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The level of compensation that an Employment Tribunal can award depends on the type of claim being made. The most common claim is of unfair dismissal. Compensation for unfair dismissal is split into two parts, known as the “basic award”, and “compensatory award” respectively.

a) The “Basic Award”
This is calculated by using a set formula multiplying figures for the number of Complete years of service, by the individual’s weekly pay (capped according to an amount set by Regulations each year) by a factor depending on the age of the individual at the date of dismissal.

The calculation has altered every year for many years, the details are below:-

From the 6th April 2023
 the maximum figure to be taken into account for a week's pay has been £643. Again, this only affects dismissals that took place on or after the 6th April 2023. nb For those dismissals that take place on or after the 6th April 2022 the maximum figure to take account for a week's pay was £571.

The consequence is that the maximum amount that can be ordered under the Basic Award for dismissals that took place on or after the 6th April 2023 is £19,290 and for dismissals in the previous year the figure was £17,130.

NB. There are some types of case for which a minimum "basic" award applies. These include dismissals for union, employee representative or pension trustee reasons. In these cases the minimum basic award is set at £7,836 since the 6th April 2023 (previously £6,959).

b) The “Compensatory Award”
This part of the compensation is to cover the actual loss suffered as a consequence of the dismissal.

For dismissals that took place on or after the 6th April 2023 the maximum figure is £105,707 or the person's annual salary (whichever is the LOWER). This covers loss of earnings and benefits (including loss of pension) and any future losses.

For dismissals that took place between the 6th April 2022 and the 5th April 2023 the maximum compensatory award was £93,878 (or the annual salary(whichever was lower).

If the Tribunal considers that the individual was to blame to some extent in his/her own dismissal it will reduce the compensatory award. Furthermore, if the individual finds alternative work before the hearing the tribunal will generally deduct the earnings from the new job from the losses.

On the positive side for an employee, if an employer failed to follow the guidance set out in the ACAS Code of Practice on Disciplinary Procedures the Employment Tribunal can increase the compensatory award by up to 25 % of the figure it initially assessed.

For a breach of contract claim the tribunal can award up to £25,000.

In discrimination cases (such as age, race or disability discrimination) there is no upper limit on the amount of compensation that the tribunal can award. The main part of the compensation will still usually be the actual financial losses e.g. loss of pay, benefits. However, in addition the tribunal can make an award for “injury to feelings”. The courts have set the appropriate wards for injury to feelings in certain bands depending on the severity of the actual discrimination that occurred. If the claim brought by the individual is bringing claims that encompass unfair dismissal and unlawful discrimination the Tribunal will not duplicate the award for compensation over the same lost earnings and benefits.

The Employment Tribunal Services annual report 2021/2022 showed that the median average awards of compensation for discrimination were:-

i. Race - £14,120
ii. Sex - £17,959
iii. Disability - £14,000
iv. Age- £12,480

NB. The mean averages are higher than these figures in some cases, due to a number of particularly higher value cases. 

These indicate that employers must take these issues very seriously and ensure that they have appropriate policies and procedures in place to tackle these issues. However, it should really be noted that the size of awards of compensation have not grown substantially over the past few years. (see link PAYG Equal Opps Policy).


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