The amount of compensation awarded following a tribunal/arbitration process will depend on the nature and outcome of the case.
The limits on certain awards and payments are varied annually according to the Retail Price Index.
Tribunal/Arbitration awards can be increased or decreased if the employer or employee unreasonably failed to follow appropriate disciplinary or grievance procedures.
An award can also be decreased where the claimant is found to have contributed to their dismissal by their actions. This is known as contributory conduct and can result in awards being reduced by up to 100 per cent.
The arbitrator will apply the same rules as the tribunal when calculating awards.
See a table of current tribunal and arbitration compensation limits.
Adjustments to tribunal awards
A tribunal/arbitrator may increase any award made to an employee in respect of unfair dismissal by between 10 and 50 per cent if you unreasonably failed to comply with the statutory disciplinary procedures referred to within the Labour Relations Agency (LRA) Code of Practice on Disciplinary and Grievance procedures. In such cases the tribunal/arbitrator can also reduce the award by between 10 and 50 per cent if the employee unreasonably fails to comply with the statutory procedures.
A tribunal/arbitrator may vary any award made to an employee in respect of workplace grievances by a percentage of up to, or down by, 50 per cent where there has been an unreasonable failure by either party to observe the good practices set out in the LRA Code of Practice on disciplinary and grievance procedures.
Interest on tribunal awards - Industrial/Fair Employment Tribunal
If you do not pay an award within 42 days of the date when the tribunal's decision is sent to the parties, you will start paying interest only on the amount of award outstanding.
In cases of unlawful discrimination judgments, interest accrues from the day the decision is sent to the parties. However, no interest is charged if you pay the award in full within 14 days.
Interest on tribunal awards - Arbitration
If you do not pay an award within 42 days of the date when the arbitrator’s decision is sent to the parties, you will start paying interest only on the amount of award outstanding.
Amounts recouped by the Social Security Agency (SSA) are not included in the calculation of interest - see recouping state benefits from employment-related tribunal awards.
Failure to pay tribunal awards
If you are an employer and you fail to pay an Industrial Tribunal/Fair Employment Tribunal or Arbitrator's award made against you, enforcement action can be taken through the Enforcement of Judgments Office (EJO).
Any enforcement action will result in additional costs being incurred and these will be added to the outstanding amount due. You will have to pay these costs as well as the original award. The claimant may also be able to charge interest on the amount owed. Enforcement action through the EJO may also impact adversely on your credit rating.
Deductions for income tax and National Insurance
Where the employment relationship has already ceased, you do not normally have to deduct income tax and National Insurance contributions (NICs) from tribunal/arbitrator awards (these awards are generally based on net pay).
- an award is over £30,000, income tax may be payable
- a tribunal orders reinstatement or re-engagement, you must deduct income tax and NICs from the pay for the period between the date of dismissal and the date of reinstatement or re-engagement
To find out more about your tax and NICs obligations, contact the HMRC Employer Helpline on Tel 0300 200 3200.