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Employment tribunals - compensatory award for unfair dismissal - are there any reasons why your compensation might be reduced?

When you've worked out how much your compensatory award might be, you need to think about any reasons why a tribunal might then reduce it or increase it.

This page looks at the reasons why a tribunal might reduce an award.

Why might a tribunal reduce your compensatory award?

A tribunal might reduce your compensatory award because:

  • you're partly to blame for your dismissal
  • your employer didn't follow a fair procedure when they dismissed you, but you would still have been dismissed anyway
  • you haven't done enough to find a new job
  • you couldn't give a good reason for failing to attend any disciplinary or appeal meetings
  • you've been too ill to work since you've been dismissed.

Are you partly to blame for your dismissal?

A tribunal can reduce your compensatory award if they decide you've contributed in some way to your dismissal. This is known as contributory fault.

The tribunal will only reduce your compensatory award when they think you've done something for which you're to blame.This could be for example, if you've broken health and safety rules for no good reason, or you were abusive to a colleague, and were dismissed as a result.

Your award might also be reduced if you've been deliberately obstructive during an investigation around the facts of your dismissal.

A tribunal won't reduce your award for something you had no control over. For example, if you were dismissed for ill-health and you therefore weren't capable of doing your job.

By how much can a tribunal reduce your award?

When they look at the facts of the case, the tribunal must decide whether:

  • they think you're guilty of the misconduct, even if you say you aren't
  • your conduct contributed to your dismissal, and if it did, by how much.

The tribunal may reduce your compensatory award by a certain amount depending on how much at fault you were. For example, if they think you were 25 per cent to blame for your dismissal, they will reduce your compensatory award by 25 per cent. If they decide you were completely to blame for your dismissal, they may reduce your compensatory award by 100 per cent. However, these cases are rare.

If you admit the misconduct, for example, being drunk at work or stealing, your compensatory award is likely to be reduced.

Did your employer follow a fair procedure when they dismissed you?

A dismissal will be unfair if your employer hasn't followed a proper procedure when they dismiss you. Employers should follow the procedure set down in the ACAS Code of Practice before dismissing an employee. If the only reason your dismissal is unfair is because this procedure hasn't been followed, this is known as a procedurally unfair dismissal.

The Polkey reduction

If a tribunal decides that your employer didn't follow a fair procedure, but that if they had, it would have made no difference to the outcome of your claim, and you would still have been dismissed, it can reduce your compensatory award. This is known as a Polkey reduction.

A tribunal makes a Polkey reduction most often when the dismissal is for redundancy or misconduct.

If a tribunal thinks you would have been dismissed anyway

The tribunal will have to decide what would have happened if your employer had followed a proper procedure before dismissing you. If they think you would have been dismissed anyway, and the dismissal would have been fair, you'll only get a compensatory award up to the date you were dismissed. The tribunal won't multiply any award by the number of months they think it would have taken you to find another job.

Example

Grace is one of three administrative workers in an office. Her employer calls them into his office without warning and tells them that they are all redundant starting immediately because the office they work in is closing that day.

The tribunal decides this dismissal was unfair because no proper procedure was followed. However, since the office was closing and there were no suitable alternative jobs, the three workers would have all been made redundant, even if the correct procedure had been followed.

The tribunal awards them only one week's loss of earnings as their compensatory award. This is because they decide that the employer should have met to consult with the workers about the redundancies, and this would have taken a week to arrange and carry out.

They will also still get their basic award unless they also get redundancy pay.

If a tribunal thinks there was only a chance you might have been dismissed

The tribunal will have to decide what would have happened if your employer had followed a proper procedure before dismissing you. If they think there's a chance you would have been dismissed anyway, they will reduce your compensatory award by an amount to reflect what the chance was of you being dismissed if the procedure been properly followed.

This is usually worked out as a percentage amount. So if the tribunal thinks the likelihood of you still being dismissed is 20 per cent, they will reduce your award by 20 per cent and you will get 80 per cent of the award.

Example

Emma is one of three administrative workers. Her employer carried out a redundancy selection exercise to choose one of its administrative workers for redundancy.

The tribunal decide the selection procedure was flawed because the criteria used were not objective and the person making the assessments was biased. However, they go on to decide that even if Emma's employer had used fair criteria and an unbiased assessor, there was still a one-in-three chance of her being the worker selected for redundancy.

They therefore reduce her award by 33 per cent and give her only 67per cent of her compensatory award.

If you haven't done enough to find a new job

A tribunal will expect you to be able to show that you've made reasonable efforts to find another job as quickly as soon as possible. They call it mitigating your loss. If they think you haven’t done enough they can reduce the length of time for which they award you compensation.

To avoid losing any compensation, make sure that you keep evidence of your job searches and applications so you can show them to the tribunal. If you don't keep a record, it's possible your employer might bring their own evidence of the jobs you could have applied for.

Example

Trevor wins his claim for unfair dismissal. The hearing date is 12 months after his dismissal. The employer shows the tribunal that there have been over 20 suitable vacancies which Trevor could have applied for but didn’t.

The tribunal decides that Trevor has not made enough effort to find work. However, even if he had tried harder he would still have been out of work for six months. They therefore award him six months’ worth of his monthly losses.

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