Increases to Employment Tribunal compensation caps and Vento bands for 2026/2027
Compensation Caps
From 6 April 2026, new compensation caps have come into force for awards made in the employment tribunal for unfair dismissal.
Compensatory Award
The statutory cap for the compensatory award for unfair dismissal has been increased to £123,543 from £118,223. This award remains subject to the rule that the compensatory award is limited to the lower of either 52 weeks’ gross pay or the statutory cap.
From 1 January 2027, the Employment Rights Act 2025 will remove this cap entirely. This means that employment tribunals will be able to award Claimants the full value of their compensation for loss of earnings.
Basic Award
The statutory cap on the basic award for unfair dismissal has increased to £9,157, up from £8,763.
A Week’s Pay
The cap on a week’s pay, which is used for calculations relating to unfair dismissals and statutory redundancy payments, has been increased to £751 from £719. This cap increase means that the maximum basic award for unfair dismissals and statutory redundancy payments has seen an increase to £22,530.
Vento Bands
The Vento guidelines were introduced following the case of Vento v Chief Constable of West Yorkshire Police (2002). The Vento bands are relevant to claims under the Equality Act 2010, and the employment tribunals use them to assess and determine awards for injury to feelings in discrimination and whistleblowing detriment claims.
As with the compensation cap increases, the Vento bands have increased from 6 April 2026, as follows, to ensure that they align with inflation:
- the lower Vento band for less serious claims has increased to £1,300 to £12,600 (previously £1,200 to £12,100)
- the middle Vento band for claims that do not merit the upper band but are more serious than the lower band has increased to £12,600 to £37,700 (previously £12,100 to £36,400)
- the upper Vento band for the most serious claims has increased to £37,700 to £62,900 (previously £36,400 to £60,700). The employment tribunal can also make awards over the £62,900 limit in exceptional cases.
Impacts of Cap and Band Increases
The compensation cap increases will impact unfair dismissal claims in which the effective date of termination is on or after 6 April 2026. The increases will mean that employers should expect to experience more significant financial exposure in claims, reflecting an inflationary increase. Further, in view of the forthcoming removal of the compensatory awards cap on unfair dismissals, employees with higher salaries and who experience a loss in their long-term career could receive awards that significantly exceed the current limits and employers should therefore provision accordingly.
In relation to the increase to the Vento bands, employers will be well-served by taking steps in order to minimise discrimination arising in the workplace which could lead to successful claims and resulting in compensation for injury to feelings. Employers can reduce issues in the workplace or ensure that they do not develop by creating and enforcing robust policies, procedures and training.