This guide is maintained as a current resource for July 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.
How much is a claim worth? We explain how tribunals calculate compensation, including statutory caps, loss of earnings, and awards for discrimination. Get the facts on your potential outcomes.
When an individual brings a claim to an Employment Tribunal in England and Wales and the tribunal finds in their favour, the tribunal can award compensation. Compensation is designed to put the claimant, as far as possible, in the position they would have been in had the wrongdoing not occurred. This article explains the different types of awards, how they are calculated, statutory limits, time limits, potential adjustments to compensation, and practical considerations. The aim is to provide clear, accessible information for members of the public, solicitors, students and anyone facing employment disputes.
1. What Is an Employment Tribunal Compensation Award?
An Employment Tribunal compensation award is a financial sum ordered by a tribunal when an employee or worker successfully proves an employment law claim. Common claims leading to compensation include:
- Unfair dismissal;
- Discrimination under the Equality Act 2010;
- Wrongful dismissal or breach of contract;
- Redundancy disputes and related statutory rights;
- Failure to consult over collective redundancies.
Tribunals cannot award compensation for every type of claim. For example, they cannot award compensation for stress or upset alone after an unfair dismissal unless the claim includes a discrimination element.
2. Key Types of Compensation Awards
a. Unfair Dismissal Awards
In unfair dismissal cases, compensation is typically made up of two parts:
Basic Award
This is a statutory award based on length of service, age and weekly pay, similar to statutory redundancy pay. It has a statutory cap, meaning it is calculated using a maximum “week's pay” figure set by regulation.
Compensatory Award
This compensates for financial losses resulting from the dismissal such as loss of wages, benefits and pension contributions. It is capped at the lower of a statutory maximum or a specified period's gross pay. For claims where the effective termination date is on or after 6 April 2025, the cap is £118,223 or 52 weeks' gross pay, whichever is lower.
If a dismissal arises for reasons connected with health and safety or for protected disclosures (whistleblowing), there may be no cap on the compensatory award.
3. Discrimination Awards
Where a tribunal finds unlawful discrimination under the Equality Act 2010, compensation can include:
- Financial losses (e.g. lost wages, loss of pension);
- Injury to feelings (a separate head of loss reflecting the impact of discriminatory conduct).
Unlike ordinary unfair dismissal awards, compensation for discrimination is uncapped. Awards for “injury to feelings” are often guided by bands (sometimes called Vento bands) which reflect the seriousness of the discrimination. The bands are reviewed periodically; for example, the lower band for less serious cases and the higher band for very serious harm.
4. Other Tribunal Awards
Tribunals can make specific awards in relation to other statutory breaches:
- Breach of contract may result in damages often subject to statutory caps;
- Failure to consult in collective redundancy situations may attract an award of up to 90 days' gross pay per employee;
- Awards for breach of flexible working regulations or failure to give terms and conditions can involve specified weeks' pay.
5. How Compensation Is Calculated
a. Financial Losses
Tribunals start by identifying actual financial losses due to the breach, often separated into:
- Past losses: wages and benefits lost up to the date of the hearing;
- Future losses: projected losses until the claimant could reasonably be expected to have mitigated their loss by finding alternative employment.
Mitigation means the claimant must demonstrate reasonable efforts to find suitable work after dismissal; failure to mitigate can reduce the award.
b. Deductions and Adjustments
Tribunals may reduce awards for:
- Contributory fault where the claimant's conduct contributed to the dismissal;
- Failure to mitigate losses by not making reasonable efforts to find new work;
- Failure to follow the ACAS Code of Practice on disciplinary and grievance procedures, which may lead to a 10–25% uplift in the award.
6. Limits and Caps
Statutory caps vary depending on the type of claim. For unfair dismissal, the compensatory award and basic award are capped in line with annual statutory figures. For discrimination claims, compensation for financial losses remains uncapped and injury to feelings awards are guided by bands with upper limits that reflect severity.
7. Time Limits and Procedural Requirements
Tribunal claims must be presented within strict time limits. For example, unfair dismissal claims are generally brought within three months less one day from the effective date of termination. Claims for discrimination also have similar early time limits from the date of the discriminatory act or knowledge of it. Failing to bring a claim within the applicable period can lead to the tribunal refusing to consider the claim. (General principle based on employment tribunal rules.)
8. Tax and Benefits Considerations
In many cases, the first £30,000 of a tribunal compensation award is not subject to income tax. Awards above that threshold may attract tax, particularly for unpaid wages or contractual losses. Compensation can also interact with means‑tested benefits such as Universal Credit; claimants should consider this when assessing their net payment.
9. Practical Steps After a Successful Claim
- Schedule of Loss: Claimants prepare a detailed breakdown of losses, often before a remedy hearing, to justify compensation amounts.
- Interest: Tribunals may award interest on certain compensatory elements, particularly where discrimination is found and financial loss spans a lengthy period.
- Enforcement: If an employer does not pay the award, the claimant can seek enforcement through the County Court or other enforcement mechanisms. (General procedural principle.)
Common Questions
Can I get compensation for stress or upset?
Tribunals generally do not award compensation for stress alone unless there is a discrimination claim or another specific statutory head of loss.
Is compensation paid quickly after a tribunal decision?
Payment timelines vary. Tribunals typically allow a period for payment; if an employer fails to pay, enforcement action may be necessary.
Key Takeaways
Employment Tribunal compensation awards in England and Wales are structured to address losses arising from unlawful dismissal, discrimination and other breaches of employment rights. Awards include basic and compensatory elements, financial losses, injury to feelings in discrimination cases and specified statutory awards for other rights breaches. Compensation is subject to statutory caps, procedural requirements and mitigation principles. Understanding these elements, statutory limits and practical considerations such as tax and benefit implications helps claimants navigate the tribunal compensation landscape effectively.
