This guide is maintained as a current resource for September 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Comprehensive guide to interest on compensation awards in employment tribunals in England and Wales. Explains legal rules, how interest is calculated at 8 per cent, applicable periods for discrimination claims, procedural requirements and practical examples for tribunal claimants and employers.
When a claimant succeeds in an employment tribunal claim - particularly in a workplace discrimination case - the tribunal may award interest on compensation in addition to the base financial and non‑financial awards. Interest exists to recognise the time a claimant has waited to receive money they were entitled to, reflecting the real‑world cost of delayed payment. This guide explains the legal framework, how interest is calculated, applicable rates, procedural matters, and practical considerations for both claimants and employers in England and Wales.
Legal Framework for Interest on Tribunal Awards
Statutory Basis
Interest on certain employment tribunal awards, especially in discrimination cases, is governed by specific secondary legislation. The Employment Tribunals (Interest on Awards in Discrimination Cases) Regulations 1996 (as amended) require tribunals to consider awarding interest on compensation without a formal application from either party. These Regulations apply specifically to discrimination awards under legislation including the Equality Act 2010.
Interest awards are distinct from normal compensation and serve to compensate for the delay between the discriminatory act and the date the award is calculated. Tribunals must assess whether to include interest and explain their decision in writing, including how they calculated it when awarded.
When Interest Applies
Interest can be awarded on compensation arising from discrimination claims, including:
- Injury to feelings compensation;
- Financial loss such as past earnings;
- Aggravated or exemplary damages related to discriminatory conduct.
The legislation does not require interest on future losses, as these reflect anticipated loss after the hearing date rather than money withheld due to delay.
How Interest Is Calculated
Interest under the 1996 Regulations is calculated as simple interest accruing daily. Tribunals assess interest on different heads of compensation over specific periods:
Injury to Feelings, Aggravated or Exemplary Damages
For non‑financial awards such as injury to feelings, interest accrues from the date of the discriminatory act up to the date the compensation is calculated. This reflects the entire period the claimant endured the effects of discrimination before remedy is determined.
Other Financial Compensation
For financial losses (for example lost earnings), interest is generally calculated from the mid‑point of the period between the discriminatory act and the compensation calculation date to reflect the typical timing of when the losses accrued.
Discretion to Adjust
While the Regulations set these usual periods, a tribunal may adjust the period for interest if applying the standard approach would cause serious injustice in all the circumstances.
Interest Rates
The current default rate used in discrimination cases in England and Wales is 8 per cent per year, calculated daily. This was established by amending legislation in 2013, which aligned the interest rate with that provided under the Judgments Act 1838 and brought England and Wales into line with existing Scottish practice.
This rate applies unless legislation changes or a tribunal determines a different rate is appropriate under exceptional circumstances. It is significantly higher than typical bank interest, recognising the public policy goal of compensating claimants fairly for delay.
Practical Effect of Interest Awards
Maximising Compensation
Interest can substantially increase a successful claimant's compensation, particularly in cases where discrimination took place long before the tribunal hearing. Because awards may take months or even years to finalise, interest serves to lessen the financial disadvantage of delay.
Mandatory Consideration
Tribunals must consider interest on awards - they cannot ignore this head of compensation. If they decide not to award interest, they must give clear written reasons.
Post‑Award Interest
Separate rules govern interest after the tribunal decision is delivered. If a respondent does not pay the full award within 14 days of the written decision, further interest may accrue under general tribunal interest rules. This ensures claimants are not penalised for enforcement delays.
Examples of Interest Application
- If a claimant's injury to feelings award of £10,000 is tied to discrimination dating back two years, interest at 8 per cent from the date of the act to the calculation date will add a further amount to the award.
- For past earnings loss of £5,000 where the discriminatory act occurred over a year, interest from the midpoint of that period provides additional compensation reflecting the delay.
Because interest accrues daily, even modest delays between remedy hearing and judgment can add significant sums at 8 per cent per annum.
Common Questions
Is interest automatic in all tribunal awards?
Interest is automatically considered in discrimination cases. Tribunals must decide whether to award it, and reasons are required if they choose not to.
Does interest apply to all parts of discrimination compensation?
Interest applies to past financial losses and non‑financial awards like injury to feelings and aggravated damages, but generally not to future losses.
What rate of interest is used?
The standard rate in discrimination cases in England and Wales is 8 per cent per annum, calculated simply on daily balances.
Can interest continue after the judgment?
If the employer fails to pay within 14 days of the tribunal's judgment, interest can continue under general tribunal rules, subject to specific statutory frameworks.
Final Thoughts
Interest on compensation awards in employment tribunals serves to ensure claimants are not disadvantaged by the delay inherent in bringing and resolving legal claims, especially in discrimination cases. Governed by the Employment Tribunals (Interest on Awards in Discrimination Cases) Regulations 1996 and subsequent amendments, interest is calculated at 8 per cent per annum and applied from specified dates depending on the type of loss. Tribunals must consider interest and explain their decisions, making this an important aspect of remedy assessments. Claimants and employers should understand how interest increases overall awards, affects tribunal strategy and interacts with broader compensation and enforcement processes.
