Understanding The Compensatory Award For Unfair Dismissal

compensatory award for unfair dismissal

Losing a job can be a devastating experience, especially when it is due to reasons that are perceived as unjust or unfair. In cases of unfair dismissal, employees have the right to seek compensation in the form of a compensatory award. This award is intended to provide financial recompense for the loss of income and other possible damages resulting from the unfair termination of employment.

Unfair dismissal occurs when an employer terminates an employee’s contract of employment in a manner that is considered to be arbitrary, discriminatory, or in violation of the law. Examples of unfair dismissal include being fired for reasons related to race, gender, age, disability, pregnancy, or exercising legal rights such as requesting maternity leave or whistleblowing.

The compensatory award serves as a form of redress for the employee who has been wrongfully dismissed. It aims to put the individual back in the financial position they would have been in had the dismissal not occurred. The amount of the award is typically calculated based on factors such as the employee’s age, length of service, salary, and the circumstances surrounding the dismissal.

When determining the amount of the compensatory award, the employment tribunal will take into account various factors such as the employee’s loss of earnings, future loss of earnings, any benefits lost as a result of the dismissal, and any non-financial losses suffered, such as damage to reputation or emotional distress.

In cases of unfair dismissal, the compensatory award can range from a few thousand to tens of thousands of pounds, depending on the specifics of the case. However, there are two important limitations to keep in mind when it comes to the compensatory award:

1. The compensatory award is subject to a statutory cap. As of April 2021, the maximum compensatory award for unfair dismissal is £89,493, or 52 weeks’ gross pay – whichever is lower. This cap is in place to prevent excessively high payouts and to provide a degree of certainty for both employees and employers.

2. The compensatory award can be reduced if the tribunal finds that the employee contributed to their dismissal in some way. This is known as contributory fault, and it can result in a percentage reduction of the compensatory award based on the employee’s degree of responsibility for the dismissal.

It is important to note that unfair dismissal claims must be brought to an employment tribunal within three months of the date of dismissal. Failure to do so may result in the claim being rejected, so it is crucial for employees to act quickly if they believe they have been unfairly dismissed.

Employers who are found to have unfairly dismissed an employee may also be ordered to pay additional compensation in the form of a basic award. The basic award is calculated based on the employee’s age, length of service, and weekly pay, and it is subject to a statutory cap. As of April 2021, the maximum basic award for unfair dismissal is £16,320.

In addition to financial compensation, the employment tribunal may also order the employer to reinstate the employee or provide them with a new job on equivalent terms. This remedy is rare, as it requires a high level of cooperation between the parties involved, but it can be a powerful way to right the wrongs of unfair dismissal.

Overall, the compensatory award for unfair dismissal plays a crucial role in protecting the rights of employees and holding employers accountable for their actions. By providing financial compensation and other remedies, the award seeks to ensure that employees are treated fairly and justly in the workplace.

If you believe you have been unfairly dismissed from your job, it is important to seek legal advice as soon as possible to understand your rights and options for seeking compensation. Remember that you only have a limited amount of time to bring a claim, so act swiftly to protect your interests.