The statutory cap
[ch 10: page 408]In unfair dismissal claims, the compensatory award is subject to a limit known as the “statutory cap”. This is the lower of 52 weeks’ gross pay or £89,493 (from April 2021). A week’s pay includes contractual pension contributions paid by the employer into a pension scheme (University of Sunderland v Drossou [2017] UKEAT/0341/RN).
The cap applies to the compensatory award only. Applying the statutory cap is the last step in the calculation, after calculating the loss and taking into account any payments by the employer and any percentage adjustments due, for example, to contributory fault or breach of the Acas Code.
There is no statutory cap in cases of dismissal for health and safety reasons, or for whistleblowing. There is no statutory cap on the compensation for a discriminatory dismissal in breach of the Equality Act 2010, although claimants cannot recover twice for the same loss (see Chapter 7: Discrimination).
The vast majority of compensation awards for unfair dismissal are far below the statutory cap.