Compensation awards for unfair dismissal
Where the
tribunal finds that an employee has been unfairly dismissed it will provide the
alternative remedy of an award of compensation. Such an award will usually
consist of:
Basic award
The basic award
is calculated by adding up the following amounts, but only continuous employment
within the last 20 years can count:
-
11/2 weeks' pay for each complete year of
employment when an employee was between the ages of 41 and 65 inclusive;
-
1 week's pay for each complete year of employment
when an employee was between the ages of 22 and 40 inclusive;
-
half a weeks' pay for each complete year of
employment when an employee was below the age of 22.
The maximum
number of week's' pay that may be awarded is 30. There is also a maximum week's
pay that can be used to calculate the award. (The limit on a week's pay may vary
from year to year: the current figure is £290.
From 1 October
2006, where an employee has been dismissed without statutory dismissal and
disciplinary procedures having been followed (if failure to follow them was
wholly or mainly the employer's fault) and the amount of the basic award is less
than four weeks' pay (before any reduction for the last two reasons above), the
tribunal will increase it to four weeks' pay unless it considers that this would
result in injustice to the employer.
Compensatory
award
This award
compensates the employee for the loss suffered as a result of the dismissal
insofar as the employer is responsible for this loss. As well as covering the
loss of earnings between the dismissal and the hearing and an estimate of future
loss, the tribunal will also consider matters such as loss of pension and other
rights and any reasonable expenses incurred by the employee as a result of the
dismissal.
The compensatory
award is an amount the tribunal considers just and equitable in the
circumstances, but there is a maximum compensatory award except in cases where
the reason for the dismissal is that the employee made a protected disclosure
under the Public Interest Disclosure Act 1998 or took action relating to health
and safety. (The maximum compensatory award may vary from year to year: the
current figure is £58,400)
Under the new
provisions, if an employer dismisses an employee without the statutory procedure
having been completed and the failure to complete it was wholly or mainly the
employer's fault, any compensatory award will be increased by at least 10 per
cent and up to 50 per cent. Similarly, if the procedure was not completed and
the fault lay wholly or mainly with the employee, any compensatory award will be
reduced by 10 to 50 per cent.
See our
compensation calculator page and find
out how much you may be entitled to.
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