Solicitor Guide On Unfair Dismissal Compensation: What is the compensation for unfair dismissal UK?

Have you ever wondered what happens if you are unfairly dismissed from your job? Do you know what compensation you could receive for such a situation? It’s time to uncover the truth and challenge common beliefs surrounding the compensation for unfair dismissal in the UK.

Key Takeaways:

• When unfairly dismissed in the UK, you are entitled to receive compensation.
• The compensation consists of a basic award and a compensatory award.
• The basic award is a fixed sum, while the compensatory award aims to compensate for the money lost due to job loss.
• There are factors that can affect the calculation of compensation, such as length of service and weekly pay.
• Eligibility to make a claim for unfair dismissal requires at least two years of continuous employment.

Understanding the Basic Award for Unfair Dismissal

The basic award is one component of the compensation for unfair dismissal. It is calculated based on several factors, including your length of service, your age at the time of dismissal, and your gross weekly pay.

Firstly, the length of your service with your employer plays a crucial role in determining the basic award. The longer you have worked for your employer, the higher your basic award. This is because your length of service demonstrates your loyalty and commitment to the company.

Your age at the time of dismissal also influences the basic award. Younger employees tend to receive a lower basic award compared to older employees. This is because younger individuals are deemed to have more time and opportunity to secure alternative employment.

Furthermore, your gross weekly pay is taken into account when calculating the basic award. The basic award is based on a maximum amount for a week’s pay, which varies depending on the date of dismissal.

If your gross weekly pay exceeds the maximum amount, you can only claim up to the capped amount per week.

It’s important to note that the basic award may be subject to reduction in certain circumstances. For example, if you have engaged in misconduct, such as stealing from your employer or endangering your colleagues by breaking health and safety rules, the tribunal may reduce your basic award.

Understanding the Compensatory Award for Unfair Dismissal

The compensatory award is an essential component of the compensation you can receive for unfair dismissal. Its purpose is to compensate you for the financial losses you have endured as a result of losing your job. To determine the compensatory award, you need to assess your income on a weekly or monthly basis after tax and national insurance deductions. This includes any regular overtime, bonuses, and other benefits provided by your employer.

The compensatory award considers both past losses and future losses. Past losses refer to the financial losses you have incurred up until the date of the calculation. Future losses, on the other hand, encompass the financial losses you expect to experience until you secure a new job.

If you have worked for your employer for a period of 2 years or more, you can also claim an additional amount to compensate for the fact that you must remain in your new job for 2 years before you become eligible to claim unfair dismissal.

It’s important to note that the length of time to consider in the calculation of your compensatory award depends on whether you have already obtained a new job or if you are still seeking employment. The award can be increased if your employer failed to adhere to the ACAS Code of Practice on disciplinary and grievance procedures. Conversely, the award may be reduced in specific circumstances, such as if you bear partial responsibility for your dismissal or if you have not made adequate efforts to secure alternative employment.

Factors Affecting Compensation Calculation

Several factors can affect the calculation of compensation for unfair dismissal. These factors include:

• Discrimination: If discrimination was involved in the dismissal, it can impact the amount of compensation you receive.
• Age: Your age at the time of dismissal can also be a factor in the calculation.
• Length of service: The length of your service with your employer is taken into account.
• Weekly pay: Your gross weekly pay is considered in determining the compensation amount.
• Future losses: The duration of your future losses plays a role in the calculation. If you have found a new job, it is based on the time you were out of work. If you are still searching for employment, it is based on the estimated time it will take to find another job.
• Finding a new job: The efforts you make to find a new job after dismissal are also considered.
• Mitigating loss: Your attempts to mitigate your loss by actively seeking employment can impact the compensation calculation.
• Grievance process: If you have gone through a grievance process, it can also be taken into account in determining the compensation.
• Welfare benefits: If you received welfare benefits after losing your job, the tribunal may deduct this amount from your compensation. However, certain benefits like Housing Benefit, Tax Credits, and certain other welfare benefits will not affect your compensatory award.

Compensation Calculation Examples

The calculation of compensation for unfair dismissal can vary greatly depending on individual circumstances. Here are a couple of examples to illustrate how the compensation calculation works.

Example 1: Already Found a New Job

If you have already found a new job that pays about the same as your old one, here’s how you can calculate your compensation:

1. Calculate the amount of money you lost each week or month while you were out of work.
2. Multiply the amount by the number of weeks or months you were unemployed.

For example, let’s say you lost £500 per week and were unemployed for 4 months. Your compensation would be:

This would be the total compensation amount if you found a new job that pays the same as your old job.

Example 2: New Job Pays Less

If your new job pays less than your old job, you can claim compensation for the difference in pay and estimate how long it would take you to find a job paying what you used to earn.

1. Calculate the difference in pay between your old job and new job.
2. Estimate the number of weeks or months it would take you to find a job paying what you used to earn.
3. Multiply the difference in pay by the estimated number of weeks or months.

For example, let’s say your old job paid £600 per week, but your new job pays only £400 per week. You estimate it will take you 6 months to find a job paying what you used to earn. Your compensation would be:

This would be the total compensation amount if your new job pays less than your old job.

Example 3: Still Looking for Work

If you are still looking for work, here’s how you can calculate your compensation:

1. Calculate the amount of money you are losing each week or month while you are unemployed.
2. Estimate the number of weeks or months it will take you to find another job.
3. Multiply the amount of money lost by the estimated number of weeks or months.

For example, let’s say you are losing £400 per week and estimate it will take you 12 weeks to find another job. Your compensation would be:

This would be the total compensation amount if you are still looking for work.

The examples above provide a general idea of how compensation for unfair dismissal is calculated. Remember, the specific amount will depend on your individual circumstances and the decision of the tribunal.

Limitations and Considerations of Compensation