New unfair dismissal compensation limit introduced

30 July 2014

The Basic Award

The Basic Award is calculated in the same way as a statutory redundancy payment and takes into account an individual’s length of service, gross weekly pay (subject to a statutory cap of £450 per week) and age. 

The Compensatory Award 

The compensatory award is an amount that the Tribunal believes is just and equitable to award based on the financial loss caused to the employee by the dismissal; this usually includes loss of earnings, loss of bonus or commission, loss of other benefits including insurance or company car, loss of pension and expenses in looking for further employment. 

Statutory Cap 

Before 29th July 2013 a simple cap applied to the compensatory award and this was in the sum of £74,200.

On 29th July 2013 this was amended, so that the maximum compensatory award is the lower of £74,200 or the individual’s 52 weeks pay, that is 52 x 1 weeks actual gross pay for the employee at the time of the dismissal.  This revised cap will apply where an individual’s effective date of termination is on or after 29th July 2013. 

If you need any further information regarding a potential unfair dismissal claim or the compensation in this regard then please do not hesitate to contact Alexandra Dean, Head of Employment Department, on 01245 228141 or