What can an employment tribunal claim cost an employer?
It depends on the claim and the outcome. In Great Britain, unfair dismissal compensation is a basic award plus a compensatory award, currently capped for most claims at the lower of £123,543 or 52 weeks' pay. Discrimination compensation has no limit. Each side usually meets its own legal costs, but a tribunal can order costs in some cases. Claimants pay no fee.
Unfair dismissal awards
The basic award counts back up to 20 years of continuous employment: half a week's pay for each year under age 22, one week's pay from 22, and one and a half weeks' pay from 41. A week's pay is capped at £751 where the effective date of termination is on or after 6 April 2026.
The compensatory award is usually based on the employee's financial loss. For most dismissals it is capped at the lower of £123,543 or 52 weeks' pay. There is no cap where the main reason for dismissal was whistleblowing or certain health and safety reasons. Commencement regulations already made remove the cap from 1 January 2027. It will not apply wherever the effective date of termination is on or after that date, even if the employee was dismissed before it.
Other amounts a losing employer may pay
- Discrimination compensation, which has no limit
- Witness expenses, and damages or loss of earnings
- Some Jobseeker's Allowance, Income Support or ESA the claimant received
- Interest, unless the award is paid in full within 14 days
Legal costs and costs orders
GOV.UK says a winning employer will not usually get its costs back. Under the Employment Tribunal Procedure Rules 2024, the tribunal must consider a costs order or a preparation time order where a party or its representative has acted vexatiously, abusively, disruptively or otherwise unreasonably, where a claim, response or reply had no reasonable prospect of success, or where a hearing was postponed on an application made less than 7 days before it. It can order up to £20,000, or more after a detailed assessment (taxation in Scotland), and may consider ability to pay. A tribunal can also order a deposit of up to £1,000 for an argument with little reasonable prospect of success, and can make a wasted costs order against a representative.
Fees and published figures
GOV.UK says there is no fee to make an employment tribunal claim. A GOV.UK factsheet, citing Ministry of Justice data, says 646 unfair dismissal awards were reported in 2023/24, with a median of £6,746. The latest Tribunal Statistics Quarterly says newer data on compensation and costs awarded has been suspended while records from a new case management system are combined.
The law
“one and a half weeks’ pay for a year of employment…”
“52 multiplied by a week’s pay of the person concerned…”
“has acted vexatiously, abusively, disruptively or otherwise unreasonably…”
Sources
- Being taken to an employment tribunal: if you lose the case · GOV.UK
- Being taken to an employment tribunal: at the hearing · GOV.UK
- Make a claim to an employment tribunal: make a claim · GOV.UK
- Factsheet: Unfair Dismissal · GOV.UK
- Tribunal Statistics Quarterly: April to June 2026 · GOV.UK
- The Employment Rights (Increase of Limits) Order 2026, Schedule · legislation.gov.uk
- The Employment Rights Act 2025 (Commencement No. 4 and Transitional and Saving Provisions) Regulations 2026 · legislation.gov.uk
General information for employers in Great Britain, not legal advice. Check the official sources for your situation.
- Compensatory award cap for unfair dismissal removed where the effective date of termination is on or after this date
Future dates are expected dates and depend on Parliament.
What employers can do
- Respond to any claim within 28 days
- Check whether a dismissal's effective date of termination falls on or after 1 January 2027, when the cap no longer applies
- Consider settlement, including through Acas, at each stage
- Pay any award in full within 14 days to avoid interest
- Note that a costs application must be made within 28 days of the final judgment being sent
- Review what led to the claim and update procedures
Employment legal protection insurance can cover legal costs and awards in tribunal claims, alongside HR advice: how HR insurance works.
Related answers
- What happens when an employee makes an employment tribunal claim? In Great Britain, the employee must usually notify Acas first, and Acas offers both sides early conciliation. If that does not resolve things, the employee files a claim, and the employer must respond on form ET3 within 28 days. The tribunal then manages the case, often through a preliminary hearing, before a full hearing and a decision.
- When does the unfair dismissal qualifying period change to six months? The qualifying period for ordinary unfair dismissal claims falls from two years to six months on 1 January 2027. The new rule applies wherever the effective date of termination is on or after 1 January 2027, even if notice was given earlier. The cap on unfair dismissal compensatory awards is removed from the same date.
- Does employers' liability insurance cover employment tribunal claims? Not as a legal requirement. In Great Britain, the law requires employers' liability insurance to cover liability for employees' bodily injury or disease arising from their work. The law does not mention employment tribunal claims such as unfair dismissal, discrimination or unpaid wages, so employers should treat them as a separate risk. What any particular policy includes depends on its terms.