Employment Settlement Agreement Calculator
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This calculator is for reference only rather than a legally correct figure. The amount received will be dependent on your individual circumstances and may require evidence.
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The calculator breaks down your package into contractual entitlements and any ex-gratia compensation.
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Settlement agreement calculator: Find out what your package could be worth
Being offered a settlement agreement can feel like a lot to take in. This free settlement agreement calculator gives you an instant estimate of what your package could be worth based on your salary, length of service, notice period, and age.
Use it as a starting point, then speak to one of our settlement agreement solicitors to review the actual offer. It’s free, it’s same-day, and your employer covers the cost.
How our settlement agreement calculator works
Our settlement agreement calculator will give you an instant estimate of what your package could be worth. It takes into account the following variables:
- Gross Salary: your gross annual salary, which determines the value of your notice pay and forms the basis of any compensation calculation.
- Age: statutory redundancy pay increases for each year worked over 41, and age can affect how long it may take to find a comparable role.
- Length of service: the longer you’ve worked for your employer, the higher your statutory redundancy entitlement.
- Notice period: your contractual notice period determines how much notice pay you’re owed, whether worked or payment in lieu (PILON).
How are settlement agreements calculated?
A settlement agreement is calculated by adding together two distinct parts: the contractual payments your employer already owes you, and any additional compensation they are offering on top.
Part 1: Contractual entitlements
These are payments you are owed regardless of the settlement. They are treated as normal income and fully subject to tax and National Insurance.
- Notice pay: pay for your notice period, whether worked or paid in lieu
- Holiday pay: accrued, untaken annual leave up to your leaving date
- Unpaid wages or bonuses: any salary or bonuses already earned before you leave
Part 2: Ex gratia payments
These are the additional sums your employer offers in exchange for you signing the agreement and waiving your right to bring employment claims. The first £30,000 is tax-free.
- Statutory redundancy pay: calculated using your age, length of service, and weekly pay (capped at £719/week from April 2025)
- Loss of employment: an additional payment reflecting the circumstances of your departure and any potential claims
- Injury to feelings: where discrimination has occurred, a separate award may be included to reflect the personal impact
The two parts of a settlement agreement at a glance
The table below summarises both parts of a typical employee settlement agreement package and how each element is treated for tax.
| Payment type | What it is | Taxable? |
| Notice pay | Pay for your notice period, whether worked or paid in lieu | Yes |
| Holiday pay | Accrued, untaken annual leave to your leaving date | Yes |
| Unpaid wages / bonuses | Any salary or bonuses already earned | Yes |
| Statutory redundancy pay | Based on age, service, and weekly pay (capped at £719/week from April 2025) | Tax-free up to £30,000 |
| Ex gratia compensation | Additional payment for loss of employment, unfair dismissal, or discrimination | Tax-free up to £30,000 |
Are settlement agreements taxable?
The first £30,000 of a settlement agreement is tax-free, meaning no income tax or National Insurance on that portion of your payout. What is and isn’t covered by the £30,000 threshold:
- Ex gratia and statutory redundancy pay: tax-free up to £30,000. Anything above that threshold is taxed at your normal income tax rate.
- Notice pay, holiday pay, and unpaid wages: always fully taxable, regardless of the £30,000 threshold. These are contractual entitlements, not compensation payments.
- PILON (payment in lieu of notice): if your contract includes a PILON clause, your notice pay is taxable even when it forms part of the settlement figure.
- Employer pension contributions: payments made directly into your pension scheme as part of the settlement can be tax-free, subject to your annual allowance. This is worth discussing with your solicitor before the agreement is finalised, as it can meaningfully reduce your tax liability.
For a full breakdown of how settlement agreement payments are taxed, read our guide: Are Settlement Agreements Taxable?
What is a reasonable settlement agreement?
A reasonable settlement agreement offer is one that fairly reflects both what you are legally owed and the specific circumstances surrounding your departure. There is no single formula. The right figure depends on your particular situation.
The statutory minimum is a floor, not a target
Your contractual entitlements (notice pay, holiday pay, and statutory redundancy pay) represent the minimum your employer must pay. A reasonable offer should go beyond this, particularly where the circumstances of your exit give rise to potential employment claims.
What pushes a settlement offer higher
The ex gratia element of your package is where there is usually room to negotiate. The following factors typically support a stronger settlement agreement offer:
- A flawed poorly handled redundancy process
- Potential unfair dismissal, discrimination, or whistleblowing claims
- Long service or a senior role within the organisation
- Specialist skills that make finding a comparable role more difficult
- An employer who wants a swift, clean break with no risk of future claims
When the statutory minimum may be fair
If the redundancy process was properly followed and the business case is solid, an offer closer to the statutory minimum can still be fair. Not every departure warrants an enhanced package.
Do you need a settlement agreement solicitor – and who pays?
Yes, you do need a solicitor. By law, you must take independent legal advice before signing a settlement agreement. Without it, the agreement has no legal standing.
- Your adviser must be qualified: a solicitor or other specified legal professional covered by professional indemnity insurance.
- Your employer pays the legal fees: most employers cover the cost in full up to £500. You pay nothing.
- It applies to every situation: whether you want the agreement signed quickly or the offer reviewed, the cost to you is the same: zero.
- We only do settlement agreements: same-day service, advised over 20,000 employees, and have 900+ five-star Google reviews.
Call us today on 020 7247 7190 or make a free enquiry online.
How is statutory redundancy calculated?
Statutory redundancy pay is calculated using three factors: your age, your length of continuous service, and your weekly pay.
The statutory redundancy pay formula
The amount you receive per year of service depends on your age during each year worked:
- Under 22: half a week’s pay for each full year of service
- Age 22 to 40: one week’s pay for each full year of service
- Age 41 or over: one and a half week’s pay for each full year of service
Weekly pay is capped at £751 (from April 2026), and the maximum statutory redundancy payment is £22,530. You must have at least two years of continuous service with your employer to qualify.
Can you use an ACAS settlement agreement calculator to estimate your payout?
You can use a settlement agreement calculator to estimate your payout whether your case is being handled directly with your employer or through the ACAS Early Conciliation process. The components that make up your package are the same either way. Where ACAS is involved, it facilitates the negotiation rather than determining the figure itself.
ACAS (Advisory, Conciliation and Arbitration Service) is an independent body that helps resolve workplace disputes. Its name comes up in two distinct contexts when it comes to settlement agreements.
- ACAS Early Conciliation
- The ACAS Code of Practice
How does ACAS affect the calculation?
It does not change what your package is worth. ACAS does not produce a settlement agreement figure — it facilitates the negotiation between you and your employer. The components of an ACAS settlement agreement reflect the same elements as a standard settlement agreement: notice pay, redundancy pay, and any compensation for potential employment claims.
Reasons to instruct GTE Settlement Agreements
Getting an estimate on your settlement agreement is a useful starting point. Getting your actual agreement reviewed by an expert is what protects you.
Here’s why employees choose us:
- Same-day service: we review, advise on, and sign off settlement agreements the same day, so you can move forward quickly and with confidence
- No cost to you: your employer pays our legal fees, typically £350 to £500 plus VAT
- 5 star reviews: we’re one of the UK’s most rated settlement agreement firms with over 900+ five-star Google reviews
- Nationwide coverage: with offices in London, Manchester, and Birmingham, we support employees across the UK.
Settlement Agreement Calculator FAQs
How accurate is a settlement agreement calculator? 
A calculator gives a useful ballpark figure, but the actual value of your agreement depends on the specifics of your situation, such as the strength of any potential claims, your employer’s approach to negotiation, and the terms already on the table. Treat it as a starting point, not a final figure.
What is an ex gratia payment in a settlement agreement?
An ex gratia payment is a sum paid by your employer that goes beyond what you are contractually or legally entitled to. It is typically included to compensate for loss of employment or any potential claims you might otherwise bring. The first £30,000 is tax-free.
What's the difference between statutory and enhanced redundancy pay?
Statutory redundancy pay is the legal minimum, calculated using a fixed formula based on your age, length of service, and weekly pay (capped at £751). Enhanced redundancy pay is a higher amount offered voluntarily by your employer — usually as part of a settlement agreement to achieve a clean, agreed exit.
How long does it take to receive payment after signing a settlement agreement?
Payment is typically made 28–30 days after the signed agreement is returned to your employer. The exact timeline should be set out in the agreement itself.
Can I negotiate a settlement agreement?
Yes, a settlement agreement can be negotiated. The financial package, reference wording, non-compete restrictions, and confidentiality clauses are all areas where terms can be improved. Your solicitor can raise concerns and make representations on your behalf. At GTE, reasonable negotiations are included as part of the free service your employer funds.
Can a settlement agreement be withdrawn?
Yes, a settlement agreement can be withdrawn by either party before it is signed. Once both parties have signed, it becomes legally binding and cannot be withdrawn unilaterally. If your employer withdraws an offer before you sign, you retain all your existing employment rights.
Who pays for a settlement agreement?
Your employer pays for your legal advice on a settlement agreement. As part of the settlement, employers are required to contribute to your legal costs. In practice, most employers cover the fee in full. At GTE, our fee is typically £350 to £500 plus VAT — and you pay nothing.
