Compensation is awarded to recompense an employee for lost earnings in the event of having been unfairly dismissed by a company. The compensatory award is based on the tribunal’s assessment of lost earnings between the dismissal and the hearing, and the likely loss of future earnings including other benefits such as pension rights. Most unfair dismissal claims are subject to a maximum amount of compensation but a few claims can be unlimited, such as in the case of discrimination.

Compensation limits are outlined in the table below.

Compensation limits (from 1st February 2012)

Employment right Maximum award
Unfair dismissal

Basic award

Compensatory award

Additional award

 

£14,250

£78,335

£12,350 – £24,700 (i.e. 26-52 weeks’ pay)

Redundancy pay £14,250
Discrimination No limit
Dismissal for union/employee representative or pension trustee reasons

Basic award

Compensatory award

 

 

£14,250

£78,335

Dismissal for health and safety reasons

Basic award

Compensatory award

 

£14,250

No limit

Dismissal for making a protected disclosure

Basic award

Compensatory award

 

 

£14,250

No limit

Guarantee pay £26 a day (maximum 1 working week in any period of 3 months)
Contract claims in a tribunal £25,000
Limits on a week’s pay = £475 (where applicable)