Unfair dismissal compensation cap is removed

Implementation date: 1 January 2027

The Employment Rights Act 2025 removes the limit on the compensatory award in unfair dismissal claims.

The current maximum compensatory award for unfair dismissal is £118,223 (from 6 April 2025), or 52 times the claimant's weekly pay if this is lower than £118,223.

The Government has stated in its factsheet on the implementation of unfair dismissal measures in the Employment Rights Act 2025 that it intends the removal of the unfair dismissal compensation cap to take effect on 1 January 2027.

This change is introduced alongside the reduction in the unfair dismissal qualifying period from two years to six months.