Unfair dismissal is a legally prohibited act by an employer, where an employee is terminated from their job without a valid reason or in breach of their employment contract When an employee feels that they have been unfairly dismissed, they have the right to file a claim for unfair dismissal If successful, one of the repercussions that an employer may face is having to pay a compensatory award to the unfairly dismissed employee.
The compensatory award is a form of financial compensation awarded to an unfairly dismissed employee as a way to make up for the losses they have incurred due to their unfair dismissal This award aims to place the employee in the position they would have been in had they not been unfairly dismissed The amount of the compensatory award varies depending on the circumstances of the dismissal and the losses suffered by the employee.
There are two main components that make up the compensatory award for unfair dismissal: the basic award and the compensatory award.
The basic award is calculated based on the employee’s age, length of service, and weekly pay, subject to a maximum statutory limit The basic award is designed to compensate the employee for their time spent with the company and reflects the financial loss of being unfairly dismissed.
The compensatory award, on the other hand, is designed to compensate the employee for the actual losses they have suffered as a result of the unfair dismissal This can include lost wages, benefits, and any other financial losses incurred by the employee The compensatory award also takes into account the efforts made by the employee to mitigate their losses by finding alternative employment.
In determining the amount of the compensatory award, employment tribunals consider various factors such as the employee’s age, length of service, salary, prospects of finding alternative employment, and the circumstances of the dismissal The goal is to ensure that the employee is adequately compensated for the unfair treatment they have endured.
It is important to note that there is a statutory cap on the compensatory award for unfair dismissal compensatory award unfair dismissal. As of 2021, the maximum compensatory award is £89,493, or 52 weeks’ gross pay (whichever is lower) This means that even if the losses incurred by the unfairly dismissed employee exceed this amount, they will only receive a maximum of £89,493 as compensation.
Employment tribunals have the discretion to adjust the compensatory award based on the circumstances of the case For example, if the employee contributed to their dismissal or failed to mitigate their losses, the compensatory award may be reduced On the other hand, if the employer’s actions were particularly egregious or the employee has suffered significant losses, the compensatory award may be increased.
In some cases, employment tribunals may also order the reinstatement or re-engagement of the unfairly dismissed employee instead of awarding a compensatory award Reinstatement involves placing the employee back in their original position as if they had never been dismissed, while re-engagement involves placing the employee in a different position within the company However, reinstatement and re-engagement are rare outcomes as they require both parties to agree to the terms.
In conclusion, the compensatory award for unfair dismissal is a financial compensation awarded to an employee who has been unfairly dismissed from their job The award aims to make up for the losses incurred by the employee as a result of their unfair dismissal and place them in the position they would have been in had they not been unfairly dismissed While the amount of the compensatory award is subject to a statutory limit, employment tribunals have the discretion to adjust the award based on the circumstances of the case.