What an employment tribunal actually costs an employer
Two awards, an uplift that can add a quarter, and three costs no judgment ever mentions. From 1 January 2027 the compensatory award loses its cap entirely, which changes the arithmetic of every dismissal decision you make from now on.
An unfair dismissal award has two parts, and from 1 January 2027 the larger one has no ceiling. Section 25(3) of the Employment Rights Act 2025 omits s.124 of the Employment Rights Act 1996 - the provision that capped the compensatory award. A tribunal can then add up to 25% for an unreasonable failure to follow the Acas Code. And none of that includes what the case costs you in fees and time.
The two awards
Calculated like statutory redundancy pay: half a week's pay for each year of service under 22, one week for each year from 22 to 40, and a week and a half for each year from 41, counting back a maximum of 20 years. A week's pay is capped - see our statutory rates page for the current figure - which puts a hard ceiling on this part. It is the part you can work out on paper.
This covers actual financial loss: lost earnings to the hearing, future loss until they realistically find comparable work, lost pension, and loss of statutory rights. Until now it has been capped. From 1 January 2027 the cap is gone, so the ceiling is the claimant's real loss.
What that means practically: for a long-serving, well-paid employee who struggles to find equivalent work, the number can be substantially larger than the old cap allowed. It does not mean awards become unlimited in practice - a tribunal still requires the loss to be proved and mitigated - but the arithmetic of "what is our worst case" has changed.
The uplift that punishes the process, not the decision
Under s.207A TULRCA 1992 a tribunal may increase an award by up to 25% where an employer unreasonably failed to follow a relevant Acas Code - and reduce it by up to 25% where the employee did.
Read that against an uncapped compensatory award and the point sharpens: 25% of an uncapped number is itself uncapped. The cheapest risk reduction available to any employer is not a better lawyer, it is following the procedure - meeting, right to be accompanied, written outcome, appeal. Our grievance guide and disciplinary walk-through set out what that looks like.
What no award figure includes
- Legal fees. Each side normally bears its own costs in the employment tribunal regardless of who wins - costs orders are the exception, not the rule. Winning is not the same as being made whole.
- Management time. Witness statements, disclosure, preparation and hearing days come out of the working week of the people who can least spare it - usually the manager involved and whoever runs HR.
- The settlement you take instead. Most claims settle. The commercial reality is that many employers settle a defensible claim because defending it costs more than settling it, which is a cost the case law never records.
What actually reduces the number
- A fair process, documented at the time. Contemporaneous notes beat reconstructed ones, and the uplift is the only part of the award entirely within your control.
- Decide before six months. From 1 January 2027 ordinary unfair dismissal protection starts at six months' service. A probation decision made comfortably inside that window - notice included - is a different legal position from one made just outside it. See probation under the 2027 rules.
- Watch the effective date of termination. The new rule bites on the date the dismissal takes effect, not the date you decided or the date they were hired. Notice given in December that terminates in January falls under the six-month rule.
- Mitigation evidence. The compensatory award reflects loss the claimant could not reasonably avoid. Evidence about the state of the job market is worth gathering early.
- Early conciliation, taken seriously. Acas early conciliation is mandatory before a claim. It is also the cheapest point at which the matter can end.
The honest summary
There is no average tribunal cost worth quoting, and anyone giving you one is selling something. What you can say with confidence is this: the predictable part is small and capped, the unpredictable part loses its ceiling on 1 January 2027, a quarter can be added for a process failure, and the fees and time land whether you win or lose.
Which is an argument for spending the money before the dismissal rather than after it.
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The uplift is the part you control
CoDash keeps the meeting, the outcome letter, the appeal and the notes on one case timeline with the audit trail intact - so a fair process is evidenced as it happens, not reconstructed from inboxes a year later.