Basic award
Every successful unfair dismissal claim carries a basic award — a statutory payment calculated from your age, length of service and weekly pay. Understanding the formula, the caps, and the reductions that can apply is the starting point for estimating what you are owed.
Does the basic award apply to all unfair dismissal claims?
Yes. Every successful unfair dismissal claim carries a basic award. It is a statutory entitlement calculated by a fixed formula — age, length of service and weekly pay cap — not a discretionary sum. The tribunal has no power to award nothing for the basic award where the dismissal is found unfair, though it can reduce it in certain circumstances such as where the employee was also at fault.
How is the weekly pay cap applied?
The weekly pay cap applies to a single week's gross pay for the purposes of the basic award calculation. If your actual gross weekly pay is higher than the cap, only the capped figure is used. The cap is reviewed annually each April. From 6 April 2026 it is £751. If your contract specifies hours that vary week to week, a statutory averaging calculation determines your weekly pay figure.
What is the maximum basic award I can receive?
The maximum is 30 weeks' pay at the weekly cap. From 6 April 2026 the cap is £751, giving a maximum basic award of £22,530. To receive the maximum you would need to be aged 41 or over, have at least 20 years of continuous employment, and earn at or above the weekly pay cap. Most employees receive less because they have fewer years of service or earn less than the cap.
Can the basic award be reduced?
Yes. A tribunal can reduce the basic award where the employee's own conduct before dismissal contributed to it, or where the employee unreasonably refused an offer of reinstatement. In redundancy cases, if the employee has already received a statutory redundancy payment for the same dismissal, the basic award is reduced by that amount to avoid double recovery.
Is the basic award different in automatically unfair dismissal cases?
The calculation method is the same, but there are minimum basic award amounts for certain categories of automatically unfair dismissal — for example, dismissal related to trade union activities or health and safety functions. These minimum awards exist to protect employees in those specific circumstances and are uprated each April. The Employment Rights Act 1996 sets out which dismissals attract the minimum.
Is the basic award taxable?
The first £30,000 of an employment termination payment is generally exempt from income tax. The basic award forms part of the overall termination package and sits within that exemption in most straightforward cases. However, tax treatment can be complex where multiple payments are made or where the claim includes elements relating to contractual entitlements. HM Revenue and Customs guidance should be consulted for the claimant's specific circumstances.
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is the first, fixed component of unfair dismissal compensation — calculated exactly like statutory redundancy pay, using your
age, years of service and weekly pay
from 6 April 2026), up to a maximum of
Where this comes from
Employment Rights Act 1996, s.119
— sets out the three-band age formula for calculating the basic award.
Employment Rights Act 1996, s.227
— weekly pay cap, reviewed annually by statutory instrument each April.
Employment Rights (Increase of Limits) Order 2025
— sets the weekly pay cap at £751 and the maximum basic award at £22,530 with effect from 6 April 2026.
gov.uk — Calculate your redundancy pay
— the official calculator (same formula applies to the basic award).
How the basic award is calculated
An unfair dismissal award has two parts. The
is the first and simpler part — a fixed sum worked out by a statutory formula. The
is the second part, covering actual financial loss, and is assessed separately with a different set of rules and caps.
The basic award formula is identical to the one used for statutory redundancy pay. It multiplies three factors: the number of complete years of
continuous employment
(up to a maximum of 20), a
multiplier based on age
figure — capped each April by statutory instrument. From 6 April 2026 the cap is
The age multiplier has three bands, set out in section 119 of the Employment Rights Act 1996:
For each complete year of service worked
s pay. For each complete year worked
: one and a half weeks
pay. Where service spans more than one age band, the relevant portion of service is multiplied at each band
s rate and the results added together.
Only the most recent 20 years of service count in any event. So the maximum possible basic award is 20 years at the highest multiplier (1.5) at the highest weekly pay cap (£751): 20 × 1.5 × £751 =
If your actual weekly pay is below the cap, your real pay is used. If it is above, the cap applies. The cap is the ceiling, not the floor.
How it works in practice
Fatima is 47 years old and has worked for her employer for 12 years. Her gross weekly pay is
— below the £751 cap, so her actual pay is used. She wins her unfair dismissal claim.
Her 12 years of service break down across the age bands as follows. She started at age 35. She worked from age 35 to 40 — 5 years in the 22-to-40 band (multiplier: 1). She worked from age 40 to 47 — 7 years in the 41-and-over band (multiplier: 1.5).
5 years (age 35–40) × 1.0 × £620
7 years (age 40–47) × 1.5 × £620
This is the starting point for the basic award. Had Fatima
s employer been able to show she had unreasonably refused an offer of reinstatement, the tribunal could have reduced this figure. Had she already received a statutory redundancy payment for the same dismissal, it would have been set off against the basic award to avoid double recovery.
Common pitfalls for claimants
- Using the wrong weekly pay figure.
- The weekly pay for the basic award is calculated at the date of the effective date of termination, not at the date of the tribunal hearing. If your pay increased in the months before dismissal, it is your pay at termination that counts. Variable pay (commission, bonuses, irregular hours) uses a statutory averaging calculation.
- Forgetting the 20-year service cap.
- Only the most recent 20 complete years count. Long-service employees should check whether some early years are excluded from the calculation — it can reduce the figure significantly.
- Not accounting for reductions.
- Contributory fault reductions can apply to the basic award as well as the compensatory award. If your conduct contributed to the dismissal — even in an automatically unfair dismissal case — the tribunal can reduce the basic award accordingly.
- Treating the basic award as the whole claim.
- The basic award is usually the smaller component. The compensatory award — covering lost earnings, benefits and pension contributions — is often much larger, subject to a separate cap of the lower of 52 weeks
- pay or £123,543 (from April 2026). Whistleblowing and discrimination claims have no cap on the compensatory award.
- Overlooking the minimum basic award.
- Certain categories of automatically unfair dismissal — including dismissals connected with trade union activities or health and safety functions — attract a statutory minimum basic award, uprated each April. This minimum applies even if the formula calculation would produce a lower figure.
Frequently asked questions
Sources & further reading
- Employment Rights Act 1996, s.119
- — basic award formula (legislation.gov.uk)
- Employment Rights Act 1996, s.227
- — weekly pay cap (legislation.gov.uk)
- Calculate your redundancy pay
- — official calculator, same formula as the basic award (gov.uk)
Estimating what your claim is worth?
Start My Claim walks you through the basic award calculation and helps you build a full schedule of loss — basic award, compensatory award, and any other heads of claim.
Last reviewed: June 2026.
Weekly pay cap (£751) and maximum basic award (£22,530) confirmed against the Employment Rights (Increase of Limits) Order 2025 with effect from 6 April 2026.
This page is explanatory only and is not legal advice. Start My Claim is self-service software, not a law firm — its tools help you build and run your own case.