Client Login

Hallett
Employment Law Services Ltd

Compensation

The level of compensation that an Employment Tribunal can award depends on the type of claim being made. The most common claim is of unfair dismissal. Compensation for unfair dismissal is split into two parts, known as the “basic award”, and “compensatory award” respectively.



a) The “Basic Award”



This is calculated by using a set formula multiplying figures for the number of Complete years of service, by the individual’s weekly pay (capped according to an amount set by Regulations each year) by a factor depending on the age of the individual at the date of dismissal.



The calculation has altered every year for many years, the details are below:- 



From the 6th April 2017 the maximum figure to be taken into account for a week's pay has been £489. Again, this only affects dismissals that took place on or after the 6th April 2017. nb For those dismissals that take place on or after the 6th April 2016 the maximum figure to take account for a week's pay is £479. 



The consequence is that the maximum amount that can be ordered under the Basic Award for dismissals that took place on or after the 6th April 2017 is £14,670 and for dismissals in the previous year the figure is £14,370.

NB. There are some types of case for which a minimum "basic" award applies. These include dismissals for union, employee representative or pension trustee reasons. In these cases the minimum basic award is set at £5,970 since the 6th April 2017 (previously £5,853).



b) The “Compensatory Award”

This part of the compensation is to cover the actual loss suffered as a consequence of the dismissal.



For dismissals that took place on or after the 6th April 2017 the maximum figure is £80,541 or the person's annual salary (whichever is the LOWER). This covers loss of earnings and benefits (including loss of pension) and any future losses.

For dismissals that took place between the 6th April 2016 and the 5th April 2017 the maximum compensatory award was £78,962 (or the annual salary(whichever was lower).



If the Tribunal considers that the individual was to blame to some extent in his/her own dismissal it will reduce the compensatory award. Furthermore, if the individual finds alternative work before the hearing the tribunal will generally deduct the earnings from the new job from the losses.

On the positive side for an employee, if an employer failed to follow the guidance set out in the ACAS Code of Practice on Disciplinary Procedures the Employment Tribunal can increase the compensatory award by up to 25 % of the figure it initially assessed.



For a breach of contract claim the tribunal can award up to £25,000.



Discrimination



In discrimination cases (such as age, race or disability discrimination) there is no upper limit on the amount of compensation that the tribunal can award. The main part of the compensation will still usually be the actual financial losses e.g. loss of pay, benefits. However, in addition the tribunal can make an award for “injury to feelings”. The courts have set the appropriate wards for injury to feelings in certain bands depending on the severity of the actual discrimination that occurred. If the claim brought by the individual is bringing claims that encompass unfair dismissal and unlawful discrimination the Tribunal will not duplicate the award for compensation over the same lost earnings and benefits.



The Employment Tribunal Services annual report 2015/2016 showed that the median average awards of compensation for discrimination were:-

i. Race - £13,760



ii. Sex - £13,500



iii. Disability - £11,309

iv. Age- £8,417

NB. The mean averages are higher than these figures in some cases, due to a number of particularly higher value cases. 



These indicate that employers must take these issues very seriously and ensure that they have appropriate policies and procedures in place to tackle these issues. However, it should really be noted that the size of awards of compensation have not grown substantially over the past few years. (see link PAYG Equal Opps Policy).

 

Advanced Site Search

Free Factsheets

Redundancy - Redundancy is one of the potentially fair rea...

Holiday Entitlement and Pay - Until the introduction of the Working Time Re...

Compromise/ Settlement Agreement - A Settlement Agreement (formerly called a Com...

Monitoring and Surveillance of Staff - Employers may have a variety of reasons for m...

National Living Wage - The National Living Wage came into effect on ...

More Information
For more information, help, and specialist employment law advice

Latest News

Parliamentary report on sexual harassment in the workplace- considering its recommendations and comments

The topic of sexual harassment in g...

Overtime and Holiday Pay

At this time of year many people ar...
More News