hello@kilgannonlaw.co.uk

Our team is ready to answer any questions

0800 915 7777

Book your consultation today

Unfair dismissal compensation

To bring an unfair dismissal compensation claim, an employee must have worked for the employer for two or more years. There are a few exceptions, e.g. if the claim relates to automatic unfair dismissal, discrimination or whistleblowing.


How is unfair dismissal compensation calculated?

There is a set formula for awarding unfair dismissal compensation, although the actual amount awarded will vary from case to case.

Compensation normally consists of two elements: the basic award and the compensatory award.

How is the basic award calculated?

A fixed formula is applied which multiplies the employee’s age, years of service and average weekly pay.

At the time of writing (June 2021) the weekly pay figure is limited to a maximum of £544 per week, and years of service is limited to a maximum number of years (namely 20). The weekly pay figure changes annually, at the start of April.

The multiplier used in calculations is dependent on the claimant’s age:

  • Half a week’s pay for each year of service, below the age of 22
  • One week’s pay for each year of service, over the age of 22
  • One-and-a-half weeks’ pay for each year of service, over the age of 41

Basic award deductions

The tribunal can make deductions in some circumstances:

  • If the employee unreasonably refuses an offer to be reinstated.
  • If the employee contributed in some way to the dismissal.
  • If a redundancy payment has already been paid to the employee, where the dismissal was due to redundancy.


How is the compensatory award calculated?

The compensation element of the award reflects the money an employee has lost due to their dismissal.

The award calculation begins by multiplying the employee’s net weekly salary, including all benefits, by the number of weeks they have been out of work.

An employee may also be entitled to compensation for loss of future earnings and loss of their employment rights.

Sums obtained through alternative employment or received as state benefits will be taken into account.

If the employee has not found another job, they will need to work out how long it could take and provide evidence of what efforts have been made to secure a new job.

Other award considerations

The compensation award may also include an amount to reflect the fact that it will take two years in a new job to get the right to claim unfair dismissal (loss of employment rights). There is no set figure for this, but awards are generally in the region of £250 to £500.

The employee has a responsibility to mitigate any loss by looking for other jobs. A tribunal may reduce the award if they find that the employee did not make a reasonable effort to do so.

At the time of writing (June 2021) the compensatory award is capped at £89,493 or 52 weeks’ gross salary – whichever is lower. The figure rises annually in April, in line with economic inflation.

Unlimited awards

There are a few circumstances in which the compensation can be unlimited:

  • If an employee is dismissed for raising a health and safety concern
  • If an employee is dismissed for making a protected disclosure (whistleblowing)
  • If an employee’s dismissal is a result of discrimination, namely on the grounds of sex, age, race, disability, etc.

Time limits on unfair dismissal claims

Strict time limits generally apply when bringing a claim for unfair dismissal.

A claim must be lodged before the end of a three-month period. This begins with the effective date of termination. If an employee submits a claim after this deadline, they can apply to the Tribunal who may, in their discretion, extend the time limit where it was not reasonably practicable for the employee to present their claim in time and they presented their claim within a reasonable period.


The date of dismissal

The date of dismissal will be relevant to the maximum awardable amount. For example, for dismissals after 6th April 2021 the limit is £89,493. For claimants dismissed on or after 6th April 2020 and before 6th April 2021, the compensation cap is £88,519. These caps change annually.

Need help with an unfair dismissal claim?

Whether you are an employee seeking to submit an unfair dismissal claim, or an employer who would like to discuss an unfair dismissal claim brought against them, our team of experienced employment law solicitors possess the knowledge and expertise to provide you with accurate and professional legal advice. Get in touch today for an initial consultation.


a woman is writing on a tablet while using a laptop .
By Matthew Kilgannon 20 Mar, 2024
Every April, the Government reviews and makes changes to employment laws, including a review of financial rates. Below we set out a summary of the proposed changes coming into effect in April and beyond.
a man in a wheelchair is sitting at a desk with a woman standing next to him .
By Marianne Wright 20 Feb, 2024
In the modern workplace, fostering a culture of inclusivity and ensuring equal treatment for all employees is a crucial aspect of employment law. Discrimination based on disabilities (which can include mental health conditions) is strictly prohibited in the United Kingdom. This article explores the legal framework in UK employment law that safeguards employees against discrimination and highlights the consequences faced by employers who fail to uphold these important principles.
a man is sitting at a desk in a dark room using a laptop computer. GDPR
By Emily Kidd 06 Feb, 2024
In an era of heightened data protection awareness and stringent regulations like the General Data Protection Regulation (GDPR), employees play a critical role in safeguarding personal data. This article explores the legal consequences that employees may face in the United Kingdom when implicated in data protection breaches at the workplace.
person holding up a mental health book and in a discussion
By Yeing-Lang Chong 22 Jan, 2024
In recognition of the importance of employee well-being, employers in the UK are increasingly implementing well-being initiatives to support the mental health and overall well-being of their workforce. These initiatives, which can include employee assistance programs (EAPs) and wellness programs, aim to provide support, resources, and interventions that enhance employee well-being. This article explores the legal framework surrounding well-being initiatives in UK employment law and highlights the benefits and considerations for employers when implementing such programs.
Female employee getting harassed at work by a colleague
By Marianne Wright 19 Jan, 2024
Creating a safe and respectful work environment is a fundamental aspect of UK employment law. This article explores the legal obligations placed on employers to address workplace harassment, highlighting the measures they should take to promote a culture of respect and protect their employees' mental health.
By Emily Kidd 04 Dec, 2023
In recent years, there has been increasing recognition of the importance of mental health in the workplace. Employment law acknowledges the sensitive nature of mental health disclosures and places obligations on employers to handle such disclosures with care, confidentiality, and without discrimination. This article explores the legal framework surrounding mental health disclosures in the workplace, emphasising the responsibilities employers have in safeguarding employee privacy and ensuring a supportive and inclusive environment.
By Emily Kidd 04 Dec, 2023
The General Data Protection Regulation (GDPR) revolutionised the way organisations handle personal data, and for Human Resources (HR) departments in the United Kingdom, compliance is paramount. This article provides a comprehensive exploration of best practices for HR to safeguard employee data and ensure GDPR compliance in the workplace.
Whistleblowing, Sexual Harassment and Gagging Clauses image
By Louise Maynard 09 Nov, 2023
On 23 October 2024, the new, positive duty to prevent sexual harassment in the workplace comes into force. The extent to which a non-disclosure agreement can prevent a worker disclosing sexual harassment will be under the limelight. In the employment context, the most common area for non-disclosure agreements is settlement agreements, under which an employee agrees to settle all claims in return for a compensation payment often where the employer has been unable to resolve a grievance including unlawful discrimination or sexual harassment.
Positive duty to prevent sexual harassment in the workplace
By Louise Maynard 03 Nov, 2023
On 26 October 2023, Parliament passed new legislation to amend the Equality Act 2010 to place a duty on employers to take reasonable steps to prevent sexual harassment of employees and workers during the course of their employment. The new duty comes into force on 26 October 2024.
What is a Deposit order in the Employment Tribunal?
By Louise Maynard 28 Aug, 2023
Employment tribunals are often reluctant to strike out cases at an early stage unless there is a compelling reason to do so. An alternative option for the Tribunal is to make a deposit order.
More Posts
Share by: