An employment tribunal may award compensation for unfair dismissal. This will usually consist of a basic award and a compensatory award. An additional award may also be awarded if an employer fails to comply with a reinstatement or re-engagement order. For more detailed information on compensation for unfair dismissal, see Practice note, Unfair dismissal: compensation and remedies.
The basic award for unfair dismissal is calculated according to a formula based on the employee's age, length of service and weekly pay (section 119, Employment Rights Act 1996). The maximum that can be awarded under the formula is 30 weeks' pay and the employee's weekly pay is subject to the statutory limit on a week's pay (see Week's pay). There is no minimum award, except for in certain automatically unfair dismissal cases: see Minimum basic award for certain automatically unfair dismissals.
Minimum basic award for certain automatically unfair dismissals
Some automatically unfair dismissals attract a minimum basic award (section 120(1), Employment Rights Act 1996, (ERA 1996) and section 156, Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA)). The amount is adjusted annually by the Secretary of State in line with RPI under a formula set out in section 34 of the Employment Relations Act 1999. The mandatory award from 6 April 2019 was prescribed by the Employment Rights (Increase of Limits) Order 2019 (SI 2019/324).
Such cases are where the reason or principal reason for dismissal is:
Trade union membership or activities (sections 152(1) and 153, TULRCA).
Carrying out activities as a health and safety representative (section 100(1)(a) and (b), ERA 1996).
Carrying out functions as a workforce representative (section 101A(1)(d), ERA 1996).
Carrying out duties as an occupational pension scheme trustee (section 102(1), ERA 1996).
Carrying out functions or activities as an employee representative (section 103, ERA 1996).
The maximum basic award is the same as in other unfair dismissal cases (see Basic award).
In cases where the dismissal is automatically unfair under section 104F of the ERA 1996 (dismissals in connection with a prohibited blacklist) there is also a minimum basic award (section 120(1C), ERA 1996). However, this is not covered by the compulsory annual RPI-linked increase under section 34 of the ERelA 1999, the minimum has remained the same since it was introduced in 2010.
The compensatory award in the vast majority of unfair dismissal cases is subject to a statutory upper limit or "cap" (section 124(1), Employment Rights Act 1996). The cap is adjusted annually by the Secretary of State in accordance with a formula set out in section 34 of the Employment Relations Act 1999. The statutory limit from 6 April 2019 was prescribed by the Employment Rights (Increase of Limits) Order 2019 (SI 2019/324).
The relevant date for determining the applicable limit is the effective date of termination (EDT), not the date the tribunal makes its award.
For more information, see Practice note, Unfair dismissal: compensation and remedies: Compensatory award.
The limit is raised every 6 April in line with any annual increase in RPI measured in the previous September. If there is no change or a decrease in RPI, the limit remains the same.
The statutory cap does not apply where the reason for the dismissal was that the claimant:
Was carrying out health and safety activities (section 100, ERA 1996).
Had made a protected disclosure (section 103A, ERA 1996).
Was selected for redundancy for one of the above reasons (section 105, ERA 1996).
An employment tribunal may order that an additional award be paid in unfair dismissal cases if an employer does not comply with a reinstatement order or re-engagement order. The minimum and maximum amounts which can be ordered are calculated with reference to a week's pay, subject to statutory limits (for which, see Week's pay).
The minimum order will be the lower of 26 weeks' pay or the amount in the Minimum column in the table below, while the maximum order will be the lower of 52 weeks' pay or the amount in the Maximum column below.