When an employee is wrongfully terminated from their job, they may be entitled to receive compensation in the form of an unfair dismissal compensatory award. This award is intended to provide financial relief to employees who have been unfairly dismissed from their employment. In this article, we will explore the key aspects of the unfair dismissal compensatory award and how it is calculated.
Under the Employment Rights Act 1996, employees have the right not to be unfairly dismissed from their job. If an employer dismisses an employee without a valid reason or fails to follow proper procedures, the dismissal may be considered unfair. In such cases, the employee can make a claim to an employment tribunal for unfair dismissal.
If the tribunal finds that the dismissal was unfair, they may award the employee compensation in the form of a compensatory award. The purpose of the compensatory award is to put the employee back in the position they would have been in if they had not been unfairly dismissed. It is meant to cover any financial losses the employee has suffered as a result of the dismissal.
Calculating the compensatory award can be a complex process, as it takes into account a number of factors. These factors include the employee’s length of service, age, salary, and the circumstances surrounding the dismissal. The tribunal will also consider whether the employee has mitigated their losses by seeking alternative employment.
The compensatory award is subject to a maximum limit, which is updated annually by the government. As of 2021, the maximum compensatory award is £89,493, or 52 weeks’ gross pay, whichever is lower. In exceptional cases, the tribunal may award additional compensation if they believe the employer’s behavior was particularly egregious.
In addition to the compensatory award, the tribunal may also award a basic award to the employee. The basic award is calculated based on the employee’s length of service and is subject to a maximum limit, which is also updated annually. As of 2021, the maximum basic award is £16,320.
It is important to note that the compensatory award is not intended to punish the employer, but rather to compensate the employee for their losses. The award is meant to provide financial support to the employee while they search for new employment and get back on their feet.
Employers have a legal obligation to follow proper procedures when dismissing an employee. Failure to do so can result in a claim for unfair dismissal and a compensatory award being awarded to the employee. Employers should ensure that they have valid reasons for dismissing an employee and that they follow the correct procedures to avoid facing a claim for unfair dismissal.
In conclusion, the unfair dismissal compensatory award is an important form of financial relief for employees who have been wrongfully terminated from their jobs. It is intended to compensate the employee for any financial losses they have suffered as a result of the dismissal. Employers should be aware of their obligations under the law and follow proper procedures to avoid facing a claim for unfair dismissal and a compensatory award being awarded to the employee.