England, Scotland and Wales
Settlement agreement calculator: what is your exit worth?
A 45-year-old on £40,000 with six years' service typically leaves with £10,092–£13,426: a £6,759 statutory redundancy baseline plus an ex-gratia payment of one to two months' salary, a mid-range figure of £11,759. Enter your own numbers and the settlement figure calculator shows the equivalent estimate, and remember these are typical observed outcomes, not entitlements.
£350–£500
typical employer contribution to your solicitor's fee for signing off the agreement
Email me this result
We will send you these figures and a link back to them. One email, nothing else unless you tick the box.
What this is based on
- The statutory redundancy baseline uses the statutory formula: 0.5, 1 or 1.5 weeks' pay per complete year of service by age band, weekly pay capped at £751 and service capped at 20 years, so the statutory maximum is £22,530. The £751 cap took effect 6 April 2026 in England, Scotland and Wales and is reviewed each April, verify the current figure on gov.uk (Northern Ireland uses a different cap).
- We apply your current age band to every year of service. The official calculation bands each year by the age you were during it, so long-serving employees who crossed an age band will see a slightly different figure on the gov.uk redundancy calculator, use that for the exact statutory entitlement.
- Statutory redundancy pay requires 2 years' service, so the baseline is nil below that. Outside a genuine redundancy there is no legal entitlement to it at all; it appears in every scenario here because it is the anchor figure negotiators commonly work from whatever label the exit carries.
- The ex-gratia multiples are typical observed negotiated outcomes, not entitlements: 1–2 months' salary for a redundancy-shaped exit, 1–3 months for a performance or conduct dispute, 3–6 months where a discrimination allegation is in play (tribunal awards for discrimination are uncapped, which strengthens the negotiating position), and 2–3 months for long-term sickness exits. Any individual agreement can fall outside these ranges.
- Tax: the first £30,000 of genuinely ex-gratia termination money is free of income tax, and statutory redundancy pay counts toward the same £30,000 limit (ITEPA 2003 s403). Notice pay, including payment in lieu of notice, is always taxed as earnings and is excluded from this estimate.
- Excluded: notice pay, accrued holiday, bonuses, commission, pension contributions and share awards, all of which are paid and taxed separately, and tribunal awards, which follow their own rules. A settlement agreement is only binding once you have taken independent legal advice on it (Employment Rights Act 1996 s203).
Settlement Calculator is an independent information site operated by Ellul Solutions Ltd. We are not a firm of solicitors and do not provide claims management services; we are not affiliated with Acas, HMRC or any government body. Figures are typical observed outcomes and statutory minimums as at the updated date, and nothing here is legal or tax advice: have any agreement reviewed by an independent solicitor before signing, as the law in any case requires.
Have a solicitor review your agreement
The law requires independent advice before a settlement agreement binds you, and your employer usually pays £350–£500 toward it. Tell us where you are in the process and we'll introduce you to a specialist employment solicitor.
Typical UK settlement agreement values by salary and service, 2026
Last updated
Statutory redundancy baseline plus the typical observed ex-gratia range for a redundancy-shaped exit (1–2 months' salary), computed with the same formulas as the calculator. Typical negotiated outcomes, not entitlements.
Statutory baseline: 0.5/1/1.5 weeks per year by age band, weekly pay capped at £751 (rate from 6 April 2026), 20-year cap. Ex-gratia: 1–2 months' salary, the typical observed range for redundancy-shaped exits. Notice, holiday and bonuses excluded.
| Salary | Service | Age band | Statutory baseline | Typical package range |
|---|---|---|---|---|
| £25,000 | 2 years | 22–40 | £962 | £3,045–£5,129 |
| £30,000 | 4 years | 22–40 | £2,308 | £4,808–£7,308 |
| £40,000 | 6 years | 41+ | £6,759 | £10,092–£13,426 |
| £45,000 | 8 years | 22–40 | £6,008 | £9,758–£13,508 |
| £50,000 | 10 years | 41+ | £11,265 | £15,432–£19,598 |
| £60,000 | 15 years | 41+ | £16,898 | £21,898–£26,898 |
- A 45-year-old on £40,000 with six years' service typically negotiates a settlement of £10,092–£13,426: a £6,759 statutory redundancy baseline plus one to two months' salary ex-gratia.
- Statutory redundancy pay caps out at £22,530 for redundancies on or after 6 April 2026: 30 weeks (20 years at 1.5 weeks) at the £751 weekly maximum.
- The first £30,000 of an ex-gratia settlement payment is income-tax-free under ITEPA 2003 s403, and statutory redundancy pay counts toward the same limit.
- Employers typically contribute £350–£500 toward the legal advice an employee must take for a settlement agreement to bind them.
Cite this page
“Typical UK settlement agreement values by salary and service, 2026”, Settlement Calculator, https://settlementcalculator.uk/ (updated 2026-08-15). Statutory baseline: 0.5/1/1.5 weeks per year by age band, weekly pay capped at £751 (rate from 6 April 2026), 20-year cap. Ex-gratia: 1–2 months' salary, the typical observed range for redundancy-shaped exits. Notice, holiday and bonuses excluded.
The detail
Sourced, dated, kept current.
Questions, answered directly
How much is a typical UK settlement agreement worth?
For most negotiated exits: notice pay plus any statutory redundancy entitlement plus an ex-gratia payment of one to three months' salary. A 45-year-old on £40,000 with six years' service typically sees £10,092–£13,426 on top of notice. These are observed outcomes, not entitlements, and discrimination allegations push the range higher.
How is statutory redundancy pay calculated in 2026/27?
Half a week's pay per full year of service under age 22, one week for years aged 22 to 40, and one and a half weeks for years aged 41 or over, with weekly pay capped at £751, service capped at 20 years, and 2 years' minimum service. The absolute maximum is £22,530. The cap is reviewed each April, check gov.uk for the current figure.
Is a settlement agreement tax-free?
Partly. The first £30,000 of genuinely ex-gratia compensation, including any statutory redundancy pay, is free of income tax. Notice pay, holiday pay and bonuses are always taxed as earnings, and anything above £30,000 is taxed as income.
Do I need a solicitor for a settlement agreement?
Yes, by law. The agreement only validly waives your claims if you have taken advice from an independent adviser, usually a solicitor, named in the agreement (ERA 1996 s203). Your employer typically pays £350–£500 toward that advice.
Can I negotiate a settlement agreement offer?
Yes. A first offer is rarely the ceiling, and nothing stops a counter-offer while the agreement is open. The strength of your position turns on claim value and process failures, which is exactly what a solicitor's review establishes before you respond.
What happens if I refuse a settlement agreement?
The underlying process continues: a redundancy consultation, performance procedure or grievance runs its course, and you keep all tribunal rights. Refusing is sometimes the right call, but tribunal claims take months and outcomes are uncertain, which is the discount a settlement prices in.
Sources
Know your range before you respond
The statutory baseline and the typical negotiated range, in thirty seconds.
Put this on your site
<script src="https://settlementcalculator.uk/embed.js" async></script>