Employment Rights Act 1996, section 124

Limit of compensatory award etc

Part X Unfair dismissal

(1)The amount of—

(a)any compensation awarded to a person under section 117(1) and (2), or

(b)a compensatory award to a person calculated in accordance with section 123,

shall not exceed [F818the amount specified in subsection (1ZA)F818] .

[F819 (1ZA)The amount specified in this subsection is the lower of—

(a)[F820 £123,543F820] , and

(b)52 multiplied by a week’s pay of the person concerned.F819]

[F821 (1A)Subsection (1) shall not apply to compensation awarded, or a compensatory award made, to a person in a case where he is regarded as unfairly dismissed by virtue of section 100, 103A, 105(3) or 105(6A).F821]

F822 (2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)In the case of compensation awarded to a person under section 117(1) and (2), the limit imposed by this section may be exceeded to the extent necessary to enable the award fully to reflect the amount specified as payable under section 114(2)(a) or section 115(2)(d).

(4)Where—

(a)a compensatory award is an award under paragraph (a) of subsection (3) of section 117, and

(b)an additional award falls to be made under paragraph (b) of that subsection,

the limit imposed by this section on the compensatory award may be exceeded to the extent necessary to enable the aggregate of the compensatory and additional awards fully to reflect the amount specified as payable under section 114(2)(a) or section 115(2)(d).

(5)The limit imposed by this section applies to the amount which the [F823employment tribunalF823] would, apart from this section, award in respect of the subject matter of the complaint after taking into account—

(a)any payment made by the respondent to the complainant in respect of that matter, and

(b)any reduction in the amount of the award required by any enactment or rule of law.

Definitions used in section 124 2

week

“week”—

(a)

in Chapter I of this Part means a week ending with Saturday, and

(b)

otherwise, except in sections 27C, 75F, 75H, 80A, 80B , 80EA , 80EF , 80J and 86 and paragraph 11 of Schedule A1 , means, in relation to an employee whose remuneration is calculated weekly by a week ending with a day other than Saturday, a week ending with that other day and, in relation to any other employee, a week ending with Saturday.

Defined in s.235(1) · see it in the full Act
employment

(5) In this Act “employment”—

(a)in relation to an employee, means (except for the purposes of section 171) employment under a contract of employment, and

(b)in relation to a worker, means employment under his contract;

Defined in s.230(5) · see it in the full Act

(6) This section has effect subject to sections 43K , 47B(3) and 49B(10) ; and for the purposes of Part XIII so far as relating to Part IVA or section 47B, “worker”, “worker’s contract” and, in relation to a worker, “employer”, “employment” and “employed” have the extended meaning given by section 43K.

Defined in s.230(6) · see it in the full Act

Cases considering section 124 15

Johnson (AP) v. Unisys Limited

[2001] UKHL 13 · 22 March 2001Limits

The statutory maximum for a compensatory award was a deliberate policy limit. A general common law claim for unlimited damages would make that limit ineffective (see paras [53]-[58]; [80]).

South Tyneside Healthcare NHS Trust v Awotona

[2005] EWCA Civ 217 · 15 February 2005Interprets

Applies the statutory limit on the compensatory award, subject to subsection (4), which may permit the limit to be exceeded in the specified circumstances (see paras [13]; [20]; [21]). Confirms that the provision sets a monetary limit on the compensatory award for unfair dismissal, subject to the exception in subsection (4) (see para [20]). Interprets the provision as permitting the statutory limit to be exceeded only to the extent necessary for the aggregate compensatory and additional awards fully to reflect the specified amount. It does not alter the ordinary assessment of compensation (see paras [20]; [21]).

National Westminster Bank Plc v Parry

[2004] EWCA Civ 1563 · 1 November 2004Limits

The court applied the statutory cap to the compensatory award, subject only to the exceptions specified by the section. The cap could prevent recovery of otherwise proven loss (see paras [16]; [18]-[19]). The court identified this as a statutory mechanism allowing the cap to be exceeded where necessary to reflect the amount specified under section 114(2)(a) in the circumstances addressed by the provision (see para [9]). This provision permits an excess over the cap only to the extent necessary for the compensatory and additional awards to reflect the section 114(2)(a) amount. It does not generally exclude that amount from the cap (see paras [17]-[19]).

What each judgment says about section 124 is in the case-law panel in the full Act.

Amendments and notes

9 notes from legislation.gov.uk

Amendments

  1. F818Words in s. 124(1) substituted (29.7.2013) by The Unfair Dismissal (Variation of the Limit of Compensatory Award) Order 2013 (S.I. 2013/1949), arts. 1, 2(2) (with art. 4)
  2. F819S. 124(1ZA) inserted (29.7.2013) by The Unfair Dismissal (Variation of the Limit of Compensatory Award) Order 2013 (S.I. 2013/1949), arts. 1, 2(3) (with art. 4)
  3. F820Sum in s. 124(1ZA)(a) substituted (6.4.2026) by The Employment Rights (Increase of Limits) Order 2026 (S.I. 2026/310), art. 1(2), Sch. (with art. 4)
  4. F821S. 124(1A) inserted (25.10.1999) by 1999 c. 26, s. 37(1); S.I. 1999/2830, art. 2(1), Sch. 1 Pt. I
  5. F822S. 124(2) repealed (17.12.1999) by 1999 c. 26, ss. 36(1)(3), 44, Sch. 9(10); S.I. 1999/3374, art. 2(b)(c), Sch.
  6. F823Words in s. 124(5) substituted (1.8.1998) by 1998 c. 8, s. 1(2)(a) (with s. 16(2)); S.I. 1998/1658, art. 2(1), Sch. 1

Modifications

  1. C144Ss. 117-127A applied (with modifications) (2.7.1999) by S.I. 1999/1548, reg. 3
  2. C145S. 124 power to amend conferred (25.4.2013 for specified purposes, 25.6.2013 in so far as not already in force) by Enterprise and Regulatory Reform Act 2013 (c. 24), ss. 15(1)-(9), 103(1)(i), 103(2) (with s. 24(4))
  3. C146S. 124(1) applied (1.11.1998) by 1998 c. 39, s. 24(4)(b); S.I. 1998/2574, art. 2(1), Sch. 1