The statutory cap

In unfair dismissal claims, the compensatory award is subject to a limit known as the “statutory cap”. The rules governing the calculation of the statutory cap changed for all dismissals on or after 29 July 2013. The statutory cap is now the lower of 52 weeks’ gross pay or £76,574 (2014-15).

The cap applies to the compensatory award only. Applying the statutory cap is the last step in the calculation, after assessing the amount of the loss and taking into account any payments made by the employer and any percentage adjustments required for, for example, contributory fault or failure to comply with the Acas Code.

There is no statutory cap on the compensatory award 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 6: Discrimination).

In reality, the vast majority of claimants achieve awards far below the statutory cap. The median award for unfair dismissal in the twelve months to March 2013 was just £4,832.