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Unfair dismissal compensation

When Tribunals award compensation for unfair dismissal there are two main awards - the basic award and the compensatory award.

The basic award

This is calculated on the length of time worked and the age of the employee when employed:

For years of service between the ages of 18 to 21 - Half a week’s pay for each complete year worked.

For years of service between the ages of 22 to 40 - One week’s pay for each complete year worked.

For years of service aged 41 to 65 - One and a half weeks’ pay for each complete year worked.

A week’s pay for these calculations is capped by statute. The maximum is £464 in respect of dismissals on or after 6 April 2014.

The compensatory award

This award is designed to compensate the employee for the financial loss incurred as a result of the unfair dismissal. This is normally made up of lost salary and other benefits such as pension. The Tribunal will assess the loss up to the date of the hearing and may also make an award for estimated future losses where the employee has not found a new job by the hearing date or has found a new job but on lower pay. Compensation will be reduced where the employee has not taken adequate steps to find a new job. It can also be reduced for other reasons such as where the Tribunal thinks that the employee’s own actions have contributed to the dismissal.

The maximum compensatory award is the lower of £76,574 and a sum equal to 52 weeks' pay in respect of dismissals on or after 6 April 2014. For dismissals before 6 April 2014, replace the figure of £76,574 with £74,200.

Compensation for discrimination

Where a Tribunal finds that there has been unlawful discrimination, compensation can include an award for injury to feelings as well as the recovery of financial losses. The size of the award will depend on how seriously the Tribunal views the discrimination and the effect that it has had on the individual. There are different bands for awards for injury to feelings which have been set by case law. Compensation in discrimination cases can also if appropriate include an award of damages for personal injury. The limit on compensation which a Tribunal can award in unfair dismissal cases does not apply to discrimination cases.

Unfair Dismissal

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