Employment Tribunal: How Much Compensation Can You Actually Claim?
What is your claim actually worth? Here is how compensation is calculated for unfair dismissal, discrimination, and wrongful dismissal -- including what most people miss.
schedule 8 min readperson Eugene Pienaar, Solicitor (non-practising)
The Two Parts of an Unfair Dismissal Award
If you win an unfair dismissal claim, the tribunal makes two separate awards: the basic award and the compensatory award. Both are calculated separately and subject to different rules and limits.
The basic award is calculated using the same formula as statutory redundancy pay: half a week's pay for each year worked under age 22, one week's pay for each year between 22 and 40, and one and a half week's pay for each year over 40. Weekly pay is capped at £643 (as of April 2025, reviewed annually). The maximum basic award is currently £19,290. The basic award can be reduced if the tribunal finds the employee contributed to their dismissal or if the employee unreasonably refused an offer of reinstatement.
The compensatory award covers actual financial loss -- lost earnings from dismissal to the hearing date, future loss of earnings beyond the hearing, loss of pension contributions, and any other financial losses caused by the dismissal. From January 2027, when the ERA 2025 qualifying period changes take effect, the compensatory award cap (currently one year's gross pay or £115,115, whichever is lower) will be reviewed. Check the current cap at the time of your claim.
The Schedule of Loss
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The complete step-by-step guide: The Complete Employment Tribunal Claim Guide.
The schedule of loss is the document in which you set out your claimed compensation in detail. It is submitted to the tribunal before the hearing and forms the basis of any award. Every element of your loss must be itemised and justified. A well-prepared schedule of loss demonstrates that you understand what you are claiming and why -- and it gives the other side and the tribunal a clear picture of your case on compensation.
Elements to include: immediate loss of earnings (gross salary from dismissal to the date of the hearing, less any earnings from new employment), future loss of earnings (if you have not found work of equivalent value by the hearing date, the tribunal will project forward), loss of pension contributions, loss of benefits (company car, private medical, life insurance), loss of statutory rights (a small fixed award), and expenses incurred as a result of the dismissal.
Discrimination Compensation -- Uncapped
Compensation for discrimination claims under the Equality Act 2010 is uncapped. There is no ceiling on the amount that can be awarded. In addition to financial losses (calculated in the same way as unfair dismissal compensation), discrimination awards include injury to feelings -- compensation for the distress, hurt, and humiliation caused by the discriminatory act.
Injury to feelings is assessed on the Vento scale, which has three bands. The lower band (£1,100 to £11,700) covers less serious acts of discrimination -- a one-off incident, isolated treatment. The middle band (£11,700 to £35,200) covers serious but not the most extreme cases. The upper band (£35,200 to £58,700) covers the most serious cases, including sustained campaigns of discrimination. The bands are reviewed periodically -- check current figures when preparing your claim.
In cases where the discrimination caused psychiatric injury, an additional award for personal injury may be available. This requires medical evidence.
Whistleblowing -- Uncapped
Compensation for whistleblowing detriment and dismissal is also uncapped. It covers the same elements as unfair dismissal compensation plus injury to feelings. In cases where the dismissal is particularly egregious, the tribunal can also make an additional award.
The Polkey Reduction
Even where dismissal is found to be unfair, the tribunal may reduce the compensatory award if it finds that a fair procedure would have made no difference -- that the employee would have been dismissed anyway had the correct process been followed. This is called a Polkey reduction, named after the leading case. It can significantly reduce the award. Similarly, the tribunal can reduce the award for contributory fault -- where the employee's own conduct contributed to the dismissal.
Mitigation
You are required to mitigate your loss. This means you must take reasonable steps to find alternative employment after dismissal. A tribunal will reduce the compensatory award if you have failed to mitigate -- for example, if you have not looked for work, have turned down reasonable job offers, or have taken an unreasonably long time to find alternative employment. Keep records of all job applications, interviews, and rejections. These demonstrate that you have taken your mitigation duty seriously.
Educational purposes only. This article is not legal advice and does not create a solicitor-client relationship. If your situation requires legal advice, consult a qualified solicitor or visit equaljustice.legal.