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Employment tribunals - discrimination - calculating interest on compensation

A tribunal can increase your compensation by adding interest to the amount you are awarded. This page explains how to work this out.

How is interest on your compensation calculated?

A tribunal can award interest to be added to your compensation award for discrimination. They don't have to do this but you should always ask for interest to be added.

Interest is usually calculated in two parts:

  • pre-judgment interest
  • post-judgment interest.

Pre-judgment interest

Pre-judgment interest can be paid on:

  • the injury to feelings part of the compensation award, and
  • the financial loss part of the compensation award.

Interest for the injury to feelings part of the award

If you have an award for injury to feelings, interest starts to build up from the date the discrimination took place.

To work out interest

Step one: work out the daily rate of interest. To do this, divide the amount of your award by 365 then multiply by 8 per cent. This is the rate of interest set by the court. This gives you the daily rate of interest.

Step two: work out the number of days between the date the discrimination took place and the date the compensation is calculated. This is usually the date of the tribunal hearing.

Step three: Multiply the daily rate of interest by the number of days between the date of the discrimination and the date of the tribunal hearing.

Example

A claimant successfully brings a claim for sexual harassment and is awarded £1,000 for injury to feelings. The act of harassment happened on 1 January and the tribunal takes place on 28 February.

Date of discrimination is: 1 January

Date of hearing and award is: 28 February

Amount of award is: £1,000

  1. Daily rate of interest is:
    £1,000 ÷ 365 = £2.74
    £2.74 x 8% = £0.219
  2. There are 59 days between the act of discrimination and the hearing (31 days in January and 28 days in February)
  3. £0.219 x 59 = £12.92 interest.

Therefore you would be entitled to an extra £12.92 to be added to your compensation award for injury to feelings.

Interest for the financial loss part of the award

If you're being compensated for your financial losses, interest starts building up from a date midway between the date the discrimination took place and the date the tribunal works out your compensation award.

To work out interest on your financial losses

Step one: divide the amount of your award by 365 then multiply this by 8 per cent to give the daily rate of interest.

Step two: work out the number of days between the date the discrimination took place and the date the tribunal calculates your compensation award. This is usually either the date of the hearing or the date your award is made.

Step three: divide these number of days by two to give the number of calculation days.

Step four: multiply the daily rate of interest by the number of calculation days.

Example

A claimant successfully brings a claim for sexual harassment and is awarded £2,000 for loss of earnings. The act of harassment happened on 1 January and the Tribunal takes place on 28 February. What interest is payable on the injury to feelings award?

Date of discrimination is: 1 January

Date of hearing and award is 28 February

Amount of award is: £2,000

  1. Daily rate of interest is:
    £2,000 ÷ 365 =  £5.48
    £5.48 x 8% = 0.44
  2. Number of days between the act of discrimination and hearing is 59 (31 days in January + 28 days in February)
  3. Divide these number of days by by two to give number of calculation days (59 divided by 2 = 29.5)
  4. Multiply the daily rate of interest by number of calculation days, so 0.44 x 29 = £12.76 interest

Therefore you would be entitled to an extra £12.76 to be added to your compensation award for injury to feelings.

Post judgment interest

If your employer doesn't pay you the compensation you have been awarded within 14 days of the tribunal's decision, post-judgment interest will build up on the amount from the date the award was calculated.

The current rate of interest on unpaid tribunal awards for discrimination cases is 8 per cent a year.

You should claim interest if you have to take action to enforce a tribunal award.

Next steps

Other useful information

Equality Advisory Support Service (EASS)

If you've experienced discrimination, you can get help from the EASS discrimination helpline.

Equality and Human Rights Commission (EHRC)

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