Unfair Dismissal Remedies

Understanding Your Rights and Potential Compensation

At Blackstone Solicitors, we understand that being unfairly dismissed is more than just a legal dispute. It is a significant life event that can impact your financial stability, your mental health, and your future career trajectory. When an Employment Tribunal finds that an employee has been unfairly dismissed, it must then decide what “remedy” is appropriate.

Across England and Wales, the law provides several avenues for redress. These range from getting your old job back to receiving a financial award intended to cover your losses. However, the calculation of these awards is complex and subject to various statutory caps and rules. This guide provides a comprehensive overview of the remedies available under the Employment Rights Act 1996 and how they are applied in practice.

Free Initial Telephone Discussion

For a free initial discussion with a member of our New Enquiries Team, get in touch with us today. We are experienced in dealing with all the legal aspects of Employment Law, and once instructed, we will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help ensure you are on the best possible footing from the start and also avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or click here to make a free enquiry and a member of the team will get back to you.

The Three Primary Remedies

If you succeed in a claim for unfair dismissal, the Tribunal has the power to order one of three main types of remedy. It is important to note that the Tribunal must consider the first two options before moving on to financial compensation, though in reality, financial awards are by far the most common outcome.

1. Reinstatement

Reinstatement is the “primary” remedy in law. This is an order for the employer to treat the employee as if they had never been dismissed. You would return to your original job with no loss of seniority or pension rights, and you would be entitled to back pay for the period between your dismissal and the date you return to work.

2. Re-engagement

Re-engagement occurs when the Tribunal orders the employer (or an associated employer) to provide the employee with a job that is comparable to the one they lost. This is often used when the original role no longer exists or when the relationship with a specific manager has broken down to the point that returning to the exact same spot is impossible.

3. Financial Compensation

This is the most frequent remedy. Compensation is split into two distinct parts: the Basic Award and the Compensatory Award. Together, they aim to provide a fair financial settlement for the wrong committed by the employer.

Why are Reinstatement and Re-engagement Rare?

While the law prioritises getting your job back, it happens in fewer than 1% of successful cases. There are several reasons for this.

First, the Tribunal must consider whether it is “practicable” for the employer to comply. If the business has shrunk or the role has been filled by someone else in good faith, the court may decide it is not feasible.

Second, the Tribunal must consider whether the employee contributed to their own dismissal. If the employee was partially at fault, the court might find that a return to the workplace is not appropriate.

Finally, and perhaps most importantly, the trust and confidence between the parties have usually evaporated by the time a case reaches a hearing. If an employer clearly does not want the employee back, forcing a return can lead to a toxic environment, which the Tribunals generally prefer to avoid.

Calculating the Basic Award

The Basic Award is a statutory payment designed to recognise your length of service. Its calculation is identical to the formula used for statutory redundancy pay.

The amount is based on three factors:

• Your age at the time of dismissal.
• Your length of continuous service (capped at 20 years).
• Your gross weekly pay (subject to a statutory cap that changes every April).

The formula works as follows:

• For each year of service where you were aged 41 or over, you receive 1.5 weeks’ pay.
• For each year of service where you were aged between 22 and 40, you receive 1 week’s pay.
• For each year of service where you were aged under 22, you receive 0.5 weeks’ pay.

If the Tribunal finds that your conduct before the dismissal was such that it would be just and equitable to reduce the award, they have the power to do so, sometimes reducing it to zero.

The Compensatory Award: Covering Your Losses

The Compensatory Award is often the largest part of a claim. Unlike the Basic Award, which is a fixed formula, this award is “discretionary.” Its purpose is to provide the employee with such amount as the Tribunal considers just and equitable, based on the actual financial loss suffered because of the dismissal.

Immediate Loss of Wages

This covers the net (take-home) pay you lost between the date of your dismissal and the date of the Tribunal hearing. It includes not just your salary, but also the value of any lost benefits, such as a company car, private medical insurance, or pension contributions.

Future Loss of Wages

If you have not found a new job by the time of the hearing, the Tribunal will estimate how much longer it will take you to find equivalent employment. This is a speculative exercise. A highly skilled professional in a niche market might be awarded 12 months of future loss, whereas someone in a sector with high demand might only receive a few months.

Loss of Statutory Rights

When you start a new job, you have to work for two years before you gain the right to claim unfair dismissal again. The Tribunal usually awards a small sum (typically between £300 and £500) to compensate you for the fact that you have lost this protection and must “start from scratch” with a new employer.

Statutory Caps and Limits

It is a common misconception that unfair dismissal claims can result in multi-million-pound payouts. In England and Wales, the Compensatory Award is subject to a strict statutory cap.

As of the current 2026 rates, the cap is the lower of:

• A fixed statutory amount (which currently exceeds £115,000).
• One year’s gross salary of the individual who was dismissed.

This “one year’s pay” rule is often a surprise to high earners. If you earn £150,000 a year, your compensatory award for a standard unfair dismissal claim will likely be capped significantly below your actual annual earnings, regardless of how long it takes you to find a new job.

Exceptions to the Cap

The cap does not apply in cases where the dismissal was for:

• Whistleblowing (making a protected disclosure).
• Health and Safety activities.
• Discrimination (though discrimination is usually brought as a separate claim under the Equality Act 2010, which has no upper limit on compensation).

The Duty to Mitigate Loss

A successful claimant cannot simply sit back and wait for a payout. You have a legal duty to “mitigate” your loss. This means you must take reasonable steps to find a new job.

If the employer can prove that you have not been looking for work, or that you turned down a reasonable offer of employment, the Tribunal will reduce your Compensatory Award. At Blackstone Solicitors, we advise all our clients to keep a meticulous “job search diary.” Save every application email, every rejection letter, and every note from an interview. This evidence is vital to proving that you have done everything possible to minimise the financial impact on your employer.

Polkey Reductions and Contributory Fault

Even if you win your case, your award can be slashed due to your own actions or the specific circumstances of the dismissal.

The “Polkey” Deduction

Named after a famous legal case, a Polkey reduction occurs when the Tribunal finds that the dismissal was procedurally unfair, but that the employer would have dismissed you anyway even if they had followed a perfect procedure. For example, if a company failed to hold a meeting but you were caught red-handed stealing, the court might reduce your compensation by 100% because the outcome was inevitable.

Contributory Fault

If the Tribunal decides that your conduct caused or contributed to your dismissal, they can reduce both the Basic and Compensatory awards. This reduction can range from 10% for minor errors to 100% for gross misconduct.

ACAS Uplifts and Reductions

The ACAS Code of Practice on Disciplinary and Grievance Procedures is the gold standard for workplace conduct. If your employer “unreasonably” failed to follow the Code (for example, by refusing you an appeal), the Tribunal can increase your compensation by up to 25%.

Conversely, if you failed to follow the Code (for example, by failing to attend a disciplinary meeting without a good reason), your compensation can be reduced by up to 25%.

Additional Awards: Failure to Provide Written Reasons

If you have at least two years of service, you have a legal right to request a written statement of the reasons for your dismissal. The employer has 14 days to provide this. If they fail to do so, or if the reasons provided are evasive or wrong, a Tribunal can make a separate award of two weeks’ pay.

While this is a smaller sum, it serves as a penalty for employers who fail to be transparent with their staff during the termination process.

The Costs of Litigation and “Vento” Guidelines

It is important to understand that in Employment Tribunals, the general rule is that each party pays their own legal costs. Unlike in the High Court, you do not usually get your legal fees paid by the employer if you win.

If your claim also includes an element of discrimination or harassment, you may be entitled to an award for “Injury to Feelings.” These are calculated using the “Vento bands,” which categorise the severity of the emotional distress. While not strictly part of an “unfair dismissal” remedy, they are frequently awarded alongside it in complex cases.

How Blackstone Solicitors Can Help You

Navigating the landscape of Tribunal remedies requires a strategic and analytical approach. At Blackstone Solicitors, we assist clients across England and Wales in accurately valuing their claims and negotiating robust settlements.

We help you by:

• Calculating your potential award: Providing a realistic estimate of what you can expect to receive, taking into account the statutory caps and potential Polkey reductions.
• Drafting Schedules of Loss: This is a vital document required by the Tribunal that sets out exactly how much money you are claiming and why.
• Negotiating Settlements: Many cases are settled via ACAS or a Settlement Agreement before they ever reach a hearing. We ensure the settlement reflects the true value of your claim.
• Advocating for Reinstatement: If you genuinely want your job back, we can build the legal argument to show the Tribunal why it is practicable and just.

We believe in clear, honest communication. We won’t give you false hope of a massive payout if the law limits your claim. Instead, we provide the clinical legal expertise needed to ensure you get every penny you are entitled to.

Conclusion

The remedies for unfair dismissal are designed to put you back in the position you would have been in had the dismissal not occurred. While the system is not perfect and the caps can be frustrating for high earners, it remains a vital protection for workers across the country.

If you believe you have been unfairly dismissed, timing is everything. You generally have just three months less one day to begin the legal process. Delay can result in your claim being barred forever.

How to Contact Our Employment Law Solicitors

It is important for you to be well informed about the issues and possible implications of Employment Law. However, expert legal support is crucial in terms of ensuring a positive outcome to your case.

To speak to our Employment law solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.

Please visit our website to see all the Employment Law services we offer: https://blackstonesolicitorsltd.co.uk/employment-law-services/

Authored by Ben Posted in Blog, News Tagged as

Comments are closed.