When an employee is unfairly dismissed from their job, the law provides a remedy in the form of a compensatory award. This award is designed to compensate the employee for any loss suffered as a result of their unfair dismissal. In this article, we will take a closer look at what a compensatory award for unfair dismissal entails and how it is calculated.
Unfair dismissal occurs when an employee is dismissed from their job in a way that is not in line with the law. This could be due to factors such as discrimination, whistleblowing, or retaliation for asserting their legal rights. In such cases, the employee has the right to bring a claim for unfair dismissal before an employment tribunal.
If the tribunal finds in favor of the employee and determines that the dismissal was indeed unfair, they may award the employee financial compensation in the form of a compensatory award. This award is intended to make up for any financial loss that the employee has suffered as a result of their dismissal.
There are two main components to 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. It is subject to a maximum limit, which is adjusted annually. The basic award is designed to compensate the employee for the loss of their job and is calculated based on a formula set out in the Employment Rights Act 1996.
The compensatory award, on the other hand, is intended to compensate the employee for any financial losses they have suffered as a result of their unfair dismissal. This could include loss of earnings, loss of benefits, and any other financial hardship that the employee has faced as a result of losing their job.
Calculating the compensatory award can be a complex process and may require the input of a legal expert. The tribunal will take into account a number of factors when determining the amount of the compensatory award, including the employee’s age, length of service, and future employment prospects.
The compensatory award is subject to a statutory cap, which is adjusted annually. As of 2021, the maximum compensatory award that can be awarded for unfair dismissal is £88,519. However, this amount is subject to change, so it is important to consult with a legal expert to determine the exact amount that may apply in a specific case.
In addition to the compensatory award, the tribunal may also award the employee a sum of money known as a protective award. This is designed to compensate the employee for any failure by the employer to consult with them prior to their dismissal. The amount of the protective award will be calculated based on the circumstances of the case.
It is important to note that the compensatory award is not intended to punish the employer for their actions, but rather to compensate the employee for the losses they have suffered. The tribunal will take into account the circumstances of the case and the impact of the dismissal on the employee when determining the amount of the compensatory award.
In summary, the compensatory award for unfair dismissal is designed to compensate employees who have been unfairly dismissed from their job. It is a financial award intended to make up for any loss suffered as a result of the unfair dismissal, including loss of earnings and benefits. If you believe you have been unfairly dismissed, it is important to seek legal advice to determine if you are entitled to a compensatory award and to ensure that your rights are protected.