KNOWLEDGE

Employment tribunal awards

Morton Fraser_Innes Clark
Author
Innes Clark
Partner
PUBLISHED:
31 March 2021
Audience:
Business
category:
Factsheet

A Claimant (the person who brings the claim, i.e. the employee or worker) is successful in his or her claim, the Employment Judge has the power to make a financial award against the Respondent (the individual or organisation responding to the claim i.e. the employer) to the Claimant.

The awards the Employment Tribunal can make are subject to maximum limits, noted below:

Employment Right

Maximum Award

Unfair Dismissal

Basic award: £16,320

Unfair Dismissal

Compensatory award: lower of £89,493 or 12 months' gross pay*

A week’s pay

£544 (gross)

Additional Award

26 to 52 weeks’ pay (capped at £544 per week)

Dismissal for health and safety reasons

No limit

Dismissal for making a protected disclosure (whistleblowing)

No limit

Discrimination – race, sex, disability, sexual orientation, religion or belief, age

No limit

Breach of contract

£25,000

 

* A week's gross pay for the purposes of the statutory cap includes employer pension contributions, but excludes benefits-in-kind and discretionary bonuses. Dismissals for whistle blowing or related to certain health and safety reasons remain uncapped as do dismissals relating to unlawful discrimination.

How is the award calculated?

Any award made by the Tribunal to a successful Claimant is calculated on the basis of the Claimant’s losses to the date of the Hearing and, potentially, beyond. Financial compensation consists of basic and compensatory awards.

Basic award

The basic award is calculated in a similar way to a redundancy payment. The calculation involves multiplying the relevant factors of length of continuous service, age and a week’s pay as at the effective date of termination:

  • One and a half week’s pay for each year of employment after age 41;
  • One week’s pay for each year of employment between the ages of 22 and 40;
  • Half a week’s pay for each year of employment under the age of 22.

A cap of 20 years is placed on the period of continuous service and a week’s pay is capped at £544.

A link to a redundancy payment calculator can be found here.

Compensatory Award

The Tribunal must consider whether or not it is appropriate to make an award of compensation. The objective of such an award is to compensate fully but not to award a bonus.

Unlike the basic award, calculation of the compensatory award does not rely on any prescribed formula. The different heads of loss which the Tribunal must consider when calculating a compensatory award are:

  • Immediate loss of wages;
  • Future loss of wages;
  • Loss of employment rights;
  • Loss of pension rights.

In assessing the Claimant’s losses arising from the unfair dismissal as a matter of practice, the Tribunal will consider past and future loss.

Reductions to Award

However, there are arguments which a Respondent can make which may reduce any award made to the Claimant.

A Respondent can argue:

  • Sums already paid to the Claimant on or following dismissal (such as a redundancy payment, notice payment or an ex gratia payment) should be taken into account by the Tribunal;
  • Any state benefits the Claimant has received should be taken into account;
  • A “Polkey deduction” should be made  - i.e. the compensatory award should be reduced or limited to reflect the chances that the Claimant would have been dismissed in any event and that the Respondent’s procedural errors made no difference to the outcome;
  • Contributory fault -- the compensatory award should be reduced because the Claimant’s conduct contributed to the dismissal;
  • The Claimant failed to mitigate his/her loss and any award should be reduced as a result of this;
  • The Claimant failed to comply with the ACAS code and any award should be reduced accordingly.

Employment Tribunal Statistics

The Employment Tribunal has published statistics on the level of awards made by the Employment Tribunal for the period from 1 April 2019 to 31 March 2020. The maximum awarded, average and median awarded for unfair dismissal and discrimination claims are set out below.

 

Maximum Award

Median Award

Average Award

Unfair Dismissal

£118,842

£6,646

£10,812

Race Discrimination

£30,330

£8,040

£9,801

Sex Discrimination

£73,619

£14,073

£17,420

Disability Discrimination

£265,719

£13,000

£27,043

Religion/belief Discrimination

£0

£0

£0

Age Discrimination

£243,636

£11,791

£38,794

Sexual Orientation Discrimination

£96,645

£9,245

£27,936

The full report is available here (see Employment Tribunal and Employment Appeal Tribunal Tables 2019 to 2020).

Although the maximum awarded by a Tribunal for unfair dismissal exceeds the statutory cap (currently £89,493), it should be noted that the cap does not apply where the reason for dismissal is for whistleblowing or raising certain health & safety issues.

For an overview of the law relating to unfair dismissal see our article on Unfair Dismissal.

You can also find Innes on Google+ and Twitter or connect with him on LinkedIn.

Disclaimer

The content of this webpage is for information only and is not intended to be construed as legal advice and should not be treated as a substitute for specific advice. Morton Fraser LLP accepts no responsibility for the content of any third party website to which this webpage refers.  Morton Fraser LLP is authorised and regulated by the Financial Conduct Authority.