Two Separate Awards -- Both Matter
If you win an unfair dismissal claim the tribunal makes two separate awards: the basic award and the compensatory award. Understanding both -- how they are calculated, what they cover, and what can reduce them -- is essential to knowing what your claim is worth and to preparing your schedule of loss correctly.
The Basic Award
The complete step-by-step guide: I Have Just Been Dismissed -- 48-Hour Action Pack.
The basic award is calculated using exactly the same formula as statutory redundancy pay. It is based on your age, your length of continuous employment, and your gross weekly pay (capped at £643 per week as of April 2025, reviewed annually).
The formula: for each complete year of employment under the age of 22 you receive half a week's pay. For each complete year between ages 22 and 40 you receive one week's pay. For each complete year over 40 you receive one and a half week's pay. The maximum basic award is currently £19,290.
Example: if you are 35, have worked for your employer for six years, and earn £800 gross per week (capped at £643), your basic award is 6 x 1.0 x £643 = £3,858.
The basic award can be reduced if the tribunal finds you caused or contributed to your dismissal, or if you unreasonably refused an offer of reinstatement. It can also be reduced by the amount of any redundancy payment already received.
The Compensatory Award
The compensatory award covers your actual financial loss caused by the dismissal. It is subject to a cap -- currently the lower of one year's gross pay or £115,115. For automatically unfair dismissal on whistleblowing grounds and for discrimination claims, there is no cap.
The compensatory award covers several distinct heads of loss.
Immediate loss of earnings: your net earnings from the date of dismissal to the date of the tribunal hearing, less any earnings you have received from new employment during that period. Use net pay after tax and national insurance, not gross.
Future loss of earnings: if you have not found equivalent employment by the hearing date, the tribunal will award a further period of future loss. This is based on a realistic assessment of how long it will take you to find comparable work, taking into account your age, skills, experience, and the local job market. Typically three to twelve months, but can be longer in difficult cases.
Loss of pension contributions: if your employer contributed to a pension, those contributions are part of your loss. Calculate as the employer contribution rate multiplied by your monthly gross salary multiplied by the total period of loss.
Loss of statutory rights: a small fixed award -- typically £350 to £500 -- recognising that you will need to work at your new employer for a qualifying period before acquiring unfair dismissal protection again.
Loss of benefits: company car, private medical insurance, life insurance, share options, bonuses -- any contractual benefit lost as a result of dismissal. Calculate the cost of replacing each benefit privately.
What Employers Must Pay Regardless of Any Claim
Separate from and in addition to any tribunal award, your employer must pay you certain things on termination regardless of whether the dismissal was fair or unfair.
Notice pay: your contractual notice period in full, either worked or as payment in lieu. If your contract is silent, statutory minimum notice applies -- one week after one month, increasing by one week per year of service up to a maximum of twelve weeks.
Accrued holiday pay: all annual leave accrued but not taken to the date of termination, calculated at your normal daily rate of pay. This is a legal entitlement under the Working Time Regulations 1998. An employer who withholds accrued holiday pay is making an unlawful deduction from wages.
Final salary: all pay earned up to the termination date including any outstanding expenses.
The ACAS Uplift
If your employer failed to follow the ACAS Code of Practice on Disciplinary and Grievance Procedures, the tribunal can increase your compensatory award by up to 25 percent. The Code requires: investigation before disciplinary action, written notification of the allegation, a disciplinary hearing with the right to be accompanied, and a right of appeal. An employer who dismissed without following these steps faces a significant uplift on any award.
Mitigation
You are required to take reasonable steps to find alternative employment. A tribunal will reduce your compensatory award if you have failed to mitigate -- if you have not looked for work, turned down reasonable offers, or taken an unreasonable time to find alternative employment. Keep detailed records of every job application, every interview, and every rejection. These records demonstrate that you have taken your mitigation duty seriously and protect your full award.
Injury to Feelings -- Discrimination Claims Only
If your unfair dismissal claim includes a discrimination element -- pregnancy, disability, race, age, sex, or any other protected characteristic -- you can additionally claim injury to feelings. This is assessed on the Vento scale: lower band £1,100 to £11,700, middle band £11,700 to £35,200, upper band £35,200 to £58,700. Compensation for discrimination is uncapped. An employer who dismisses for a discriminatory reason faces potentially very significant total exposure.
Act Now -- Your Time Limit Is Running
Contact ACAS at acas.org.uk within three months less one day of your dismissal. The ACAS early conciliation process pauses the clock. Start today.