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Compensatory Awards in Unfair Dismissal Claims

We are Unfair Dismissal Award Solicitors in London:

What will you get if you win your unfair dismissal claim?

The calculation of losses is not a straight forward matter. This is simply a summary of the kind of issues that may be covered in a compensatory award made by a Tribunal. The Tribunal may reduce elements of the award by up to 100% in exceptional circumstances (for example contribution to one’s own dismissal) which we will not delve into here.

We have developed a handy tool  to help you compare what you might receive on redundancy with what you might receive if you are unfairly dismissed. To use it, click here.

The main purpose of an award of damages is to put the employee back in the position that he or she would have been had s/he not been unfairly dismissed. This is the object of the Compensatory Award:

Compensatory Award:

The compensatory award compensates the employee for the loss of net earnings, benefits etc from the date of dismissal until the date that s/he finds suitable alternative employment. The employee will have to show what steps s/he has taken to find suitable alternative employment by producing letters, emails, application forms, rejection letters etc showing that /she has actually been actively looking for another job (rather than sitting at home waiting for the Tribunal to make it’s award). This is likely to comprise of:

Loss of net pay (after deductions of tax and national insurance) for the number of weeks the employee has been out of work to the date of the Tribunal Hearing. For example, Bob is out of work for three months, before finding another job earning as much as before. If he earned £2,000 per month after tax, and was out of work for 6 months, his loss hear would be £6,000,

  • Loss of net pay (after deductions) from the hearing date until the date the employee is expected to have found suitable alternative employment (not normally more than 6 months after any remedies hearing)
  •  Loss of other benefits (for example health insurance etc) for the same period.
  • Loss of pension rights (this can be difficult to calculate) for the same period.
  • Costs associated with finding another job (such as travel, stationary etc)
  • Loss of ‘statutory rights’ (normally about £250). This recognises the fact that s/he will have to work in the new job for a year before getting statutory protection from unfair dismissal)

Compensatory awards for most people are not great, and are unlikely to approach the statutory cap (£93,878 before 6 April 2023 or £105,707 for dismissals after 6 April 2023.). Some older people may argue that they will effectively be out of work until their retirement date, but Tribunals are reluctant to accept such an argument without compelling evidence.   High earners may feel that the statutory cap for compensatory awards means that they cannot recover all of their losses when bringing an unfair dismissal claim.

Basic Award:

The basic statutory award on unfair dismissal largely the same as a statutory redundancy payment. However entitlement arises after one year’s employment. This will be a week’s pay to a maximum of £643 (or £571 if dismissed before 6 April 2023) before tax  x full years worked x 1.5 for years worked over the age of 41. There’s also a slight variation for years worked under the age of 21. see our Redundancy Calculator.

Injury to Feelings:

Tribunals will not make an award of ‘injury to feelings’ in statutory claims of unfair dismissal. However awards for injury to feelings may be made for unlawful discrimination

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