucially, understand the terms before signing.


What is the average settlement agreement amount in the UK?

It’s important to bear in mind that there is no legal minimum or maximum amount of compensation that you can be offered in a settlement agreement in the UK.  Instead, the amount you are offered will be based on a range of factors including your position in the company, earnings, and length of service. While the amount of money in a settlement offer can vary depending on the case (typically between three- and six-months’ salary), the average settlement agreement amount in the UK (as compensation for termination of employment) is between two- and three-months’ gross salary on top of notice pay.  If this seems like a lower-than-expected amount for your specific case, then don’t hesitate to contact the professional settlement agreement solicitors at Freeman Jones Solicitors.  We can work with you to understand your circumstances, helping you to make a swift, amicable, and mutually beneficial exit from the business.

Searching for more than the average settlement agreement amount?

If you’re keen to negotiate a more favourable settlement agreement for yourself, either to meet or surpass the average settlement agreement amount in the UK, you’ll need an experienced settlement agreement solicitor by your side. At Freeman Jones Solicitors, our settlement agreement services are essential to helping employers and employees alike to negotiate and draw up a settlement agreement.  Whether there are certain clauses and terms you want to be included in the arrangement or you’re struggling to understand the implications of agreeing to a settlement offer, our expert team can help. To support clients across the UK, we’ve opened Freeman Jones Solicitors branches in Chester, Liverpool, Warrington, and Wrexham. We welcome in-person visits to our offices, but you can also get in touch for free by giving us a call on 01244 506 444. You can also reach out via email by sending your enquiry to or using our convenient online contact form. Once we receive your enquiry, we’ll be in touch soon to arrange your free, no-obligation, 20-minute consultation.

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Author Colin Freeman View Profile
Colin qualified as a solicitor in 1998. He specialises predominantly in family law, litigation / dispute resolution, wills, probate and settlement agreements and has notable cases reported in the Court of Appeal and High Court.
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