What Is an Unfair Dismissal Claim Actually Worth?

A basic award, a compensatory award, then mitigation, Polkey, conduct and the Acas Code – and only after all of that, a cap. The order the steps run in is where most of the money is decided, and where most of the competing advice is wrong.

Key takeaways

• There is no day-one unfair dismissal right. The qualifying period today, 14 October 2026, is two years under s.108 ERA 1996; it becomes six months on 1 January 2027, when s.25 Employment Rights Act 2025 is commenced by reg 3 of SI 2026/559.
• Under the transitional rule in reg 4 of SI 2026/559, what matters is whether your effective date of termination falls on or after 1 January 2027 – so a notice period straddling new year can change which qualifying period applies.
• The basic award is age, complete years and a capped week’s pay (£751 as at 6 April 2026, SI 2026/310, uprated each April). It is not compensation for loss and is payable even if you found better work the next week.
• The compensatory award is reduced for mitigation, then Polkey, then conduct, then adjusted for the Acas Code, with payments already made set off – and the cap in s.124 ERA 1996 applies last, after every reduction.
• The cap is the lower of £123,543 (as at 6 April 2026, SI 2026/310) and 52 weeks’ gross pay, so for most people it bites at about a year’s salary. Section 25 ERA 2025 omits s.124 from 1 January 2027.
• Injury to feelings is not available for ordinary unfair dismissal after Dunnachie; it belongs to discrimination claims, which are uncapped and need no qualifying service.

two awards, then the reductions

A successful unfair dismissal claim produces two awards. The basic award is a service-and-age calculation that has nothing to do with what you lost. The compensatory award is what the tribunal considers just and equitable for the loss you actually suffered. Then come the reductions – mitigation, Polkey, conduct, the Acas Code adjustment – and only after all of them does a cap apply.

The order those steps run in is where most competing pages go wrong. A dismissal can be found unfair and still produce very little, because a percentage reduction applied to a large loss figure leaves a small one. That is the statutory scheme in ss.118–126 Employment Rights Act 1996 working as designed. We will not put a figure on your claim, and nobody should at a first conversation; what follows is the arithmetic, so you can see which facts move it.

Do you have a claim at all?

Three gates come before the money: you must be an employee, you must have the qualifying service (or a reason that needs none), and you must be in time. The third is separate, because the deadline for bringing the claim has its own arithmetic.

If you have less than two years’ service

For an ordinary unfair dismissal claim today you need two years’ continuous service ending with the effective date of termination (s.108(1) ERA 1996). From 1 January 2027 that becomes six months. The transitional rule is worth understanding, because it is unusually generous and almost nobody explains it: under reg 4 of SI 2026/559, the amendments apply where you are dismissed before 1 January 2027 but the effective date of termination falls on or after that date, and they do not apply where the effective date of termination falls before it. So a long notice period straddling new year can be the difference between needing two years and needing six months.

So if you are told in November 2026 that you are dismissed, with notice expiring in February 2027, your effective date of termination is in 2027 and the six-month period applies. Dismissed in November 2026 with employment ending in December 2026, and two years applies. One date, two different claims.

If the reason was automatically unfair

No qualifying service is needed at all where the reason for dismissal is one the law treats as automatically unfair. The main grounds, with their sections, are:

• making a protected disclosure, commonly called whistleblowing: s.103A ERA 1996;
• pregnancy, childbirth, maternity, adoption, paternity, shared parental or parental leave, and time off for dependants: s.99 ERA 1996 and the associated regulations;
• health and safety grounds, including refusing to work in circumstances of serious and imminent danger: s.100 ERA 1996;
• asserting a statutory right: s.104 ERA 1996;
• national minimum wage grounds: s.104A ERA 1996;
• working time grounds: s.101A ERA 1996;
• acting as a pension scheme trustee (s.102) or an employee representative (s.103);
• jury service: s.98B ERA 1996;
• trade union membership, activities or protected industrial action – s.152 Trade Union and Labour Relations (Consolidation) Act 1992.

Separately, a discrimination claim under the Equality Act 2010 needs no qualifying service, is a different claim from unfair dismissal, and is not capped. Many people have both, and our employment law solicitors will usually plead them together.

The basic award: the age-banded calculation

The basic award under s.119 ERA 1996 is calculated exactly like statutory redundancy pay. It is not compensation for loss. Someone who walked into a better-paid job the next week still gets it in full.

Four details that change the figure:

• Complete years only. Eleven months counts for nothing in that year.
• Count backwards. Service runs back from the effective date of termination, so with more than 20 years it is the most recent 20 that count — usually those at the higher multiplier.
• A week’s pay is gross, and capped. The cap was £751 from 6 April 2026 (SI 2026/310) and is uprated each April under s.34 Employment Relations Act 1999, so a later dismissal uses a later figure. Check the current Increase of Limits Order first.
• Reductions and minimums. A redundancy payment you have already received reduces the basic award (s.122(4)), and conduct contributing to the dismissal can reduce it (s.122(2)). For union, health and safety, pension trustee and employee representative dismissals, s.120 sets a minimum basic award, also uprated each April.

Section 97(2) ERA 1996 can also extend the effective date of termination, for the purpose of computing service, to the date statutory minimum notice would have expired. If you were dismissed without notice just short of two years, that provision is the first thing to check.

The compensatory award: what you actually lost

Section 123(1) ERA 1996 gives the tribunal power to award “such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal”. In practice it is built from heads of loss, each of which you have to evidence:

• Immediate loss of earnings: net pay from dismissal to the hearing, less anything you earned in that period.
• Future loss of earnings: for however long the tribunal finds it will reasonably take you to reach comparable pay. This is usually the largest and most argued head.
• Pension loss: often the most valuable head in a long-service case, and the one claimants most often leave out. Tribunals work from their own published guidance on compensating pension loss.
• Lost benefits: car or allowance, medical cover, bonus and commission on a realistic basis.
• Loss of statutory rights: a conventional, modest sum recognising that you must build up service again.
• Expenses: the reasonable costs of looking for work, and of retraining where it is justified.

What is not in there matters just as much. There is no award for injury to feelings in an ordinary unfair dismissal claim: the House of Lords settled that in Dunnachie v Kingston upon Hull City Council, holding that “loss” in s.123 means financial loss. Injury to feelings belongs to discrimination claims under the Equality Act 2010, on bands set by Presidential Guidance. If how you were treated is the centre of your case, the claim that captures it is a discrimination claim.

The evidence that protects each part of the award

• payslips for the 12 months before dismissal, your P45 and your P60, to fix gross and net pay;
• your contract, for notice, bonus, pension and benefits;
• annual benefit statements and employer pension contribution rates;
• a dated job-search log: every application, the role, the date, the outcome;
• payslips or contracts from any new work, including agency and self-employed income;
• benefit award letters, for the recoupment position;
• receipts for travel to interviews, courses and other search expenses;
• the disciplinary or redundancy paperwork, any scoring matrix and the appeal outcome — these drive the Polkey and Acas Code arguments, not the loss figures.

Mitigation: the duty that quietly shrinks awards

Section 123(4) ERA 1996 imports the common law duty to mitigate: you must take reasonable steps to reduce your loss, which means looking for work and taking a reasonable job when it is offered. The burden of proving you failed sits on the employer, and the test is what was reasonable for you. How it bites, in descending order of frequency:

• Earnings are credited. Anything you earn in the loss period comes off, pound for pound. If your new job pays the same or more, future loss usually stops there.
• A delayed start to job-hunting is deducted. If the tribunal finds you could reasonably have begun searching weeks earlier, it deducts the earnings you would have had.
• Refusing a reasonable offer. Including, sometimes, an offer of re-employment from the employer who dismissed you.
• Holding out for an equivalent role too long. You are entitled to a reasonable period to look for comparable work, not an indefinite one.

If you have already found a new job

Say so, early and accurately. A new job on equal or better pay typically ends future loss at that date, which can shrink a claim dramatically, and concealing it is worse, because it will emerge in disclosure and it damages everything else you say. If the new job pays less, the continuing shortfall is a recoverable head of loss for as long as the tribunal thinks it is attributable to the dismissal.

The answer is a job-search log kept from week one. It is the cheapest, highest-return document in the claim, and claimants who keep one rarely lose on mitigation.

Polkey: what if they could have dismissed you fairly anyway?

This is the biggest variable in procedural unfair dismissal claims, and the one readers never see coming. In Polkey v AE Dayton Services Ltd the House of Lords held that a dismissal is not saved by the argument that a fair procedure would have made no difference, it is still unfair, but that the point goes to compensation instead.

So the tribunal asks what would have happened had the employer done it properly, and reduces the compensatory award by the percentage chance that you would have been dismissed anyway. It can be any figure. A dismissal that was unfair only because the appeal was heard by the wrong manager, where the misconduct was admitted, can attract a very large reduction. A dismissal where the investigation was so poor that the tribunal cannot say what a fair process would have produced may attract none.

Two refinements. The tribunal can find you would have been dismissed anyway but later, in which case compensation runs to that later date instead of being cut by a percentage. And the exercise is evidential: the employer has to show what a fair process would have produced, not simply assert that the outcome was inevitable.

The Acas Code adjustment, and contributory conduct

The Acas Code adjustment. Under s.207A TULRCA 1992, where an employer has unreasonably failed to comply with the Acas Code of Practice on disciplinary and grievance procedures, the tribunal may increase the award by up to 25%. Where the employee has unreasonably failed to comply – refusing to attend a hearing, not using an available appeal – it may reduce it by up to 25%. It is discretionary both ways, and the failure must be unreasonable, not merely a failure.

Contributory conduct. Under s.123(6) ERA 1996 the tribunal must reduce the compensatory award where the dismissal was to any extent caused or contributed to by your own action, by such proportion as it considers just and equitable. Section 122(2) does the same for the basic award. The conduct has to be culpable or blameworthy, and it has to have contributed to the dismissal – not merely be something the employer later disapproved of.

There is also a free-standing award most claimants never ask for: under s.38 Employment Act 2002, if the employer was in breach of its duty to give you a written statement of employment particulars and you succeed in another claim, the tribunal must award two weeks’ pay and may award four. It is small, almost automatic, and routinely forgotten.

The caps, and when they do not apply

Section 124 ERA 1996 limits the compensatory award to the lower of two figures: a statutory maximum, and 52 weeks’ pay. The statutory maximum was £123,543 with effect from 6 April 2026 under SI 2026/310, and it is uprated every April, so check the current Increase of Limits Order for a dismissal in a later year. The 52-week limb uses your actual gross weekly pay and is not itself subject to the £751 week’s pay cap.

For most people the 52-week limb is the real cap, biting at roughly a year’s salary rather than at the headline. Anyone reading “up to £123,543” – the figure as at 6 April 2026 – and planning around it has usually misread which of the two limbs applies to them.

The cap does not apply:

• where the dismissal was for making a protected disclosure, or on the health and safety grounds in s.100(1)(a) or (b) — s.124(1A) ERA 1996 removes the limit entirely;
• to the basic award, which has its own ceiling of 30 weeks’ capped pay;
• to discrimination compensation under the Equality Act 2010, which is uncapped and can include injury to feelings;
• to an additional award under s.117 ERA 1996 where an employer fails to comply with an order for reinstatement or re-engagement.

The full sequence, step by step: a worked example

A hypothetical illustration of the mechanics, using the limits in force from 6 April 2026. It is not a valuation of anybody’s claim, and the percentages are illustrative.

Imagine Dev, aged 45, dismissed for alleged misconduct after nine complete years’ service. His gross pay is £600 a week and his net pay £420 a week. A tribunal finds the dismissal unfair because the investigation was inadequate and the appeal was heard by the dismissing manager. Five of his nine years were worked at age 41 or over.

1. Basic award (s.119). Five years at 1.5 weeks = 7.5 weeks; four years at 1 week = 4 weeks; 11.5 weeks in total. His £600 gross is below the £751 week’s pay cap in force from 6 April 2026, so the actual figure is used: 11.5 × £600 = £6,900.
2. Gross loss for the compensatory award (s.123). Out of work 26 weeks at £420 net = £10,920. New job 26 weeks later paying £80 a week less net, which the tribunal allows for 26 weeks = £2,080. Pension loss assessed at £1,200. Running total: £14,200, before the conventional sum for loss of statutory rights, which we have left out.
3. Mitigation (s.123(4)). The tribunal finds he could reasonably have started applying four weeks earlier and deducts 4 × £420 = £1,680. Now £12,520.
4. Polkey. The tribunal assesses a 30% chance he would have been dismissed anyway after a proper investigation and appeal, and reduces by 30%: £8,764.
5. Contributory conduct (s.123(6)). On these facts the tribunal makes no finding of culpable conduct, so nothing is deducted. Had it found 10%, the deduction would come off the £8,764, not off the original £14,200, which is why the order matters.
6. Acas Code adjustment (s.207A TULRCA 1992). The employer unreasonably failed to follow the Code on investigation and appeal, so the tribunal uplifts by 15%: £8,764 × 1.15 = £10,078.
7. Payments already made. An ex gratia £3,000 paid on dismissal is set off: £7,078.
8. The cap (s.124). The lower of the statutory maximum, £123,543 from 6 April 2026, and 52 × £600 = £31,200. Neither bites on £7,078.
9. Total. £6,900 basic plus £7,078 compensatory = £13,978, before any s.38 Employment Act 2002 award, before recoupment, and before tax (termination awards are taxed under the rules covered in our guide to settling instead of litigating).

Now change one fact to show the cap working. Suppose Dev had been out of work for two years and the compensatory loss, after all the reductions, came to £60,000. The statutory maximum of £123,543 as at 6 April 2026 would not touch it. The 52-week limb would: 52 × £600 = £31,200, and that is what he would receive. For a dismissal with an effective date of termination on or after 1 January 2027, s.124 is omitted by s.25 Employment Rights Act 2025 and that limb falls away.

Four mistakes about the money

1. Treating the cap as the claim. The statutory maximum is a ceiling on a figure built from your own losses, and for most people the 52-week limb bites first. A reader who starts from £123,543 as at 6 April 2026 and works down is starting in the wrong place.
2. Ignoring mitigation until the schedule of loss is due. By then the job-search log does not exist and the deduction is already in play. Start it the week you are dismissed.
3. Assuming the basic award depends on what you lost. It does not. It is age, complete years and a capped week’s pay, and it is payable whether or not you walked into a better job – which also means a short-service claimant on a strong case may recover less than they expect.
4. Expecting injury to feelings. Dunnachie rules it out for ordinary unfair dismissal. If the way you were treated is the heart of it, the question is whether there is a discrimination claim — which is uncapped, needs no qualifying service, and is valued on an entirely different basis.

A fifth, not about arithmetic: dismissals that follow something outside work are often misfiled. A driver disqualified from driving may be dismissed for statutory illegality under s.98(2)(d) ERA 1996, and the real battleground is then whether losing your licence can end a driving job could have been avoided at the magistrates’ court in the first place.

Is it worth running? How to decide

This weighs the factors rather than the pounds, and deliberately contains no figures: anyone offering a number at this stage is guessing.

If you do want a view, our employment law solicitors will tell you where the argument is, where the reductions are likely to land and what the realistic range looks like once they do. Our published fees are on the site, and you can speak to the team with the dismissal paperwork and twelve months of payslips to hand.