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 2011)

Employment right

Maximum award

Unfair dismissal

Basic award

Compensatory award

Additional award

 

£12,000

£68,4000

£10,4000 – £20,800 (i.e. 26-52 weeks’ pay)

Redundancy pay

£12,000

Discrimination

No limit

Dismissal for union/employee respresentative or penstion trustee reasons

Basic award

Compensatory award

 

 

£12,000 (min £5,000)

£68,400

Dismissal for health and safety reasons

Basic award

Compensatory award

 

£12,000 (minimum £5,000)

No limit

Dismissal for making a protected disclosure

Basic award

Compensatory award

 

 

£12,000

No limit

Guarantee pay

£111 (5 days in any period of 3 months) (£22.20 a day)

Contract claims in a tribunal

£25,000

Limits on a week’s pay = £400 (where applicable)

Applies to dismissals where the effective date of termination fell on or after 1 February 2011.