When an employee is wrongfully terminated from their job, they may be entitled to receive compensation for the unfair dismissal. This compensation is known as the unfair dismissal compensatory award. In this article, we will take a closer look at what the compensatory award entails and how it is calculated.
The compensatory award is designed to provide financial compensation to an employee who has been unfairly dismissed by their employer. This can occur for a variety of reasons, such as discrimination, whistleblowing, or dismissal without proper procedure. In order to qualify for the compensatory award, the employee must have been employed for at least two years with the same employer, unless the dismissal was due to an automatically unfair reason, such as discrimination.
The first step in calculating the compensatory award is to determine the basic award. This is based on the employee’s age, length of service, and weekly pay, up to a maximum of £16,320 (as of April 2021). The basic award is calculated using a formula set out in legislation and provides a set amount of compensation based on these factors.
In addition to the basic award, the compensatory award also takes into account the employee’s loss of earnings as a result of the unfair dismissal. This can include any wages that the employee would have earned during their notice period, as well as any future earnings that they have lost due to being unfairly dismissed. The compensatory award aims to put the employee back in the position they would have been in had they not been dismissed.
Other factors that may be considered when calculating the compensatory award include any loss of benefits, pension contributions, and statutory redundancy pay that the employee may have missed out on as a result of the unfair dismissal. In some cases, the compensatory award may also include an amount for injury to feelings or loss of reputation, particularly if the dismissal was due to discrimination or harassment.
The compensatory award is determined by an employment tribunal, which will take into account all relevant factors when calculating the amount of compensation to be awarded to the employee. The tribunal has the discretion to adjust the amount of the award based on the specific circumstances of the case, so the final amount may vary from case to case.
It is important for employees who believe they have been unfairly dismissed to seek legal advice and consider bringing a claim for unfair dismissal. There are strict time limits for making a claim to an employment tribunal, so it is crucial to act quickly in order to protect your rights and seek the compensation you may be entitled to.
Employers also have an obligation to follow fair procedures when dismissing an employee, in order to avoid the risk of being required to pay a compensatory award. By following proper procedures and treating employees fairly and respectfully, employers can reduce the likelihood of facing claims for unfair dismissal and the associated financial costs.
In conclusion, the unfair dismissal compensatory award is an important form of compensation designed to provide financial redress to employees who have been wrongfully dismissed from their jobs. By understanding how the compensatory award is calculated and seeking legal advice when necessary, employees can protect their rights and seek the compensation they may be entitled to. Employers should also be mindful of their obligations to treat employees fairly and follow proper procedures when dismissing staff, in order to avoid the risk of facing claims for unfair dismissal.