Unfair dismissal is a situation where an employer terminates an employee’s contract in a way that breaches employment law. In such cases, employees may be entitled to compensation, known as a compensatory award. This award is designed to provide financial relief to employees who have been unfairly dismissed and is intended to compensate them for the loss of income and other benefits resulting from their dismissal.
The compensatory award for unfair dismissal can vary in amount depending on a range of factors, including the circumstances of the dismissal, the length of the employee’s service, and the financial losses suffered as a result of the dismissal. The purpose of this award is to put the employee in the position they would have been in had they not been unfairly dismissed.
Employment tribunals have the power to award compensation to employees who have been unfairly dismissed. The amount of compensation awarded will be determined by the tribunal having regard to the employee’s financial losses, as well as any non-financial losses they may have suffered, such as loss of reputation or feelings of distress.
In determining the amount of compensation to award, employment tribunals will take into account the employee’s age, length of service, salary, and the likelihood of the employee finding alternative employment. In some cases, the compensatory award may also include an amount to cover the employee’s legal costs in bringing the claim.
The compensatory award for unfair dismissal is subject to a statutory cap, which is set at a maximum of one year’s salary or £89,493 (whichever is lower) as of April 2021. This cap is in place to ensure that the compensatory award is not excessive and to provide certainty for both employees and employers.
Employees who have been unfairly dismissed are also entitled to a basic award, which is calculated based on the employee’s age, length of service, and weekly pay. The basic award acts as a supplement to the compensatory award and is intended to provide a minimum level of compensation for unfair dismissal.
It is important to note that employees must adhere to strict time limits when bringing a claim for unfair dismissal. In most cases, employees have three months from the date of dismissal to lodge an employment tribunal claim. Failure to do so may result in the claim being rejected by the tribunal.
Employers have a duty to follow fair and legal procedures when dismissing employees. This includes providing the employee with a valid reason for dismissal, giving the employee the opportunity to respond to the allegations against them, and following a fair process before making a decision to dismiss.
If an employer fails to follow fair procedures or dismisses an employee without a valid reason, the employee may have a strong case for unfair dismissal. In such cases, the employee may be entitled to a compensatory award as well as reinstatement or re-engagement if they wish to return to their job.
In conclusion, the compensatory award for unfair dismissal is an important form of compensation that aims to provide financial relief to employees who have been unfairly dismissed. This award is intended to compensate employees for the losses they have suffered as a result of unfair dismissal and to ensure that they are put in the position they would have been in had they not been unfairly dismissed. Employees who believe they have been unfairly dismissed should seek legal advice to determine their rights and options for pursuing a claim for compensation.