Unfair Dismissal Basic Award 2026: How Tribunal Compensation Is Calculated
The basic award for unfair dismissal uses the same age-banded, capped formula as statutory redundancy pay — plus a separate, uncapped compensatory award for actual financial loss. Here's how both work.
Two separate awards, two separate purposes
When an employment tribunal finds a dismissal was unfair, compensation is usually made up of two distinct elements: the basic award and the compensatory award. They serve different purposes and are calculated in completely different ways.
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Open Redundancy Pay calculatorThe basic award — same formula as redundancy pay
The basic award uses exactly the same age-banded formula as statutory redundancy pay:
| Age during that year of service | Multiplier per complete year |
|---|---|
| Under 22 | 0.5 week's pay |
| 22 to 40 | 1 week's pay |
| 41 and over | 1.5 weeks' pay |
- A maximum of 20 years' service counts.
- A week's pay is capped at £751 for 2026/27.
- Maximum possible basic award for 2026/27: 20 x 1.5 x £751 = £22,530.
The compensatory award — based on actual loss
Unlike the basic award, the compensatory award isn't a fixed formula — it's assessed based on the tribunal's view of what's "just and equitable" to compensate the employee's actual financial loss flowing from the dismissal, which can include:
| Loss category | Example |
|---|---|
| Immediate loss of earnings | Pay lost between dismissal and the tribunal hearing (or finding new work) |
| Future loss of earnings | Ongoing loss if new work pays less, or hasn't yet been found |
| Loss of benefits | Company car, health insurance, or other benefits lost |
| Pension loss | Value of employer pension contributions lost |
| Loss of statutory rights | A notional sum reflecting having to build up qualifying service again in a new job |
| Job search / retraining costs | Reasonable costs of looking for new work |
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Open Notice Period calculatorThe compensatory award cap
Ordinarily, the compensatory award is capped at the lower of a statutory maximum figure (reviewed and uprated annually) or 52 weeks' gross pay for the claimant. This dual cap means very high earners are effectively capped by their own salary (52 weeks' pay), while lower and middle earners are capped by the statutory maximum figure if that happens to be the lower number.
When the cap does NOT apply
| Automatically unfair reason | Cap applies? |
|---|---|
| Whistleblowing (protected disclosure) | No cap |
| Health and safety dismissal (in specified circumstances) | No cap |
| Dismissal related to trade union blacklisting | No cap |
| Ordinary unfair dismissal (e.g. capability, conduct process failures) | Cap applies |
Minimum service requirements
| Claim type | Minimum service needed |
|---|---|
| Ordinary unfair dismissal | 2 years' continuous service |
| Automatically unfair dismissal (whistleblowing, pregnancy/maternity, trade union activity, asserting a statutory right, and others) | No minimum service requirement |
Worked example
An employee aged 45 with 10 years' service, gross weekly pay of £900, is unfairly dismissed (not for redundancy):
| Element | Calculation | Amount |
|---|---|---|
| Basic award | 10 years x 1.5 x £751 (capped) | £11,265 |
| Compensatory award | Based on actual loss, e.g. 20 weeks until new job found at similar pay, plus some pension loss | Assessed on the facts — not formula-based |
The basic award is a relatively mechanical calculation, while the compensatory award requires detailed evidence of actual financial loss.
Practical tips
- Don't assume the basic award is your total compensation — in most cases, the compensatory award (based on real loss) makes up the larger share of a successful claim.
- Keep evidence of your job search efforts, any reduced pay in a new role, and lost benefits to support a compensatory award claim.
- If your case falls into an automatically unfair category (like whistleblowing), understand that the usual compensatory award cap won't limit your claim.
- Get advice on ACAS early conciliation, which is a required step before most tribunal claims can be lodged.
Use the redundancy pay calculator to estimate your basic award using the same age-banded formula.
Frequently asked questions
How is the basic award for unfair dismissal calculated?
The basic award uses the same age-banded formula as statutory redundancy pay: 0.5 week's pay per complete year under age 22, 1 week's pay per year aged 22-40, and 1.5 weeks' pay per year aged 41 or over, up to a maximum of 20 years, with a week's pay capped at £751 (2026/27).
What is the maximum basic award in 2026/27?
The maximum basic award is £22,530 for 2026/27 — the same maximum as statutory redundancy pay, calculated as 20 years x 1.5 weeks x £751 weekly cap, for someone aged 41+ throughout their 20 qualifying years of service.
Is the basic award reduced if I already received redundancy pay?
Yes. If the dismissal was for redundancy and you've already received a statutory (or equivalent contractual) redundancy payment, this is deducted from the basic award to avoid double recovery, since both use broadly the same calculation.
What is the compensatory award and how does it differ from the basic award?
The compensatory award compensates for actual financial loss caused by the dismissal (lost earnings, lost benefits, pension loss, and reasonable job-search costs), assessed on the facts of your case, and is capped separately at the lower of a set annual maximum or 52 weeks' gross pay — it isn't based on the age/service formula used for the basic award.
Is there a cap on the compensatory award?
Yes, ordinarily. The compensatory award is capped at the lower of a statutory maximum figure (reviewed annually) or 52 weeks' gross pay — but this cap does NOT apply in certain automatically unfair dismissal categories, such as whistleblowing or health and safety dismissals, where compensation is uncapped.
Do I need 2 years' service to claim the basic award?
Generally yes, for ordinary unfair dismissal claims you need 2 years' continuous service. However, for automatically unfair dismissal reasons (such as whistleblowing, pregnancy, or trade union activities), there is no minimum service requirement, and a basic award (sometimes at a fixed minimum amount for certain categories) can still apply.
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Related reading
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