When an employee is fired from their job without a valid reason or without following the proper procedures, it is considered unfair dismissal. In such cases, the employee may be entitled to compensation, also known as the unfair dismissal compensatory award. This award is intended to make up for the loss of income and potential financial hardship that the employee may face as a result of their unfair dismissal.
The amount of compensation awarded in an unfair dismissal case can vary depending on a number of factors, including the length of the employee’s service, their age, salary, and the circumstances surrounding their dismissal. The compensatory award is meant to put the employee in the financial position they would have been in had they not been unfairly dismissed.
In the United Kingdom, unfair dismissal claims are handled by the Employment Tribunal. If an employee believes they have been unfairly dismissed, they can lodge a claim with the tribunal within three months of their dismissal. The tribunal will then consider the evidence presented by both the employee and the employer before making a decision on whether the dismissal was unfair and if so, how much compensation is due.
The compensatory award can include a number of different elements, such as the employee’s actual financial losses resulting from the dismissal, including lost wages, bonuses, and benefits. It can also cover future loss of earnings if the employee is unable to find another job immediately. In some cases, the compensatory award may also include an amount for injury to feelings, especially if the dismissal was found to be discriminatory in nature.
In determining the amount of the compensatory award, the Employment Tribunal will take into account the employee’s length of service with the employer, their age, qualifications, skills, and experience, as well as the availability of similar jobs in the job market. The tribunal will also consider any efforts made by the employee to mitigate their loss by finding alternative employment.
It is important to note that there is a cap on the compensatory award that can be awarded in an unfair dismissal case. As of 2021, the maximum compensatory award is £89,493 or 52 weeks’ gross pay, whichever is the lower amount. This cap is subject to annual review by the government, so it is important to stay informed of any changes in the law.
In some cases, the compensatory award may be reduced if the tribunal deems that the employee contributed to their own dismissal, either through their actions or conduct. This is known as contributory fault and can result in a reduction of the compensation awarded to the employee.
It is also worth noting that the compensatory award is separate from any other remedies that may be available to the employee in an unfair dismissal case. For example, the tribunal may also order the employer to reinstate the employee or to pay them additional compensation known as a basic award. The basic award is calculated based on the employee’s age, length of service, and salary, and is subject to a cap of £16,320 as of 2021.
In conclusion, the unfair dismissal compensatory award is a form of financial compensation intended to help employees who have been unfairly dismissed from their jobs. The amount awarded is based on a number of factors and is designed to put the employee in the position they would have been in had they not been unfairly dismissed. While there is a cap on the amount that can be awarded, the compensatory award can provide much-needed financial support to employees facing the hardship of unfair dismissal.