Unfair dismissal settlements and compensation can be awarded by an employment tribunal when you have been fired from a job for no good reason. But how much can you get for unfair dismissal?
If you successfully show that you have been sacked from a job unfairly, there are a number of laws and limits governing the amount you can get in compensation. Here’s how it works:
What Is Unfair Dismissal?
Unfair dismissal is a term for when a person has been fired or sacked from a job without a valid reason. It is also sometimes used to describe a situation where an employer hasn’t followed their own disciplinary processes.
In the UK, there are laws in place to protect you from being dismissed from a position unfairly. You can claim compensation for this, as long as:
- You have worked for your employer continuously for more than two years.
- You have not been given a potentially fair reason for your employment being terminated.
- Or you have been dismissed for a range of “automatically unfair” reasons, of which there are 60+ (including things like being pregnant or a whistleblower on illegal activity).
- It is less than three months (minus one day) from the date of your dismissal.
- You are not self-employed, an agency worker, a registered dock worker, a police officer or member of the armed forces, or working overseas or for a foreign government.
What Is The Average Payout For Unfair Dismissal?
The payout for unfair dismissal comes in two parts:
1) The Basic Award
This half of the payout for unfair dismissal is sort of like statutory redundancy pay. It is calculated relative to your age and time served:
- Under 22 years old – half a week’s pay for each year served.
- 22 to 40 years old – one week’s pay for each year served.
- Over 40 years old – one and half weeks’ pay for each year served.
Your “week’s pay” is calculated gross (before your tax and National Insurance are taken out of it) but is capped at £571 per week. The basic award is also capped at a total of £17 130.
Of course, at one week of pay or so per year, you would have to have been working for your employer for quite a long time before the basic award becomes a noteworthy amount.
2) The Compensatory Award
If the tribunal ruling on your case believes you have sustained losses (that is to say, you’ve lost out financially – perhaps they judge it will be hard for you to find a new job on the same pay) because of your unfair dismissal, they can award you up to one year’s salary or £93 878 (whichever is lower).
It is worth knowing that you have what is called “a duty to mitigate your loss”. This means, essentially, trying to get a new job. However, if you succeed in getting a new job with only a small delay, it also limits your ability to seek a compensatory award.
What Is The Maximum Unfair Dismissal Award?
The maximum amount you can get for unfair dismissal is:
- The basic award – calculated as above, equivalent to a minimum of one week’s pay (if you are under 22) or three weeks’ pay (if you are over 40) multiplied by the number of years you have worked for your employer.
- The compensatory award – a maximum of 52 weeks’ pay linked to the level of past and future losses the tribunal judges that you have sustained. This is sometimes called the “statutory cap”.
How Is Unfair Dismissal Compensation Calculated?
The amount you can get for unfair dismissal is calculated using the formula above for the basic award, while the compensatory award is largely at the discretion of the tribunal that decides your case.
The kind of factors that the tribunal will take into account when deciding on your claim and any compensation you might receive on top of the basic award include things like:
- If you have found a new job and how much it pays
- Whether your new job is temporary
- How long it might take you to find an equivalently-paid job if you haven’t found one already
- Any benefits your former employer gave you, such as subsidised healthcare
- Extras based on whether your employer followed the ACAS Code of Practice when dismissing you or never gave you written T&Cs of your employment
Unfortunately, the tribunal will not award compensation based on factors like emotional harm or stress that the situation has caused you. Nor, under most circumstances, the cost of making the claim (unless they decide your employer was utterly egregious in their actions).
How Much Can You Get For Unfair Dismissal?
All in all, unless you have worked for your employer for a long time or the grounds for your dismissal were inarguably unfair (or automatically unfair), the procedure for claiming compensation can potentially be quite difficult.
The amount you can get for unfair dismissal may also not be as large as you might hope. It’s worth talking to an employment lawyer that specialises in the field first to get a sense of your chances.
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