When an employee feels that they have been unfairly dismissed from their job, they have the right to bring a claim against their employer to an employment tribunal. If the tribunal finds in favor of the employee, they may be awarded compensation for unfair dismissal. In this article, we will explore what goes into determining employment tribunal awards for unfair dismissal and how they are calculated.
First and foremost, it is important to understand what constitutes unfair dismissal. Under UK employment law, an employee can be deemed to have been unfairly dismissed if the employer has not followed a fair procedure or if the reason for dismissal was not one of the potentially fair reasons set out in the Employment Rights Act 1996. These potentially fair reasons include conduct, capability, redundancy, illegality, or some other substantial reason.
Once an employee has successfully proven that they were unfairly dismissed, the employment tribunal will consider how much compensation they should be awarded. There are two main components to employment tribunal awards for unfair dismissal – the basic award and the compensatory award.
The basic award is calculated based on the employee’s age, length of service, and weekly pay. The calculation is as follows:
– Half a week’s pay for each full year of employment under the age of 22
– One week’s pay for each full year of employment between the ages of 22 and 41
– One and a half week’s pay for each full year of employment over the age of 41
The weekly pay is subject to a maximum amount which is set by the government and updated each year. As of 2021, the maximum weekly pay is £544, meaning that no matter how high an employee’s salary is, the basic award will be capped at this amount.
The compensatory award, on the other hand, is intended to compensate the employee for the financial losses they have suffered as a result of being unfairly dismissed. This can include loss of earnings, loss of benefits, and any future losses that the employee is likely to incur as a result of the dismissal.
The compensatory award is calculated based on the actual financial losses that the employee has suffered up to the date of the tribunal hearing, as well as an estimate of any future losses. The maximum compensatory award that can be made is currently capped at £89,669 or one year’s salary, whichever is lower.
In addition to the basic and compensatory awards, the tribunal may also choose to award the employee a sum of money called a “Polkey” award. This is based on the likelihood that the dismissal would have occurred anyway, even if a fair procedure had been followed. The purpose of the Polkey award is to compensate the employee for any financial losses that would have been incurred even if the dismissal had been carried out fairly.
It is important to note that the employment tribunal has the discretion to adjust the amount of the award based on the specific circumstances of the case. For example, if the employer has failed to follow a fair procedure or if the employee has contributed to their dismissal in some way, the tribunal may choose to reduce the amount of compensation that is awarded.
In conclusion, employment tribunal awards for unfair dismissal are intended to compensate employees who have been unfairly treated by their employers. By understanding how these awards are calculated and what factors are taken into account, employees can better prepare themselves for the tribunal process and have a clearer idea of what to expect in terms of compensation.