Basic Award for Unfair Dismissal: How It's Calculated
Basic Award for Unfair Dismissal: How It's Calculated
Important: This guide provides general information about UK employment law. It is not legal advice and cannot account for your specific circumstances. Time limits for employment tribunal claims are strict. If you're considering a claim, check deadlines carefully and consider seeking professional advice.
Jurisdiction
This guide applies to England, Wales and Scotland. Employment law in Northern Ireland is governed by separate legislation and uses different limits.
In brief: The basic award for unfair dismissal is calculated using your age, complete years of service (up to 20), and weekly gross pay (capped at £719 for dismissals on or after 6 April 2025). It works like statutory redundancy pay and forms one part of tribunal compensation. The maximum basic award is £21,570. Tribunals may reduce or remove it in certain situations.
Last updated: 6 February 2026 By Yerty, using employment tribunal decisions and UK legislation.
This guide explains how tribunals calculate the basic award, when it applies, and how it fits into your wider unfair dismissal claim.
What Is the Basic Award?
The basic award is one element of compensation an employment tribunal may award if a dismissal is found to be unfair. It is calculated using a fixed statutory formula based on your age, length of service, and weekly pay — and is separate from the compensatory award, which covers financial loss.
The basic award is designed to recognise length of service, not financial hardship. That distinction matters when assessing total compensation.
For a full overview of how unfair dismissal claims work, see: How to Prove Unfair Dismissal: Evidence That Matters
For the compensatory award: Compensatory Award for Unfair Dismissal: What You Could Get
How the Basic Award Is Calculated
The basic award uses the same formula as statutory redundancy pay. Three factors determine the amount:
1. Your age at the effective date of termination
Your age affects the multiplier applied to each year of service:
| Age group | Multiplier per year of service |
|---|---|
| Under 22 | 0.5 weeks' pay |
| 22 to 40 | 1 week's pay |
| 41 or over | 1.5 weeks' pay |
If your service spans multiple age bands, different multipliers apply to different years. The calculation works backwards from your termination date.
2. Your length of service
Only complete years count. For example, 7 years and 10 months counts as 7 years. The maximum service used in the calculation is 20 years, regardless of how long you have actually worked for the employer.
3. Your weekly gross pay
The tribunal uses your normal weekly gross pay (before tax and National Insurance), but subject to a statutory cap. For dismissals with an effective date on or after 6 April 2025, the weekly pay cap is £719.
Weekly Pay Cap and Maximum Award
| Element | Current figure (6 April 2025 onwards) |
|---|---|
| Weekly pay cap | £719 per week |
| Maximum basic award | £21,570 |
| How the maximum is reached | 20 years' service × 1.5 weeks × £719 (someone aged 41+ with 20+ complete years) |
These figures are reviewed annually, usually from April each year. For dismissals before 6 April 2025, earlier limits apply.
How Age Affects the Calculation
| Age group | Multiplier | Example | Result |
|---|---|---|---|
| Under 22 | 0.5 weeks' pay | 3 years × 0.5 × £600 | £900 |
| 22 to 40 | 1 week's pay | 8 years × 1 × £500 | £4,000 |
| 41 or over | 1.5 weeks' pay | 12 years × 1.5 × £719 (capped) | £12,942 |
Worked Examples
Example 1: Short service Age: 25 | Service: 4 years | Weekly pay: £450 4 × 1 × £450 = £1,800
Example 2: Mid-career Age: 38 | Service: 10 years | Weekly pay: £650 10 × 1 × £650 = £6,500
Example 3: Senior, high earner Age: 52 | Service: 18 years | Weekly pay: £1,200 (capped at £719) 18 × 1.5 × £719 = £19,413
What Can Reduce the Basic Award
Even where a tribunal finds dismissal was unfair, it may reduce or remove the basic award. The main reasons are:
Contributory conduct
If your conduct caused or contributed to your dismissal, the tribunal may reduce the basic award by a percentage it considers just and equitable. Reductions can range from 0% to 100%. The conduct must be blameworthy — a tribunal will not reduce the award simply because the employer had some basis for concern.
Redundancy pay already received
If you received statutory or contractual redundancy pay, this is offset against the basic award. Because the basic award and statutory redundancy pay use the same formula, the offset works as follows:
- If redundancy pay equals or exceeds the basic award → no basic award payable
- If redundancy pay is lower → the tribunal awards the difference only
Scenario 1: Basic award calculation: £6,000. Redundancy pay received: £8,000. Result: no basic award payable.
Scenario 2: Basic award calculation: £10,000. Redundancy pay received: £7,000. Result: tribunal awards £3,000.
Refusal of reinstatement
If a tribunal orders reinstatement or re-engagement and you unreasonably refuse, it may reduce or remove the basic award. These orders are rare, but the discretion exists.
Failure to engage with workplace procedures
Where you unreasonably failed to engage with internal disciplinary or grievance procedures, tribunals may apply a percentage reduction.
When You May Not Receive a Basic Award
There are situations where tribunals do not award a basic award at all:
- Redundancy pay already covers it — as explained above, if the redundancy payment equals or exceeds the basic award, nothing further is payable.
- Dismissal during unofficial industrial action — dismissal during unofficial industrial action generally excludes entitlement to a basic award, even if the dismissal is unfair for other reasons. Note: the Employment Rights Act 2025 now makes dismissal for taking part in official industrial action automatically unfair at any point (from 18 February 2026), so this exclusion applies only to unofficial action.
- Refusal of suitable alternative employment — if suitable alternative employment was offered and you unreasonably refused, the tribunal may decide a basic award should not be paid.
Basic Award vs Compensatory Award
The basic award and compensatory award are separate parts of unfair dismissal compensation:
- The basic award uses a fixed formula based on age, service, and weekly pay. It recognises length of service.
- The compensatory award is based on actual financial loss — lost earnings, benefits, pension contributions, and other losses caused by the dismissal.
In most cases, the compensatory award makes up the larger part of total compensation. For a full breakdown: Compensatory Award for Unfair Dismissal: What You Could Get
Written statement award (separate)
If your employer failed to provide you with a written statement of employment particulars (as required by section 1 of the Employment Rights Act 1996), and a tribunal finds in your favour on a substantive claim, it may make an additional award of 2–4 weeks' pay under section 38 of the Employment Act 2002. This is a separate award — it is not part of the basic award formula, but may be awarded alongside it.
Time Limits
The basic award is only available if a tribunal finds your dismissal was unfair. To bring a claim, you must act within strict deadlines:
- Current limit: 3 months minus 1 day from the effective date of termination (when your employment ended).
- From no earlier than October 2026: this is expected to extend to 6 months under the Employment Rights Act 2025.
Before submitting a tribunal claim, you must notify ACAS for early conciliation. The time spent in early conciliation may extend your deadline, but you should not rely on this — always start the process well before the 3-month deadline.
If interim relief might apply to your situation (for example, if you were dismissed for whistleblowing or health and safety reasons), the deadline is much shorter — 7 days from the effective date of termination. See: Interim relief
For more detail on deadlines: Workplace Deadlines and Time Limits
How the Employment Rights Act 2025 Affects the Basic Award
The Employment Rights Act 2025 received Royal Assent on 18 December 2025. It does not change the basic award formula itself, but it affects who can access it and when.
Key changes
Already in force (18 February 2026):
- Dismissal for taking part in official industrial action is now automatically unfair at any point — the previous 12-week limit has been removed. This means more employees dismissed during industrial action may be entitled to a basic award.
From no earlier than October 2026:
- Tribunal time limits are expected to extend from 3 months to 6 months, giving more time to bring a claim.
From January 2027:
- The qualifying period for ordinary unfair dismissal reduces from 2 years to 6 months. This means more employees will become eligible for a basic award where dismissal is found unfair.
- The compensatory award cap is being abolished (the basic award maximum is unaffected — it remains determined by the formula).
Annual uprating continues: Weekly pay caps and maximum awards are reviewed annually, usually from April. The Employment Rights Act 2025 does not freeze or alter uprating mechanisms.
Dates may still change — check the latest position before relying on them. For the latest implementation dates: GOV.UK: Employment Rights Act implementation timeline
What to Do Next
If you've been dismissed and want to understand what compensation might be available:
- Check deadlines first — the 3-month time limit (or 7 days for interim relief) is the most urgent step. Don't miss it.
- Notify ACAS for early conciliation — this is mandatory before you can submit a tribunal claim.
- Gather evidence — employment records, payslips, dismissal letters, and any correspondence. See: How to Prove Unfair Dismissal
- Understand your full compensation picture — the basic award is only one part. See: Compensatory Award for Unfair Dismissal
- Consider legal advice — for complex cases, or where compensation may be substantial, a solicitor can help with strategy and representation.
Yerty is designed to help you organise evidence, understand your rights, and take structured first steps. For the wider unfair dismissal process: Unfair Dismissal: Your Rights, Time Limits & What To Do
For eligibility if you have less than 2 years' service: Unfair Dismissal Under 2 Years: Can You Still Claim?
Frequently Asked Questions
Is the basic award guaranteed if my dismissal is found unfair?
No. Tribunals may reduce or remove it depending on redundancy pay already received, contributory conduct, or other statutory factors. But if dismissal is found unfair and none of those reductions apply, you should receive a basic award.
Do I still get the basic award if I find another job quickly?
Yes. Finding new employment affects the compensatory award (which is based on financial loss), not the basic award. The basic award depends on age, service, and weekly pay — not what happens after dismissal.
Is the basic award taxed?
Termination payments up to £30,000 are usually tax-free. Tax treatment depends on the total package, including any other payments. If total termination payments exceed £30,000, the excess may be taxable.
What is the maximum basic award?
For dismissals on or after 6 April 2025, the maximum is £21,570. This is reached by someone aged 41 or over with 20 or more complete years of service, at the capped weekly pay of £719 (20 × 1.5 × £719 = £21,570).
Can my basic award be reduced if I was partially at fault?
Yes. If a tribunal finds your conduct contributed to the dismissal, it can reduce the basic award by a percentage it considers just and equitable. This is called a contributory conduct reduction and can range from 0% to 100%.
Does redundancy pay affect my basic award?
Yes. Because the basic award and statutory redundancy pay use the same formula, any redundancy pay you received is offset against the basic award. If redundancy pay equals or exceeds the basic award, no basic award is payable.
Sources
- Employment Rights Act 1996 (ss.118–124)
- Employment Rights Act 2025
- The Employment Rights (Increase of Limits) Order 2025 (SI 2025/348)
- GOV.UK: Plan to Make Work Pay — Timeline Update (3 February 2026)
- ACAS: Making a claim to an employment tribunal
- Published employment tribunal decisions (England, Wales and Scotland)