Unfair dismissal compensation calculator

An employment tribunal that upholds an unfair dismissal claim and does not order your job back awards money in two parts. One is a formula anyone can run. The other is an argument about your loss, and it has a ceiling that most people have never been told is usually a year’s pay rather than the six-figure number in the headlines.

Basic award and compensatory award, side by side

Section 118 of the Employment Rights Act 1996 splits the award in two, and the halves behave differently in every row that matters.

The basic award: the formula

This half does not care what happened next. It counts your service backwards from the effective date of termination and charges each full year at a rate fixed by your age during that year.

The weekly cap

The week’s pay that goes into the basic award is capped. For the 2026/27 year the figure in section 227(1) is £751, substituted by SI 2026/310. Someone on £1,200 a week and someone on £751 get the same basic award if their age and service match, which is why the basic award tops out at £22,530: 20 years years, all at the over-41 rate, at the capped week.

If you were made redundant

So an unfair redundancy usually produces a basic award of nothing extra: the statutory redundancy payment has already paid it. The fight in those cases is over the compensatory award. How the age bands work, step by step.

A floor in a few cases

Section 120(1) sets a minimum basic award of £9,157 where the reason for dismissal is one of a short list, including certain health and safety reasons and acting as an employee representative or pension trustee. It is a floor under the formula, not an addition to it.

The compensatory award: the loss

“Just and equitable” gives the tribunal room, but the starting point is concrete: the earnings you have lost and will lose, the value of benefits such as pension contributions and a company car, and expenses reasonably incurred because of the dismissal (s.123(2)). This is why the calculator above asks for take-home pay rather than gross: the award replaces what you would have received.

You are expected to look for work

In practice this means the award is built from evidence: the applications you made, the roles you were offered, and what the new job pays. Someone who stopped looking will be treated as if they had found work when they reasonably could have. Keep the records from the first week.

Your own conduct

This is the reduction that turns a strong-looking claim into a modest one. A dismissal can be procedurally unfair and still be reduced heavily if the tribunal finds you contributed to it.

The Acas Code adjustment

The same section lets the tribunal reduce the award by up to 25% where it is the employee who unreasonably failed to follow the Code — not raising a grievance, for example. Section 124A of the 1996 Act applies the adjustment to the compensatory award, before any reduction for contribution.

The cap: £123,543 or 52 weeks’ pay

Which limb applies to you

The two limbs cross at £2,376 a week, which is £123,543 a year. Below that, and that is most people, 52 weeks’ pay is the lower figure, so the most a tribunal can award for your loss is roughly a year’s gross salary however long you are out of work. The fixed figure only matters for people paid more than £123,543 a year.

Look at the fifth row of the worked examples below. Two years without work at £560 a week take-home is a loss of £58,240, and the award stops at £36,400 — a year’s pay at £700 a week gross.

When there is no cap

Section 124(1A) disapplies the limit where the dismissal is automatically unfair under section 100 (health and safety), 103A (protected disclosure — whistleblowing), or 105(3) and 105(6A) (selection for redundancy on those grounds). Discrimination claims are brought under the Equality Act 2010, where section 124(6) ties compensation to what a county court could award, and section 124 of the 1996 Act does not reach them. Why that changes the negotiation.

Which year’s figure

SI 2026/310 raised the limit from £118,223 to £123,543 from 6 April 2026. Article 4 keeps the old figures where the appropriate date falls before that day, and for an unfair dismissal award the appropriate date is the effective date of termination. Employment that ended in March 2026 is still capped at £118,223.

Worked examples

Generated from the same rules as the calculator, so the table and the tool cannot disagree.

What the Employment Rights Act 2025 changes

Not yet in force

When we read section 25 on 25 September 2026, legislation.gov.uk annotated it as not in force at Royal Assent, with only a consequential subsection commenced. Acas states that the six-month qualifying period “will happen in January 2027 and is not yet law”. No commencement date for the removal of the cap had been published. Until it is commenced, the cap on this page applies, and the qualifying period for ordinary unfair dismissal is 2 years.

Why it matters now

A settlement offer is priced against what a tribunal would award. An uncapped compensatory award changes that ceiling for anyone whose loss runs past a year’s pay, which is why the commencement date is worth watching if you are negotiating across it.

From tribunal award to settlement figure

The number the calculator produces is what a tribunal could award if you won, proved the loss, and nothing reduced it. A settlement offer is that figure discounted for the chance of losing, for the time a hearing takes, and for the cost of getting there — and increased by what the employer gains from certainty and confidentiality.

Use it as the ceiling, not the ask

Start from the basic award, which is close to certain if unfairness is found, and treat the compensatory award as the part being negotiated. Where the dismissal also raises discrimination or whistleblowing, the cap on this page stops being the ceiling. What actually moves an offer · settlement agreement calculator.

Tax and timing

A settlement or award paid as compensation for losing the job falls under section 401 of the Income Tax (Earnings and Pensions) Act 2003, with the first £30,000 covered by section 403. How that works. And the claim has to be started within 3 months, after Acas early conciliation, which does not wait for negotiations to finish. If you resigned rather than being dismissed, the same awards apply to a constructive dismissal.

Common questions