From Lawpack's DIY Employment Law.
Compensation for unfair dismissal usually consists of a basic award and a compensatory award. In addition, there are further awards made in certain circumstances, such as an 'additional award', if your employer fails to comply with an order to reinstate or re-employ you, and a 'special award' if you were dismissed on the grounds of trade union membership/activities or health and safety duties and your employer again fails to comply with an order to reinstate or re-employ you .
Basic award
The basic award is calculated by considering your age, length of continuous service and gross average weekly wage. Each complete year of service up to a maximum of 20 counts for payment on the following scale (with a current maximum of £280 for a week's pay):
- up to 22 years of age - ½ week’s pay;
- between 22 and up to 41 years of age - 1 week's pay;
- between 41 and up to 65 years of age - 1½ weeks' pay.
The current maximum basic award is £8,400 (i.e. 1½ × 20 × 280).
An employment tribunal will reduce the basic award if it considers it to be just and reasonable to do so.
Compensatory award
The compensatory award is calculated on the net value of wages, other benefits and expenses reasonably incurred by you as a result of the dismissal.
Factors an employment tribunal will then take into account to reduce the award are:
- contributory fault;
- whether dismissal would have resulted even if your employer had acted reasonably;
- your duty to minimise your loss by attempting to seek other employment;
- payments made by your employer;
- what is just and reasonable, including whether there has been an injury to your feelings brought about by the manner of your dismissal.
For dismissals that occur after 1 October 2004 the compensatory award may be increased or decreased by between 10 and 50 per cent for failure to comply with the statutory dispute resolution procedures depending on which party is at fault (subject to the statutory cap of £56,800) - see 'What should I do if I have a grievance about my employer's actions?' for more information on these procedures.
Damages for injury to feelings (e.g. humiliation, distress, damage to reputation) brought about by the manner of dismissal are only likely to be awarded in limited circumstances, and may be dependent on you producing medical evidence of the effect of the way you were dismissed (not just the fact it happened). If an award is appropriate, the level is likely to be in line with the following bands: £500 to £5,000 for less serious cases; £5,000 to £15,000 in serious cases; and £15,000 to £25,000 in the most serious cases. However, note that this element is not in addition to the statutory limit of £56,800.
Law stated as at 1 April, 2005