Guide
What is a fair settlement agreement? Typical UK amounts
Updated
There is no statutory formula for a fair settlement, only a market of observed outcomes. The question a solicitor actually asks is: what would a tribunal award, discounted for risk, time and legal cost?
The typical shape of a fair offer
- Full notice pay (worked, on garden leave, or in lieu), this is contractual and not a concession.
- Statutory redundancy pay where the exit is redundancy-shaped, the formula minimum, not generosity.
- An ex-gratia payment of 1–3 months' salary in most negotiated exits we observe, rising to 3–6 months where a discrimination allegation or whistleblowing claim gives the employee real tribunal leverage.
- Extras that cost the employer little: an agreed reference, contribution to legal fees, keeping vested benefits, and an early release from restrictive covenants.
What moves the number up
- Claim strength. Ordinary unfair dismissal compensation is capped (the lower of a year's gross pay or the statutory cap), but discrimination and whistleblowing awards are uncapped, which is why those allegations change the negotiating range.
- Process failures. No consultation, no warnings, a predetermined outcome: each makes the employer's tribunal position worse and the offer better.
- Service and seniority. Longer service raises the statutory baseline; seniority raises notice and the cost of replacing you.
- Timing. Offers tend to improve after a grievance or subject access request is lodged and before a hearing date is listed, because certainty is worth money to an employer.
What moves it down
Under two years' service (no ordinary unfair dismissal claim), a genuine and well-documented redundancy process, misconduct evidence, or a new job already secured (tribunals compensate loss, and a new salary shrinks the loss). In these cases a fair offer can legitimately be little more than notice plus the statutory minimum.
Estimate your own range with the calculator, then have the offer reviewed. Acas explains the settlement agreement framework at acas.org.uk. This is general information, not legal advice on any offer you have received.