ACAS Settlement Calculator and Employment Tribunal Award Guide

Understanding Unfair Dismissal Awards

In ordinary unfair dismissal claims, the tribunal typically considers two components: the basic award and the compensatory award. The basic award is statutory and formula-based. It is the easiest part to model at the start, which is why it is often the first figure exchanged during ACAS Early Conciliation. The compensatory award is more complex because it depends on actual financial loss and whether that loss was reasonably avoidable.

The core formula for the basic award is: weekly pay × years of service × multiplier. In practice, there are legal rules around which years count and which multiplier applies by age band. If you are doing an early, high-level valuation before all personal and payroll records are available, using a range from multiplier 0.5 to 1.5 provides a practical first bracket. This page uses that range and applies the requested statutory-style limits: weekly pay cap at £643 and basic award cap at £21,798.

Years of service are usually counted as completed years to the effective date of termination, and in statutory-style models long service does not create unlimited basic award growth because caps and maximum service rules apply. That means high earners and very long-serving employees can still hit a ceiling quickly. If your salary is above the weekly cap when converted to weekly pay, the basic award is calculated on the capped weekly figure, not your full weekly earnings.

The compensatory award is meant to reflect actual loss flowing from unfair dismissal, not to punish the employer. Loss categories can include immediate loss of earnings, future loss, loss of contractual benefits, pension impact, and reasonable expenses arising from dismissal. But tribunals also assess mitigation. If a claimant could reasonably have reduced loss by seeking work sooner, accepting comparable employment, or pursuing realistic opportunities, the award can be reduced.

Other legal reductions can apply. For example, a tribunal may reduce compensation for contributory conduct if the employee's own behaviour contributed to dismissal circumstances. A Polkey reduction may also apply where dismissal procedure was unfair but the employee would likely have been dismissed lawfully in any event. These issues mean that even a claim with obvious procedural flaws does not automatically produce a full cap award.

Compensatory Award Cap And Real-World Valuation

For ordinary unfair dismissal, this page uses a compensatory award cap of £115,115. That figure is a legal ceiling, not a default payout. Many cases settle below it because actual proven loss is lower, re-employment happens quickly, or liability risks exist on both sides. Employers and claimants usually move toward a number that reflects expected tribunal value after litigation costs, management time, reputational concerns, and uncertainty are considered.

A practical way to value the compensatory element is to estimate a timeline of loss. Start with net or gross loss framework agreed for your context, then map months out of work, benefits lost, pension loss, and any reduction from replacement earnings. If someone finds equivalent work quickly, compensatory value falls. If there is prolonged unemployment or lower-paid replacement work, value rises. Tribunal litigation risk then discounts both positions because neither side controls witnesses, disclosure surprises, or judicial findings.

The ACAS stage is often where parties first test this risk-adjusted value. A claimant may open at a high multiple to account for uncertainty and distress. An employer may open low to reflect liability defences and mitigation arguments. Settlements frequently converge once both sides exchange core documents such as disciplinary records, grievance outcomes, contract terms, payroll evidence, and correspondence relevant to dismissal fairness.

In many ordinary workplace disputes without discrimination or whistleblowing dimensions, negotiation references around one to three months salary are common as a shorthand starting point, especially where both sides want speed and confidentiality. However, that shorthand can be too low or too high depending on service length, job market conditions, and litigation strength. Use it as a commercial benchmark, not as a legal rule.

If you are preparing for formal tribunal proceedings, the valuation should be refreshed at each milestone: after response filing, after disclosure, after witness statements, and before final hearing. Case value can change materially when documentary evidence is tested. Strong paper trails can increase settlement confidence; weak or inconsistent records can drive a deeper discount.

Discrimination Claims: Uncapped Compensation And Vento Bands

Discrimination cases differ from ordinary unfair dismissal because compensation is generally uncapped. A tribunal can award financial loss, injury to feelings, and in appropriate cases personal injury or aggravated damages. Because these heads can overlap over time, and because discrimination may continue during employment and after termination, values can exceed what parties expect if the evidence is compelling.

Injury to feelings awards are often discussed by reference to Vento-style banding. For this calculator page, the broad practical range requested is £1,000 to £55,000. Lower-range cases may involve one-off or less serious incidents. Mid-range cases often involve repeated conduct or meaningful emotional impact over time. Upper-range cases usually involve prolonged, serious, humiliating, or career-damaging treatment. Exceptional cases can exceed broad bands where justified by facts and evidence.

Financial loss in discrimination claims can include past and future earnings, pension, bonus loss, and ongoing disadvantage in the labour market. A claimant who can evidence continuing career impact may advance substantial future loss arguments. Employers typically challenge causation, saying losses were not caused by discrimination or would have occurred anyway. The outcome depends heavily on factual findings and credibility at hearing.

Where both unfair dismissal and discrimination allegations are pleaded, the discrimination component often drives negotiation leverage because it removes a fixed cap framework. Even where liability is disputed, the litigation risk of an uncapped claim may encourage earlier resolution. That is why careful chronology, witness preparation, and document preservation are central from the first ACAS contact onward.

PILON And Notice Pay Calculations

PILON (payment in lieu of notice) is money paid when employment ends immediately and the employee does not work notice. Notice pay can refer either to salary paid during worked notice or money owed where notice is not worked. The contractual terms matter. Some contracts include an express PILON clause. Where that clause exists, employers can usually terminate immediately and pay the notice sum, often subject to tax treatment and benefit wording in the contract.

If there is no clear PILON clause, employers still often settle notice liabilities commercially, but legal analysis can become more technical, including breach arguments and the treatment of benefits and bonuses during notice. In practice, many settlement negotiations include a specific line item for notice or PILON because it is comparatively easy to quantify from salary and contractual notice weeks.

The calculator above estimates notice/PILON as weekly salary multiplied by notice weeks. That gives a quick benchmark for discussion. Real contracts may include additional entitlements such as commission, car allowance, private medical cover, or pension contributions during notice. Those items can materially increase the amount that should be considered in settlement drafting.

When drafting or reviewing agreement terms, check whether notice pay is identified as taxable earnings and whether any part of the termination sum is intended to be paid under a different tax treatment. Tax wording should align with payroll implementation to avoid later disputes or unexpected liabilities. If the agreement includes restrictive covenants, confidentiality, or return-of-property obligations, those should be read with equal care because they can affect post-termination options.

Settlement Negotiations Through ACAS

ACAS Early Conciliation is usually the gateway before an Employment Tribunal claim proceeds. The conciliator is neutral and does not decide liability. Their role is to help parties explore settlement, shuttle offers, and identify whether a practical deal is possible. Most productive negotiations start with a clear figure framework: statutory components, factual risk adjustments, and non-financial terms such as reference wording and confidentiality.

A realistic negotiation timeline often unfolds in stages. First, each side tests position with high-level numbers. Second, the parties exchange key facts and documents. Third, they narrow differences around liability, mitigation, and future risk. A typical commercial landing zone in many straightforward disputes is around one to three months salary, but stronger claims, longer unemployment, discrimination allegations, or reputational issues can push outcomes above that range. Weak evidence or strong employer process evidence can push outcomes below.

Timing matters. Some cases settle during ACAS before tribunal filing. Others settle after claim and response are exchanged when both sides better understand legal strengths and evidential gaps. If negotiations continue while proceedings are active, deadlines still apply. Missing procedural deadlines can weaken bargaining power, so claims management and negotiation strategy should run in parallel.

Non-financial terms can be as important as money. Agreed references, announcement wording, confidentiality scope, non-derogatory clauses, and payment timing often decide whether a proposal is acceptable. A modest increase in headline value may not offset poor drafting on tax indemnity or restrictive covenants. Equally, a clear, neutral reference can be worth substantial practical value for re-employment.

Compromise Agreement / Settlement Agreement Requirements

Many people still use the older phrase "compromise agreement," but in current UK practice it is called a settlement agreement. To be binding for waiver of statutory employment claims, the employee must receive advice from an independent legal adviser. This is not optional drafting etiquette; it is a core enforceability condition. Without proper advice requirements being met, waiver clauses may not be effective.

The adviser usually confirms the legal effect of the agreement, the claims being waived, and the employee's understanding of restrictions and tax clauses. Employers commonly contribute a fixed amount toward legal fees so the agreement can be signed quickly and with lower challenge risk. Contributions vary by complexity. Straightforward exits may involve smaller contributions; complex disputes with multiple claims and schedules may require more legal time.

Before signature, both sides should verify core schedules: payment breakdown, timing, tax treatment, agreed reference text, confidentiality boundaries, return of property, post-termination restrictions, and warranties. Settlement value can be undermined if payment timing is vague or if drafting leaves ambiguity around notice, bonus, or accrued holiday. Strong drafting reduces the chance of post-settlement disputes and protects finality.

ACAS Code Impact On Compensation

The ACAS Code of Practice on disciplinary and grievance procedures can materially affect compensation in relevant tribunal cases. Where a party unreasonably fails to follow the Code, tribunals may adjust compensation by up to 25% depending on seriousness and impact. This can operate as an uplift or a reduction. It is not automatic in every case and usually requires factual examination of what was done, what should have been done, and whether failures were unreasonable.

For employees, documented use of internal grievance and appeal channels can strengthen credibility and support arguments that process failures were significant. For employers, consistent adherence to fair procedure, documented reasons, and proportionate investigation steps can reduce both liability risk and compensation exposure. Process quality is frequently decisive where underlying conduct facts are disputed.

In negotiations, ACAS Code arguments are often priced as risk-adjusters rather than fixed sums. If one side has clear procedural weaknesses, settlement proposals may include an uplift premium to avoid hearing uncertainty. Conversely, where the record shows robust process compliance, respondents may discount claimant demands. Either way, Code compliance should be assessed early and revisited after disclosure.

Evidence Checklist Before You Settle

Before accepting or rejecting a settlement number, gather documents that directly affect value. That includes contract terms, payslips, bonus records, correspondence on dismissal or redundancy process, grievance and appeal documents, meeting notes, and job search evidence. Missing documents increase uncertainty and can cause either under-settlement or overconfidence.

For claimants, keep a structured loss schedule: monthly income lost, benefits lost, job applications, interview outcomes, and replacement earnings if any. For employers, assemble a coherent timeline of decision-making with policy compliance records. Settlement leverage usually improves for whichever side can present a cleaner, more consistent documentary story.

Also identify what outcome you need beyond money. A strong reference, short payment timeline, mutual non-derogatory wording, or confidentiality limits may matter more than a marginal increase in headline amount. If you sign a settlement agreement, ensure all operational points are captured in writing and check tax language carefully.

Important: this page is an educational calculator and guide. It does not provide legal advice and should not be used as a substitute for tailored advice from a qualified UK employment law professional.