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.

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

: half a week’s pay. For each complete year worked

: one week’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.

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.

Using the wrong weekly pay figure.

Forgetting the 20-year service cap.

Not accounting for reductions.

Treating the basic award as the whole claim.

Overlooking the minimum basic award.

The second part of the unfair dismissal award — assessed on actual loss, not a fixed formula.

Continuous employment

The qualifying period that determines how many years count in the basic award calculation.

Applies to the compensatory award, not the basic award — an important distinction when estimating total recovery.

Applies to the compensatory award, not the basic award — up to 25% for procedural failures.

Can reduce both the basic and the compensatory award where the employee's own conduct contributed to the dismissal.

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)

Basic award: statutory part of unfair dismissal compensation

Basic award explained: the formula using age, service and the weekly pay cap, the maximum of £22,530 from April 2026, and how reductions work.

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