Employment tribunal awards

The awards the Employment Tribunal can make are subject to maximum limits, noted below:

* A week's gross pay for the purposes of the statutory cap includes employer pension contributions, but excludes benefits-in-kind and discretionary bonuses. Dismissals for whistle blowing or related to certain health and safety reasons remain uncapped as do dismissals relating to unlawful discrimination.

How is the award calculated?

Any award made by the Tribunal to a successful Claimant is calculated on the basis of the Claimant’s losses to the date of the Hearing and, potentially, beyond. Financial compensation consists of basic and compensatory awards.

Basic award

The basic award is calculated in a similar way to a redundancy payment. The calculation involves multiplying the relevant factors of length of continuous service, age and a week’s pay as at the effective date of termination:

• One and a half week’s pay for each year of employment after age 41;
• One week’s pay for each year of employment between the ages of 22 and 40;
• Half a week’s pay for each year of employment under the age of 22.

A cap of 20 years is placed on the period of continuous service and a week’s pay is capped at £700.

You can view the redundancy payment calculator.

Compensatory Award

The Tribunal must consider whether or not it is appropriate to make an award of compensation. The objective of such an award is to compensate fully but not to award a bonus.

Unlike the basic award, calculation of the compensatory award does not rely on any prescribed formula. The different heads of loss which the Tribunal must consider when calculating a compensatory award are:

• Immediate loss of wages;
• Future loss of wages;
• Loss of employment rights;
• Loss of pension rights.

In assessing the Claimant’s losses arising from the unfair dismissal as a matter of practice, the Tribunal will consider past and future loss.

Reductions to Award

However, there are arguments which a Respondent can make which may reduce any award made to the Claimant.

A Respondent can argue:

• Sums already paid to the Claimant on or following dismissal (such as a redundancy payment, notice payment or an ex gratia payment) should be taken into account by the Tribunal;
• Any state benefits the Claimant has received should be taken into account;
• A “Polkey deduction” should be made  - i.e. the compensatory award should be reduced or limited to reflect the chances that the Claimant would have been dismissed in any event and that the Respondent’s procedural errors made no difference to the outcome;
• Contributory fault -- the compensatory award should be reduced because the Claimant’s conduct contributed to the dismissal;
• The Claimant failed to mitigate his/her loss and any award should be reduced as a result of this;
• The Claimant failed to comply with the ACAS code and any award should be reduced accordingly.

Employment Tribunal Statistics

The Employment Tribunal has published statistics on the level of awards made by the Employment Tribunal for the period from 1 April 2022 to 31 March 2023. The maximum awarded, average and median awarded for unfair dismissal and discrimination claims are set out below.

The full report is available here (see Employment Tribunal and Employment Appeal Tribunal Tables 2022 to 2023).  

Although the maximum awarded by a Tribunal for unfair dismissal exceeds the statutory cap (currently £115,115), it should be noted that the cap does not apply where the reason for dismissal is for whistleblowing or raising certain health & safety issues.

For an overview of the law relating to unfair dismissal see our article on Unfair Dismissal.

You can also find Innes Clark on X or connect with him on LinkedIn.