Employment laws are in place to protect the rights of workers and ensure fair treatment in the workplace. One such protection is against unfair dismissal, where an employee is dismissed from their job in a manner that is considered unjust or unreasonable. In cases of unfair dismissal, employees may be entitled to a compensatory award, intended to provide some form of remedy for the harm caused by the dismissal. In this article, we will discuss the concept of the unfair dismissal compensatory award and how it works in practice.
What is an unfair dismissal compensatory award?
An unfair dismissal compensatory award is a financial sum awarded to an employee who has been unfairly dismissed from their job. The purpose of the compensatory award is to provide compensation for the loss suffered by the employee as a result of the unfair dismissal. This may include lost wages, benefits, and future earning potential that the employee would have received had they not been unfairly dismissed.
The compensatory award is decided by an employment tribunal, which will take into account various factors when determining the amount of compensation to be awarded. These factors may include the length of the employee’s service, the reason for the dismissal, the employee’s age and salary, and the efforts made by the employee to mitigate their losses by finding alternative employment.
How is the compensatory award calculated?
The amount of the compensatory award is calculated based on the financial losses suffered by the employee as a result of the unfair dismissal. This may include:
– Loss of wages and benefits: The compensatory award will typically cover the wages and benefits that the employee would have earned during the notice period or until they find alternative employment. This may also include any bonuses, commissions, or other perks that the employee would have received if not for the dismissal.
– Future loss of earnings: In cases where the employee is unable to find alternative employment or experiences a reduction in earnings as a result of the unfair dismissal, the compensatory award may also take into account the future loss of earnings.
– Pension contributions: If the employer’s actions have affected the employee’s pension contributions, the compensatory award may include compensation for these losses.
– Other financial losses: In addition to lost wages and benefits, the compensatory award may also cover other financial losses incurred as a result of the unfair dismissal, such as relocation costs or expenses related to finding new employment.
It is important to note that there is a statutory cap on the compensatory award, which is currently set at £89,493 or one year’s salary, whichever is lower. However, in exceptional cases where the unfair dismissal is deemed to be particularly egregious, the tribunal may award additional compensation above this cap.
Challenges in obtaining a compensatory award
While the unfair dismissal compensatory award is intended to provide redress for employees who have been unfairly dismissed, there are several challenges that employees may face in obtaining this compensation. These challenges may include:
– Proving unfair dismissal: In order to be eligible for a compensatory award, the employee must first prove that they were unfairly dismissed. This can be a complex and time-consuming process, requiring evidence to support the employee’s claim.
– Mitigating losses: Employees are also required to make efforts to mitigate their losses by actively seeking alternative employment. Failure to do so may result in a reduction in the compensatory award.
– Lengthy legal proceedings: Employment tribunals can be slow and expensive, with cases often taking months or even years to reach a resolution. This can be a significant barrier for employees seeking compensation for unfair dismissal.
Conclusion
The unfair dismissal compensatory award is an important protection for employees who have been unfairly dismissed from their jobs. This award aims to provide financial compensation for the losses suffered by the employee as a result of the dismissal. While the compensatory award can help to mitigate the harm caused by unfair dismissal, employees may face challenges in obtaining this compensation, including proving unfair dismissal, mitigating losses, and navigating lengthy legal proceedings. Overall, the compensatory award serves as a crucial remedy for employees who have experienced unfair treatment in the workplace.