Unfairly Dismissed? The Maximum Payout Just Rose to £123,543 — How to Work Out What You're Owed

If you've been dismissed and believe it was unfair, the maximum you could be awarded through an Employment Tribunal just went up. For dismissals occurring on or after 6 April 2026, the cap on the compensatory award for unfair dismissal rose from £118,223 to £123,543 — or 52 weeks' gross pay, whichever is lower, according to Stephenson Harwood. It's a change that matters far beyond the small number of people who'd ever hit the top of the cap.

What actually changed

Two figures moved together this April. Alongside the main compensatory award cap rising to £123,543, the minimum basic award for certain automatic unfair dismissals — including dismissals connected to trade union activities, acting as a health and safety representative, an employee representative, or a pension scheme trustee — increased from £8,763 to £9,157, per the same source. Both changes apply automatically to dismissals from 6 April 2026 onward; dismissals before that date use the previous limits.

Looking further ahead, the cap is scheduled to be abolished altogether from 1 January 2027, which would align unfair dismissal compensation with the already-uncapped awards available in discrimination and whistleblowing claims. That's a significant structural shift still to come, separate from this April's inflationary uplift.

How unfair dismissal compensation actually works

Compensation for a successful unfair dismissal claim typically has two parts:

• A basic award, calculated similarly to statutory redundancy pay — based on age, length of service and weekly pay (subject to its own statutory cap on a "week's pay" figure, separate from the compensatory cap).
• A compensatory award, intended to cover actual financial loss — lost earnings, lost benefits, and future loss if you haven't found comparable work — capped at the lower of £123,543 or 52 weeks' gross pay.

Most successful claims recover nowhere near the maximum; tribunal data consistently shows median awards well below the cap, because most claimants find new work within months and the award reflects real loss, not a fixed penalty.

Checklist: working out what you might be owed

1. Check your dismissal date. If it was on or after 6 April 2026, the new £123,543 cap and £9,157 minimum basic award apply.
2. Calculate your basic award using your age, continuous length of service (capped at 20 years), and weekly pay (subject to the statutory weekly pay cap, which is updated separately).
3. Total your actual financial losses for the compensatory element — lost salary, lost pension contributions, lost benefits, and reasonable job-search costs.
4. Deduct any income you've earned since dismissal, as tribunals offset new earnings against your loss.
5. Check the tribunal time limit — currently three months from your dismissal date, though this extends to six months for acts occurring on or after 1 October 2026.
6. Get independent advice before filing — Acas early conciliation is a mandatory first step for most claims and is free.
7. Read the official factsheet on gov.uk's Unfair Dismissal Factsheet for the current statutory framework.

How this compares internationally

The UK's capped compensatory award system is relatively employer-friendly compared with some other jurisdictions. In the US, most employment is "at-will" with no general unfair dismissal right at all outside anti-discrimination law, while Australia's Fair Work Commission caps unfair dismissal compensation at six months' pay or a statutory maximum, whichever is lower — a broadly comparable structure to the UK's, per the Fair Work Commission's public guidance.

Key Numbers

• Compensatory award cap (from 6 April 2026): £123,543 (or 52 weeks' gross pay, whichever is lower)
• Minimum basic award (automatic unfair dismissal cases): £9,157
• Cap due to be abolished: 1 January 2027
• Current tribunal time limit: 3 months (extending to 6 months from 1 October 2026)

Sources

• Stephenson Harwood — New compensation limits from 6 April 2026
• gov.uk — Unfair Dismissal Factsheet
• Acas

Educational content only — not financial advice.