Employment tribunals - is your compensatory award below the cap and will any welfare benefits you've received reduce it?
When you've calculated how much your compensatory award might be, you need to work out if it falls below the maximum amount of compensation that a tribunal can pay out. This is called the compensation cap.
You also need to work out whether your award might be reduced because you've received welfare benefits since you were dismissed.
This page looks at the compensation cap limits and how any welfare benefits you've been getting might reduce your compensatory award.
What is the compensation cap for tribunal awards for unfair dismissal?
There's a cap on compensatory awards for unfair dismissal of £89,493. This means that if your gross pay for a year is higher than this amount, a tribunal can't award you more than £89,493.
If you earn less than £89,493, there's also a cap on the amount you can be awarded. The limit is one year's gross pay. A tribunal can't award you more than this, regardless of how much you've worked out your claim to be worth.
These limits apply if you were dismissed on or after 6 April 2021.
If you were dismissed on or after 6 April 2020, the compensation cap is £88,519.
Do you have to repay the amount that you've received in benefits
If your claim doesn't go to a tribunal hearing
If you reach a settlement with your employer before the tribunal hearing, your ex-employer won’t get a recoupment notice. This means they’ll pay less overall than if you win your claim.
You can use the fact that your ex-employer will pay less to try to persuade them to settle the claim rather than go to the tribunal.
Welfare benefits that don't affect your compensatory award
Some benefits won’t affect your compensatory award. These include:
- Housing Benefit or payments you've received to help pay your Council Tax
- welfare benefits which don’t depend on your income - this includes Personal Independence Payment, Disability Living Allowance and Attendance Allowance
- Tax Credits
- welfare benefits you got before your dismissal or after the tribunal hearing
- How to work out your basic award if you are claiming unfair dismissal
- How to work out your compensatory award if you are claiming unfair dismissal
- How to prepare a schedule of loss