Unfair dismissal is a situation where an employer terminates an employee’s contract of employment without having a fair reason and/or without following the correct procedures When an employee is unfairly dismissed, they may be entitled to receive compensation in the form of a compensatory award This award is intended to compensate the employee for the loss they have suffered as a result of the unfair dismissal.
Compensatory awards in unfair dismissal cases are determined by employment tribunals, and they can vary depending on the circumstances of the case The purpose of the compensatory award is to put the employee back in the financial position they would have been in had they not been unfairly dismissed This can include compensating for lost wages, bonuses, benefits, and other financial losses incurred as a result of the dismissal.
There are several factors that employment tribunals consider when determining the compensatory award in unfair dismissal cases These factors include:
1 Length of service: The longer an employee has been with the company, the higher the compensatory award is likely to be This is because employees who have been with a company for a longer period of time are more likely to have accumulated more benefits and higher salaries.
2 Age: Younger employees may receive lower compensatory awards compared to older employees This is because younger employees have more time to find alternative employment and recover financially.
3 Mitigation: The employee has a duty to mitigate their losses by actively seeking alternative employment compensatory award unfair dismissal. If the employee fails to make reasonable efforts to find a new job, it may impact the compensatory award.
4 Loss of future earnings: Employment tribunals may also take into account the employee’s loss of future earnings as a result of the unfair dismissal This can include factors such as career progression, potential salary increases, and benefits that the employee would have received if they had not been unfairly dismissed.
5 Non-financial losses: In addition to financial losses, compensatory awards in unfair dismissal cases may also take into account non-financial losses such as loss of reputation, mental anguish, and emotional distress.
It is important to note that there is a statutory cap on compensatory awards in unfair dismissal cases As of 2021, the maximum compensatory award is £89,493 or 52 weeks’ gross pay, whichever is lower This cap is in place to prevent excessively high compensatory awards and to ensure that the awards are proportionate to the losses suffered by the employee.
In addition to compensatory awards, employees who have been unfairly dismissed may also be entitled to receive a basic award The basic award is calculated based on the employee’s length of service, age, and weekly pay, and it is subject to a statutory cap The basic award is intended to compensate the employee for the unfair dismissal itself rather than the financial losses incurred as a result of the dismissal.
Overall, compensatory awards in unfair dismissal cases play a crucial role in ensuring that employees who have been unfairly dismissed are fairly compensated for the losses they have suffered By taking into account factors such as length of service, age, mitigation, loss of future earnings, and non-financial losses, employment tribunals strive to provide fair and proportionate compensatory awards to employees who have been unfairly dismissed.
In conclusion, compensatory awards in unfair dismissal cases are designed to compensate employees for the financial and non-financial losses they have suffered as a result of being unfairly dismissed By considering various factors such as length of service, age, mitigation efforts, loss of future earnings, and non-financial losses, employment tribunals aim to provide fair and just compensatory awards to employees who have been unfairly dismissed.