exitagreementNo win no fee employment solicitors: how it works
In an employment claim, “no win no fee” usually means a damages-based agreement: the representative takes a share of what you recover, and nothing if you recover nothing. In England and Wales the law caps that share at 35% of what you recover, including VAT. The cap is the starting point for every question worth asking before you sign one.
How no win no fee works in an employment claim
The rules are in the Damages-Based Agreements Regulations 2013. They apply to an “employment matter”, and the definitions decide most of what follows:
“employment matter” means a matter that is, or could become, the subject of proceedings before an employment tribunal; “expenses” means disbursements incurred by the representative, including the expense of obtaining an expert’s report and, in an employment matter only, counsel’s fees; “payment” means that part of the sum recovered in respect of the claim or damages awarded that the client agrees to pay the representative, and excludes expenses …Read the section on legislation.gov.uk
Three things follow from those words. The agreement can be made before any claim exists, because a matter that could become tribunal proceedings counts. The representative’s share is a part of what you recover, not an hourly bill. And expenses, which in an employment matter include a barrister’s fees, are a separate item from that share.
The 35% cap
In an employment matter, a damages-based agreement must not provide for a payment above an amount which, including VAT, is equal to 35% of the sums ultimately recovered by the client in the claim or proceedings.Read the section on legislation.gov.uk
The cap includes VAT. So a representative who is VAT-registered and charges the full 35% has 35% to cover both the fee and the VAT on it. It is a ceiling, not a rate, and nothing in the Regulations stops an agreement setting a lower figure.
| Sums ultimately recovered | Maximum payment, including VAT | Left to you before expenses |
|---|---|---|
| £8,000 | £2,800 | £5,200 |
| £25,000 | £8,750 | £16,250 |
| £60,000 | £21,000 | £39,000 |
Damages-Based Agreements Regulations 2013, reg.7. Expenses are charged separately and are not included in these figures. Illustrative only.
What counts as “recovered” matters as much as the percentage. Regulation 3 requires the agreement itself to say when the payment becomes due:
… the terms and conditions of a damages-based agreement must specify— (a) the claim or proceedings or parts of them to which the agreement relates; (b) the circumstances in which the representative’s payment, expenses and costs, or part of them, are payable; and (c) the reason for setting the amount of the payment at the level agreed …Read the section on legislation.gov.uk
Read that clause with one case in mind: the claim settles before any hearing. Ask, in writing, whether a settlement counts as a recovery, whether money you were owed anyway — notice pay, holiday pay, statutory redundancy pay — counts towards the figure the percentage is taken from, and what happens if you end the agreement early.
Key points
- No win no fee usually means a damages-based agreement: a share of what you recover.
- The share is capped at 35%, including VAT, in an employment matter in England and Wales.
- Expenses are separate, and in an employment matter they include counsel’s fees.
- The representative must tell you about the alternatives in writing, including legal expenses insurance and trade union representation.
- It is not how a settlement agreement sign-off is paid for — that is usually a fixed contribution from the employer.
What you must be told before you sign
In an employment matter the Regulations add a duty that does not apply to other claims: the representative has to give you written information about how else the claim could be handled and paid for.
(1) In an employment matter, the requirements … are to provide— (a) information to the client in writing about the matters in paragraph (2) … (2) Those matters are— (a) the circumstances in which the client may seek a review of costs and expenses of the representative and the procedure for doing so; (b) the dispute resolution service provided by the Advisory, Conciliation and Arbitration Service (ACAS) in regard to actual and potential claims; (c) whether other methods of pursuing the claim or financing the proceedings, including— (i) advice under arrangements made for the purposes of Part 1 (legal aid) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, (ii) legal expenses insurance, (iii) pro bono representation, or (iv) trade union representation, are available …; (d) the point at which expenses become payable; and (e) a reasonable estimate of the amount that is likely to be spent upon expenses, inclusive of VAT.Read the section on legislation.gov.uk
That list is a checklist in its own right. Acas early conciliation is compulsory before most claims anyway, and costs nothing. Trade union representation is one of the alternatives the Regulations name, if you are a member. And legal expenses insurance, which some household and motor policies include, may cover an employment dispute without any share of the recovery. If the written information you are given skips any of these, ask why.
Check your own insurance first
It can change the whole decision. Look at the legal expenses section of your home insurance documents for “employment disputes”, and check whether the policy lets you choose your own representative or requires you to use the insurer’s panel. The answer is in the policy wording, not on this page.
Weighing up how to fund a claim?
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What an employment claim costs without one
Bringing the claim itself is free. GOV.UK sets out what you may still have to pay:
You do not have to pay a fee to make a claim to an employment tribunal. You may have to pay other costs, for example: witness expenses; the costs of the people or organisations you’re claiming against (the ‘respondents’) if the tribunal decides you’ve acted unreasonably.Read it on GOV.UK
So the real costs of a claim are representation, if you want it, and the risk of a costs order if a tribunal finds you acted unreasonably. Fees for bringing a claim were charged for a period: GOV.UK says that if you paid employment tribunal fees between 29 July 2013 and 26 July 2017, you can apply for a refund. The time limit for a claim · what a claim could be worth.
No win no fee and settlement agreements
These are two different things, and it helps to keep them apart. A settlement agreement needs advice from a relevant independent adviser before it can bind you, and that advice is normally paid for by a fixed contribution from your employer, written into the agreement. Acas says the employer should consider offering to pay for it, and that it does not have to. Fees and contributions.
A damages-based agreement is for pursuing a claim: preparing it, negotiating it and, if it comes to that, running it at a tribunal. If you sign one and the claim then settles, the percentage is worked out under the terms you agreed — which is why the regulation 3 clause matters. If you already have an offer in front of you and only need the sign-off, a percentage arrangement is unlikely to be what you need. Negotiating a settlement agreement.
Questions to ask before you sign a damages-based agreement
- What percentage, and does it include VAT? It must, under regulation 7, but the figure in the agreement should say so.
- Is a settlement a recovery, and from which sums is the percentage taken?
- Which expenses can be charged on top, and what is the written estimate?
- What happens if you end the agreement, or the representative does?
- Have you been told in writing about Acas, legal expenses insurance, trade union representation and the other alternatives regulation 5 lists?
Scotland
The Damages-Based Agreements Regulations 2013 extend to England and Wales. Scotland has its own rules on success-fee arrangements, which this page does not cover. What differs in Scotland.
Common questions
How does no win no fee work in an employment claim?
Usually through a damages-based agreement: the representative is paid a share of what you recover, and nothing if you recover nothing. In England and Wales the Damages-Based Agreements Regulations 2013 cap that share at 35% of the sums ultimately recovered, including VAT.
What is the maximum a no win no fee employment solicitor can take?
35% of the sums you ultimately recover in the claim, including VAT, under regulation 7 of the Damages-Based Agreements Regulations 2013. Expenses such as counsel's fees are defined separately and can be charged on top, so ask for an estimate in writing.
Does it cost anything to bring an employment tribunal claim?
There is no fee to make a claim. GOV.UK says you may have to pay other costs, such as witness expenses, or the other side's costs if the tribunal decides you acted unreasonably.
Do I need no win no fee for a settlement agreement?
Not for the sign-off. The independent advice a settlement agreement needs is usually paid for by a fixed contribution from the employer. A damages-based agreement is for pursuing a claim, not for advice on an agreement already offered.
Is there an alternative to no win no fee?
The 2013 Regulations require the representative to tell you in writing about the alternatives, including legal expenses insurance, pro bono representation, trade union representation and Acas. Some household insurance policies include legal expenses cover; check yours before you sign anything.
Does no win no fee apply in Scotland?
The Damages-Based Agreements Regulations 2013 extend to England and Wales. Scotland has its own rules on success-fee arrangements, which this page does not cover.
Sources cited on this page
- Damages-Based Agreements Regulations 2013 (SI 2013/609)
- Damages-Based Agreements Regulations 2013, reg.7 — the 35% employment cap
- Damages-Based Agreements Regulations 2013, reg.5 — information in employment matters
- GOV.UK — Employment tribunals: make a claim (what it costs)
- GOV.UK — Employment tribunals: refund tribunal fees
- Acas — Settlement agreements: making a formal offer
Every figure above was read from the source it is attributed to on 19 September 2026. How we check this.
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