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Employment tribunals - compensatory award for unfair dismissal - how long should you be compensated for?

Part of your claim to an employment tribunal for unfair dismissal will include asking for compensation because you've lost your job. This compensation is made up of a basic award and a compensatory award. The basic award is a fixed sum worked out using a standard formula. The compensatory award compensates you for the money you've lost because you've been dismissed.

You can be paid compensation for the money you lost until you found a new job. If you're still looking for work you can be paid compensation for the length of time you think it will take you to find another job.

You may also be able to claim compensation to make up for the fact that you'll have to work in a new job for two years before you get the right to claim unfair dismissal. This is called compensation for loss of statutory rights.

This page looks at how to work out the amount of time you can ask the tribunal to compensate you for after you've been dismissed.

Working out how much money you've lost

Before you can work out how much compensation you should get for the length of time you've been affected by your dismissal, you'll need to work out how much money you've lost because you've been dismissed. You can work this out either as a weekly or monthly figure.

If you've already found a new job, you can multiply this figure by the number of weeks or months you were out of work.

If you're still looking for work, you can multiply this figure by the number of weeks or months you think it will take you to find another job.

More about how to calculate how much money you've lost because you've been dismissed

If you've started another job since you were dismissed

If you've started another job since you were dismissed, you should be compensated for the time between losing your old job and starting your new job. You need to work out when you started work for your new employer and whether your income and employee benefits are the same as your old job.

If your new job pays the same or more than your old job

If your income and any employee benefits, such as a company car, health insurance or employer pension contributions, are the same or higher in your new job, the amount of your compensation will be the weekly or monthly amount of money you've lost multiplied by the number of weeks or months between being dismissed and starting your new job.

If your new job is temporary, or pays less than your old job

If your income and any employee benefits are lower in your new job than your old job, you'll need to estimate how long it would take you to find another job at the same pay you were getting before you were dismissed. The rules for calculating this are the same as if you haven't found a new job.

If you haven't started another job since you were dismissed

If you haven't started another job since you were dismissed, your compensation will be based on how long it's likely to be before you find another job. This figure is an estimate based on a number of factors, including:

  • your age
  • your pay
  • the kind of work you're trained to do.

The tribunal will use their experience to work out how much you should be paid if you haven't found work by the date of the hearing. They will expect you to show that you have been making reasonable efforts to get a new job. You'll need to keep a list of what you're doing to find work and keep copies of all your job applications to show the tribunal. They will look at whether you're likely to spend a long or short amount of time out of work.

Factors which may indicate you'll face a short period out of work

To decide if you're likely to be out of work for a short period of time, the tribunal will look at whether:

  • you've had several jobs over the years and have always found another job relatively easily
  • you've never been out of work more than a few months before finding another job
  • you've got good references
  • you could find agency work which would pay you a similar wage to the amount you were earning in your old job
  • you can drive or have easy access to public transport and can apply for jobs further away from your home.

For example, taking into account the job market for the work you do and how easily you've found jobs in the past, the tribunal might decide you would be able to find a job in six months. Your compensation would be the monthly amount of money you've lost multiplied by six.

Factors which may indicate you'll face a long period out of work

To decide if you're likely to be out of work for a longer period of time, the tribunal will look at whether:

  • you're a skilled worker and there are limited vacancies in your type of job locally
  • you've got limited work experience. For example, you've only had one employer or you haven't been working long
  • you've had long periods out of work in the past
  • your employer won't provide you with a reference
  • your age, particularly if you're 50 or over
  • you were dismissed for dishonesty
  • you have a disability which will limit the types of jobs you can apply for, or mean you'll need adjustments to be able to work
  • you're incapable of work due to ill health caused by your dismissal. For example, your dismissal caused depression. You will need to prove this with medical evidence
  • you have caring responsibilities and there aren't many suitable jobs that fit in with your caring requirements
  • you don't own a car and public transport links are limited where you live.

If the tribunal thinks it may take you longer to find another job, they will award you more compensation. However, they can also reduce your overall award if they think that you contributed towards your dismissal, for example by stealing from your employer.

If you think that you'll be out of work for a long time, or that you may never find another job

You may be pessimistic about ever finding another job, especially if you're an older worker. Usually, a tribunal would expect anyone, no matter how old they are, to have found another job within two years of being dismissed. You may have to accept that the only job you might find would be on a lower wage than your previous job.

It may be worth having more realistic expectations about how much you would get from a tribunal if you were to make a claim. If you're willing to accept a reasonable figure, you may be able to reach a settlement with your employer. You can then avoid going to a tribunal.

Cap on compensation limits

There is now a cap on the amount of compensation you can be awarded. The cap is one year's gross pay and you won't be able to claim more than this from a tribunal.

Compensation for loss of statutory rights

A tribunal could also award you a lump sum to make up for the fact that you'll have to be in any new job for two years before you'll have the right to claim unfair dismissal. This is called compensation for loss of statutory rights. The amount a tribunal will award varies between £250 and £500.

You can only claim this compensation if you'd worked in your old job for long enough to be protected. You must have worked for at least:

  • one year if you started work before 6 April 2012, or
  • two years if you started work on or after 6 April 2012.

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