What an Employment Tribunal win is actually worth: the basic award, the compensatory award and the Acas uplift

Two awards, one calculation

Everything before the remedy stage is about liability: was the dismissal unfair? Once the tribunal answers yes, a different question takes over, and it is governed by a different part of the Employment Rights Act 1996. Where a tribunal upholds an unfair dismissal complaint and awards compensation, the award consists of two distinct elements: a basic award, calculated under sections 119 to 122, and a compensatory award, calculated under sections 123 and 124. They measure different things, they are argued differently, and they are reduced on different grounds.

One gateway matters before any of the arithmetic begins. The right not to be unfairly dismissed generally requires two years’ continuous employment ending with the effective date of termination, although the qualifying period does not apply to a list of automatically unfair dismissals, such as those for health and safety reasons or whistleblowing. For claimants inside the gateway, the remedy question is where expectations meet arithmetic.

The basic award: the statutory formula

The basic award is the fixed part. It is deliberately mechanical, and it mirrors the statutory redundancy calculation, which uses the same age bands, multipliers and backwards-reckoned years of service. The tribunal counts the claimant’s complete years of continuous employment, reckoned backwards from the effective date of termination, and allows half a week’s pay for each year in which the claimant was under 22, one week’s pay for each year aged 22 to 40, and one and a half weeks’ pay for each year aged 41 or over. Age banding and service do the work; there is no discretion about the multiplier.

Two caps then apply. No more than twenty years of employment can be counted. And the week’s pay used in the formula is itself capped. For dismissals where the effective date of termination falls on or after 6 April 2026, the maximum week’s pay is £751; the figure is reviewed annually and was £719 for the year from 6 April 2025. A claimant on £1,200 a week with twelve years’ service does not get twelve times £1,200; the calculation runs on the capped figure, so the basic award is often smaller than claimants expect.

There is also a statutory floor in a small group of cases: where the dismissal is unfair for certain automatically unfair reasons, including health and safety activities, the basic award has a minimum of £9,157 for effective dates of termination on or after 6 April 2026.

Even the fixed part can be reduced. The tribunal must reduce the basic award where the claimant unreasonably refused an offer of full reinstatement, and may reduce it where any conduct of the claimant before the dismissal makes a reduction just and equitable; any redundancy payment already received for the same dismissal is deducted as well. The basic award is mechanical at the formula stage, but it is not immune from the conduct analysis.

The compensatory award: real financial loss

The compensatory award is where the real argument lives. Its amount is whatever the tribunal considers just and equitable in all the circumstances, having regard to the loss sustained by the claimant in consequence of the dismissal, so far as that loss is attributable to the employer’s action; the statute expressly includes reasonable expenses and the loss of benefits the claimant would otherwise have had. This is not a tariff and it is not a punishment. It is an assessment of what the dismissal actually cost, evidenced payslip by payslip.

That framing has a hard practical edge: the duty to mitigate. In working out the loss, the tribunal must apply the same rule about the duty to mitigate that applies to damages under the common law, which means the claimant is expected to take reasonable steps to find alternative work and to limit the loss. A claimant who makes no effort to look for work hands the respondent an argument that some or all of the ongoing loss should not be compensated. The job-search record – applications, registrations, responses – is remedy evidence, and it should be kept from the day after dismissal, not assembled before the hearing.

Reductions: conduct and chance

Two further mechanisms shrink compensatory awards, and litigants in person routinely underestimate both.

The first is contributory conduct. Where the tribunal finds that the dismissal was to any extent caused or contributed to by the claimant’s own action, it must reduce the compensatory award by whatever proportion it considers just and equitable – and that proportion can be very substantial. In one recent Employment Appeal Tribunal case, an unfairly dismissed claimant’s compensatory award was reduced by 100 per cent because the tribunal found he had committed the gross misconduct alleged, even though the dismissal process itself was unfair.

The second is the chance deduction, known from the case that established it as a Polkey deduction. A dismissal can be unfair because the process was defective even where dismissal was inevitable; in that situation the tribunal compensates not for the loss in full but for the chance that a fair process would have produced a different outcome, reducing the award to reflect the percentage likelihood that the claimant would have been dismissed fairly anyway. The principle cuts in the claimant’s favour on liability – a bad process makes the dismissal unfair – and against the claimant on remedy. Winning the argument about procedure does not mean being paid as though the dismissal never happened.

The statutory cap

However large the proven loss, most unfair dismissal compensatory awards are subject to a ceiling. The compensatory award is limited to the lower of £123,543 and 52 times the claimant’s actual week’s pay, for effective dates of termination on or after 6 April 2026; the cash figure was £118,223 for the preceding year. The 52-weeks limb is the one to check first: a year’s gross pay is the effective ceiling for anyone whose annual pay multiplied into that formula comes below the headline figure.

The cap does not apply at all where the dismissal is unfair because of health and safety activities or because the claimant made a protected disclosure – whistleblowing dismissals, in particular, are uncapped. That distinction matters when a dismissal can be characterised under more than one jurisdiction; legal characterisation is a remedy question as much as a liability one.

The Acas adjustment, up to 25 per cent either way

The final adjustment rewards or penalises how the parties handled the dispute before the tribunal was involved. Where a claim concerns a matter to which the Acas Code of Practice on disciplinary and grievance procedures applies, and one party has unreasonably failed to comply with the Code, the tribunal may adjust any award by up to 25 per cent – upwards against an employer who ignored the Code, downwards against an employee who did the same. An employer who dismisses with no meeting, no case to answer and no appeal is exposed to the uplift; a claimant who never raises a grievance or ignores the appeal process risks the reduction.

The Code’s own scope is worth checking before the adjustment is argued. The Acas Code is issued under section 199 of the Trade Union and Labour Relations (Consolidation) Act 1992, has been in force since 11 March 2015, and does not apply to dismissals by reason of redundancy or to the non-renewal of fixed-term contracts on their expiry; a failure to follow the Code does not of itself make anyone liable to proceedings, but tribunals take it into account. The adjustment runs on the award, so on a realistic compensatory figure the 25 per cent swing is often larger than the entire basic award.

Putting a number on the claim

The practical discipline is to build the remedy figure the way the tribunal will, before deciding how hard to fight. That means a schedule of loss that separates the two awards, states each assumption, and attaches evidence to every figure. A claimant who can show the arithmetic is a claimant who can evaluate an offer.

The documents that do the work are unglamorous: the contract, payslips and P45 for the week’s pay; pension statements for benefit loss; the job-search log for mitigation; the dismissal letter and appeal correspondence for the Acas argument. Evidence turns confusion into an argument.