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 £86,444. This means that if your gross pay for a year is higher than this amount, a tribunal can't award you more than £86,444.
If you earn less than £86,444, 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 2019.
If you were dismissed on or after 6 April 2018, the compensation cap is £83,682.
How welfare benefits affect your compensatory award
If you've been getting certain welfare benefits since you were dismissed, the amount you got will be taken off your compensatory award. This affects benefits you wouldn’t have got if you hadn’t been dismissed.
If your claim goes to a tribunal hearing
If you win your tribunal claim, the Tribunal will take some benefits off when working out the compensatory award. These include:
contributory Employment and Support Allowance.
For some other benefits, the Tribunal won’t calculate them and won’t take them off the compensatory award. Instead, the Department for Work and Pensions (DWP) will send your ex-employer a recoupment notice ordering them to repay the amount that you've received in benefits. After they've repaid the DWP, your ex-employer will pay you the amount of the compensatory award that's left. This can take some time to sort out.
The benefits covered by recoupment are:
income-related Employment and Support Allowance
For Universal Credit, the DWP will recoup the difference between:
the Universal Credit you actually got
any Universal Credit you would have got if you’d stayed in your job and continued getting paid
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