Money & remedies

Compensatory award

Plain-English definitions for England and Wales. General information, not legal advice. Laws and figures change - always check the current position on GOV.UK.

Compensatory award The part of unfair dismissal compensation that reflects your actual financial loss from the dismissal - mainly lost earnings and benefits, and subject to your duty to mitigate. It is normally capped (see statutory cap), though discrimination and whistleblowing awards are not.

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Related terms

Basic award: A fixed element of unfair dismissal compensation calculated like statutory redundancy pay: a number of weeks' pay based on your age and length of service, with the weekly pay figure subject to a statutory cap. It does not depend on your actual financial loss.
Statutory cap (compensation limit): The legal limit on the compensatory award for unfair dismissal: the lower of a fixed annual figure (reviewed each April) or 52 weeks' gross pay. Importantly, there is no cap on compensation for discrimination, whistleblowing, or health-and-safety dismissals.
Polkey reduction: A reduction to the compensatory award to reflect the chance that you would have been dismissed anyway even if a fair process had been followed. It takes its name from the House of Lords decision in Polkey.
Duty to mitigate: The expectation that someone claiming compensation for lost earnings takes reasonable steps to reduce that loss, mainly by looking for comparable new work. If a tribunal finds you did not make reasonable efforts, it can reduce the compensatory award to reflect what you could have earned. It does not require you to take any job at any pay - only to act reasonably.
Schedule of loss: A document setting out the compensation you are claiming and how it is calculated - for example lost earnings, loss of statutory rights, and any injury to feelings. It helps the tribunal and the other side understand the value of the claim.

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Related terms

Basic award

A fixed element of unfair dismissal compensation calculated like statutory redundancy pay: a number of weeks' pay based on your age and length of service, with the weekly pay figure subject to a statutory cap. It does not depend on your actual financial loss.

Statutory cap (compensation limit)

The legal limit on the compensatory award for unfair dismissal: the lower of a fixed annual figure (reviewed each April) or 52 weeks' gross pay. Importantly, there is no cap on compensation for discrimination, whistleblowing, or health-and-safety dismissals.

Polkey reduction

A reduction to the compensatory award to reflect the chance that you would have been dismissed anyway even if a fair process had been followed. It takes its name from the House of Lords decision in Polkey.

Duty to mitigate

The expectation that someone claiming compensation for lost earnings takes reasonable steps to reduce that loss, mainly by looking for comparable new work. If a tribunal finds you did not make reasonable efforts, it can reduce the compensatory award to reflect what you could have earned. It does not require you to take any job at any pay - only to act reasonably.

Schedule of loss

A document setting out the compensation you are claiming and how it is calculated - for example lost earnings, loss of statutory rights, and any injury to feelings. It helps the tribunal and the other side understand the value of the claim.