When an employee is unfairly dismissed from their job, they may be entitled to a compensatory award to help ease the financial burden of losing their source of income. The unfair dismissal compensatory award is intended to compensate the employee for the loss of earnings and any other financial losses resulting from the unfair dismissal. In this article, we will discuss what the compensatory award entails and how it is calculated.
First and foremost, it is important to understand what constitutes unfair dismissal. According to the law, an unfair dismissal occurs when an employee is dismissed from their job without a valid reason, or if the reason for their dismissal is unfair or unjust. This could include being dismissed for discriminatory reasons, such as race, gender, age, or disability, or being dismissed for whistleblowing or other protected activities.
Once it has been established that the dismissal was unfair, the employee may be entitled to a compensatory award. This award is designed to compensate the employee for the financial losses they have suffered as a result of the unfair dismissal. This can include lost wages, benefits, bonuses, and any other financial losses incurred as a direct result of the dismissal.
Calculating the compensatory award can be a complex process, as it requires taking into account a variety of factors. The amount of the award will typically be based on the employee’s age, length of service, salary, and the circumstances surrounding the dismissal. In some cases, the employee may also be entitled to receive compensation for injury to feelings or other non-financial losses resulting from the dismissal.
When calculating the compensatory award, the employment tribunal will take into account any efforts the employee has made to mitigate their losses. This could include looking for alternative employment, retraining, or taking on temporary work to make ends meet. The tribunal will also consider any benefits the employee has received as a result of the dismissal, such as redundancy pay or other compensation.
It is important to note that there is a limit to the amount of the compensatory award that can be awarded. In the UK, the maximum compensatory award for unfair dismissal is currently £88,519 or 52 weeks’ pay, whichever is lower. This limit is in place to prevent excessive compensation awards and to ensure that employers are not unfairly penalized for unfair dismissals.
In addition to the compensatory award, the employee may also be entitled to receive a basic award. The basic award is a statutory payment that is based on the employee’s age, length of service, and weekly salary. The basic award is intended to compensate the employee for the loss of job security and the impact the dismissal has on their future employment prospects.
It is worth noting that the compensatory award is separate from any other awards the employee may receive as a result of the unfair dismissal. For example, the employee may also be entitled to receive a protective award if the dismissal was due to the employer’s failure to consult on collective redundancies. The employee may also be entitled to receive additional compensation if the dismissal was discriminatory in nature.
In conclusion, the unfair dismissal compensatory award is a vital form of protection for employees who have been unfairly dismissed from their jobs. It is designed to compensate the employee for the financial losses they have suffered as a result of the unfair dismissal and to ensure that they are not unduly penalized for the actions of their employer. If you believe you have been unfairly dismissed, it is important to seek legal advice to understand your rights and to pursue any compensation you may be entitled to.