Until the new Employment Rights Act took effect the compensatory award for unfair dismissal had a statutory limit or cap, effectively the lower of a year’s gross pay or £123,000. So for many years Employers and Employees knew there was a limit to a claim.
Now the new Act – the Employment Rights Act 2025, has changed that by removing the limit for all unfair dismissals. So Tribunals will now look at a wide range of factors to decide what the actual loss is – the full projected loss of salary, pension, benefits, and the possibility that say an older worker may never work again up to retirement age, which could be 10 years of loss if the employee is 50 years old, so at least 10 years’ gross salary.
A tribunal will probably not make the full potential award, but even so the magnitude of a compensation award could be many times a year’s gross salary.