When an employee is unfairly dismissed from their job, it can have serious consequences for their livelihood and well-being. In such cases, the law provides for compensatory awards to help affected employees recover from the unfair dismissal. The compensatory award is intended to compensate the employee for any loss suffered as a result of the unfair dismissal, such as loss of wages, benefits, and emotional distress. In this article, we will explore the concept of unfair dismissal compensatory awards and how they are calculated.
Unfair dismissal occurs when an employer terminates an employee’s contract of employment in a manner that is considered to be harsh, unjust, or unreasonable. Examples of unfair dismissal include dismissing an employee for discriminatory reasons, without following proper procedures, or without a valid reason. When an employee believes they have been unfairly dismissed, they can file a claim with an employment tribunal to seek redress.
If an employment tribunal finds that an employee has been unfairly dismissed, they may award compensation to the affected employee in the form of a compensatory award. The purpose of the compensatory award is to put the employee in the position they would have been in if they had not been unfairly dismissed. The award is calculated based on the financial loss suffered by the employee as a result of the unfair dismissal.
There are two components to the compensatory award: 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 statutory cap. The compensatory award, on the other hand, is intended to compensate the employee for any financial loss suffered as a result of the unfair dismissal, such as loss of wages, benefits, and pension contributions.
Calculating the compensatory award can be a complex process, as it involves taking into account a variety of factors, such as the employee’s age, length of service, future earning capacity, and the availability of similar employment. The employment tribunal will also consider whether the employee contributed to their dismissal in any way, and may reduce the compensatory award accordingly.
In determining the compensatory award, the employment tribunal will also consider any mitigating factors, such as whether the employee has made efforts to mitigate their loss by seeking alternative employment. If the employee has not made reasonable efforts to find alternative employment, the compensatory award may be reduced accordingly.
It is important to note that there is a statutory cap on the compensatory award, which is currently set at £89,493 (as of April 2021). This means that, regardless of the employee’s actual financial loss, the compensatory award cannot exceed this cap. However, in exceptional cases, the tribunal may award more than the statutory cap if it is deemed necessary to provide full compensation to the employee.
In addition to the compensatory award, the employment tribunal may also award the employee a basic award, which is calculated based on the employee’s age, length of service, and weekly pay, subject to a statutory cap. The basic award is intended to compensate the employee for their loss of statutory rights, such as the right to notice and consultation in the event of dismissal.
In conclusion, unfair dismissal compensatory awards are an important form of redress for employees who have been unfairly dismissed from their jobs. The awards are intended to compensate the employee for any financial loss suffered as a result of the unfair dismissal, and are calculated based on a variety of factors, such as the employee’s age, length of service, and future earning capacity. While there is a statutory cap on the compensatory award, the employment tribunal has discretion to award more than the cap in exceptional cases. Understanding how compensatory awards are calculated can help employees navigate the process of seeking redress for unfair dismissal and ensure they receive fair compensation for their loss.
By: John Doe