If a Claimant (the person who brings the claim, i.e. the employee or worker) is successful in his or her claim, the Employment Judge has the power to make a financial award against the Respondent (the individual or organisation responding to the claim i.e. the employer) to the Claimant.

The awards the Employment Tribunal can make are subject to maximum limits, noted below:

Click here to view table.

How is the award calculated?

Any award made by the Tribunal to a successful Claimant is calculated on the basis of the Claimant’s losses to the date of the Hearing and, potentially, beyond. Financial compensation consists of basic and compensatory awards.

Basic award

The basic award is calculated in a similar way to a redundancy payment.  The calculation involves multiplying the relevant factors of length of continuous service, age and a week’s pay as at the effective date of termination:

  • One and a half week’s pay for each year of employment after age 41;
  • One week’s pay for each year of employment between the ages of 22 and 40;
  • Half a week’s pay for each year of employment under the age of 22.

A cap of 20 years is placed on the period of continuous service and a week’s pay is capped at £430.

A link to a redundancy payment calculator can be found here.

Compensatory Award

The Tribunal must consider whether or not it is appropriate to make an award of compensation.  The objective of such an award is to compensate fully but not to award a bonus.

Unlike the basic award, calculation of the compensatory award does not rely on any prescribed formula.  The different heads of loss which the Tribunal must consider when calculating a compensatory award are:

  • Immediate loss of wages;
  • Manner of dismissal;
  • Future loss of wages;
  • Loss of employment rights;
  • Loss of pension rights.

In assessing the Claimant’s losses arising from the unfair dismissal as a matter of practice, the Tribunal will consider past and future loss.

Reductions to Award

However, there are arguments which a Respondent can make which may reduce any award made to the Claimant.

A Respondent can argue:

Sums already paid to the Claimant on or following dismissal (such as a redundancy payment, notice payment or an ex gratia payment) should be taken into account by the Tribunal;

  • Any state benefits the Claimant has received should be taken into account;
  • A “Polkey deduction” -- the compensatory award should be reduced or limited to reflect the chances that the Claimant would have been dismissed in any event and that the Respondent’s procedural errors made no difference to the outcome;
  • Contributory fault -- the compensatory award should be reduced because the Claimant’s conduct contributed to the dismissal;
  • The Claimant failed to mitigate his/her loss and any award should be reduced as a result of this;
  • The Claimant failed to comply with the ACAS code and any award should be reduced accordingly.

Employment Tribunal Statistics

The Employment Tribunal has published statistics on the level of awards made by the Employment Tribunal for the period from 1 April 2010 to 31 March 2011.  The maximum, average and median awards for unfair dismissal and discrimination claims are set out below.

Click here to view table.

Although the maximum award for unfair dismissal exceeds the statutory cap of £72,300, it should be noted that the cap does not apply where the reason for dismissal is for whistleblowing or raising certain health & safety issues.