Pretty standard practice in the UK, actually. During the lifetime of a contract you will be asked to pay a nominal fee (£10-£20 max) to unlock the contract phone, and the network operator will often unlock the phone at no charge once the contract is up (it's now your phone, your property, the operator has no legal right to restrict your usage of that phone any longer).

It's understandable that operators charge different prices for locked and unlocked phones, but once you have signed up for a 12 month+ contract it really makes little difference to the operator what you do with that phone as long as you continue paying the monthly charges. The nominal unlocking fee while in contract is probably intended to act as a disincentive to avoid widespread abuse of the unlocking system, but any operator who refuses to unlock a phone at any time during or after a contract is just taking the p.

Cadabena - not sure about the PAYG market, obviously the economics of PAYG vs. monthly contract are very different. £20 sounds about right, although 3 months is a little excessive (unless they wanted to accrue more income...)