Unfair dismissal compensation

Posted on October 18, 2013

Unfair dismissal compensation

(Updated May 2017) There are two elements to an unfair dismissal award: the basic and compensatory awards.  The basic award is calculated on the basis of a statutory formula and subject to a cap.
The compensatory award is an amount the tribunal considers to be “just and equitable”, having regard to the loss suffered by the employee insofar as the employer is responsible.  It has generally been subject to a statutory cap.  This cap is not applied in some cases; notably where there is a dismissal as a result of having made a protected disclosure, or for having asserted a statutory right. The Enterprise and Regulatory Reform Act 2013 contains a clause to further limit unfair dismissal compensatory awards.  While the existing ‘overall’ cap will remain, a secondary ‘individual’ cap of 12 months’ pay will also be applied where the claimant’s annual wage is less than the overall cap. The government has published its new protection compensation limits, effective from 6 April 2017, under the Employment Rights (Increase of Limits) Order 2017.  The main changes are:
  • The maximum week’s pay for statutory redundancy pay and the unfair dismissal basic award rises from £478 to £489.
  • The maximum unfair dismissal compensatory award rises from £79,962 to £80,541.
  • The minimum basic award for certain unfair dismissals (trade union membership or activities, health and safety duties, pension scheme trustee duties or acting as an employee representative or workforce representative rises from £5,853 to £5,970.
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