From 6 April 2026, the maximum unfair dismissal compensatory award is £123,543 (or one year's gross pay, whichever is lower) under the Employment Rights (Increase of Limits) Order 2026. The maximum basic award is £22,530 (weekly pay cap £751, maximum 30 weeks). From 1 January 2027, the Employment Rights Act 2025 removes the compensatory award cap entirely (subject to confirmation — check GOV.UK). These are statutory maxima; actual awards depend on loss suffered and any reductions for contributory conduct. Updated June 2026.
Source: Employment Rights Act 1996, s.118–124 (as amended by Employment Rights Act 2025); Employment Rights (Increase of Limits) Order 2026; acas.org.uk/employment-tribunal-awards.
What the law says
Employment tribunal compensation for unfair dismissal is governed by Employment Rights Act 1996, sections 118–124. The limits are reviewed annually by the Secretary of State and increased by the Employment Rights (Increase of Limits) Order, typically in April each year.
The 2026 order (in force 6 April 2026) set:
- Weekly pay cap: £751 (up from £719).
- Maximum compensatory award: £123,543 (up from £118,223).
- Maximum basic award: £22,530 (up from £21,570).
Source: Employment Rights (Increase of Limits) Order 2026; acas.org.uk/employment-tribunal-awards.
Unfair dismissal awards: the two elements
An unfair dismissal award comprises two separate elements.
1. The basic award
The basic award compensates for the loss of job security. It is calculated identically to statutory redundancy pay:
| Age during each year of service | Multiplier |
|---|---|
| Under 22 | 0.5 weeks' pay |
| 22 to 40 | 1 week's pay |
| 41 and over | 1.5 weeks' pay |
- Weekly pay is capped at £751 from 6 April 2026.
- Service is capped at 20 years.
- Maximum basic award: £22,530 (20 years × 1.5 × £751).
The basic award may be reduced if the employee unreasonably refused an offer of reinstatement, or if the employee's conduct before dismissal contributed to the situation. It cannot be reduced below the minimum basic award for health and safety and other protected dismissal categories (minimum basic award: £9,157 from 6 April 2026, up from £8,763, under the Employment Rights (Increase of Limits) Order 2026). This minimum applies to certain automatically unfair dismissal categories including health and safety, working time, employee representation, trade union matters, and occupational pension trustee dismissals.
Source: ERA 1996, s.119–122; Employment Rights (Increase of Limits) Order 2026.
2. The compensatory award
The compensatory award covers the actual financial loss flowing from the unfair dismissal. It is assessed under ERA 1996, s.123 and must be "just and equitable in all the circumstances." It typically includes:
- Immediate loss of earnings — from the dismissal date to the tribunal hearing, minus any earnings from new employment.
- Future loss of earnings — projected loss if the claimant has not found comparable work by the hearing date.
- Loss of statutory rights — a conventional sum (typically around £350–£500) for the loss of employment protection built up with the previous employer.
- Loss of benefits — pension, health insurance, company car, and other benefits not replicated in new employment.
- Enhanced pension loss — where the employer operated a defined benefit pension scheme, separately assessed.
- Loss of notice pay — if not already recovered.
The cap from 6 April 2026: The compensatory award is limited to the lower of:
- £123,543, or
- 52 weeks' gross pay (the claimant's annual gross earnings at the time of dismissal).
For most employees earning below £123,543 per year, the effective cap is one year's gross pay.
Source: ERA 1996, s.123–124; acas.org.uk/employment-tribunal-awards.
The ERA 2025 change: no cap from 1 January 2027
From 1 January 2027 (subject to confirmation — check GOV.UK for the latest commencement order), the Employment Rights Act 2025 removes the statutory ceiling on the compensatory award under ERA 1996, s.124. Tribunals will be able to award the full financial loss without an upper limit.
The basic award formula is not changed by this provision. Source: Employment Rights Act 2025; employment-rights-act-2025/changes-2027/.
Reductions to compensation
Tribunal awards are frequently reduced from the theoretical maximum. Common reduction bases are:
Polkey reduction — if the tribunal finds the dismissal was procedurally unfair but the employee would have been fairly dismissed anyway within a certain period, the compensatory award may be reduced to reflect the chance of a fair dismissal occurring. For example, a 50% Polkey reduction means the award is halved.
Contributory fault (ERA 1996, s.123(6)) — if the employee's own conduct contributed to the dismissal, the tribunal must reduce the compensatory award (and may reduce the basic award) by the percentage it considers just and equitable.
Failure to mitigate — the employee must take reasonable steps to find comparable work. Unreasonable failure to mitigate results in a reduction from the date the tribunal considers mitigation should have been achieved.
ACAS Code uplift or reduction (ERA 1996, s.207A) — where an employer unreasonably failed to follow the ACAS Code on Disciplinary and Grievance Procedures, the tribunal may increase the award by up to 25%. Where the employee unreasonably failed to follow the Code, the award may be reduced by up to 25%.
Source: ERA 1996, s.123–124, s.207A; acas.org.uk/acas-code-of-practice-on-disciplinary-and-grievance-procedures.
Other types of tribunal award
Unfair dismissal is not the only type of tribunal claim. Key compensation frameworks for other claims:
| Claim type | Compensation cap | Notes |
|---|---|---|
| Wrongful dismissal | £25,000 (county court has no cap) | Tribunal has £25,000 limit; higher claims go to court |
| Discrimination (Equality Act 2010) | Uncapped | Includes injury to feelings (Vento bands) and financial loss |
| Whistleblowing detriment | Uncapped | Separate from unfair dismissal; no qualifying period |
| Unlawful deduction from wages | Amount of the deduction | No separate cap |
| Collective redundancy: protective award | 180 days' gross pay per employee (from 6 April 2026) | Under TULRCA 1992, s.190 |
For discrimination claims, injury to feelings is assessed using the Vento bands (updated annually by Presidential Guidance of the Employment Tribunals). For claims presented on or after 6 April 2026, the bands are:
| Vento band | Range | Typical cases |
|---|---|---|
| Lower | £1,300 – £12,600 | Less serious cases; isolated or one-off acts |
| Middle | £12,600 – £37,700 | Serious cases not meriting the upper band |
| Upper | £37,700 – £62,900 | Most serious cases; prolonged or particularly severe conduct |
| Exceptional | Above £62,900 | Only the most exceptional circumstances |
Source: Presidential Guidance — Vento Bands, Ninth Addendum, issued 30 March 2026 (judiciary.uk); Equality Act 2010, s.119–124; ERA 1996; TULRCA 1992, s.190; acas.org.uk/employment-tribunal-awards.
Employment tribunal hub
For more on the tribunal process, see the employment tribunal hub. To understand the claims process, see ACAS early conciliation explained and the unfair dismissal guide.
Frequently asked questions
See the FAQ below. For individual advice on potential tribunal awards, contact ACAS or an employment solicitor. This site calculates statutory minimums and sets out statutory maxima — individual awards depend on the specific facts of the case.
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