When making an unfair dismissal claim one important thing to consider is the amount of compensation that you are going to receive. When a Tribunal is awarding compensation this is split up into two main sections which are the basic award and the compensatory award. The basic award can be calculated accurately however it is the compensatory award that any unfair dismissal calculator might have trouble pinning down to an exact figure.

Basic Award

This will be calculated on the length of service of the individual and it is a fixed formula. This formula is laid out in the Employment Rights Act 1996 and equates to Age Factor x Service x Week’s Pay.^[1] How the age factor is calculated depends on your age and is broken down below:

Any full year service where the employee was 41 and over the factor is 1.5
Any full year service between the ages of 22 and 41 the factor is 1
Any full year service below the age of 22 the factor is 0.5

It should be noted that there is a cap on years of service set at 20 years and the current week’s pay figure is capped at £450 per week.

The examples below should help to illustrate the calculations.

Example 1

An employee is aged 55 at the time of his dismissal and he has 10 years service with the company (bear in mind only full years count for these calculations). He earns £500 per week. As his 10 years service all fall within the 41+ bracket he has an age factor of 1.5 for all the years. As the employee earnt more than the maximum week’s pay, it will be limited to £450.If we substitute these figures into the formula it would look like this:

1.5 [Age factor] x 10 [Full Years service] x £450 [week’s pay-capped]= £6,750. Therefore this employee would be owed a basic award of £6,750.

Example 2

If the employee’s service straddles several years then it does get a little bit more tricky. If we change the employee from example 1 to being 46 years old then he straddles both the 41+ category and the 22-41 category. In this example he has 5 years in both categories and so the formula would look like this:

(1.5 x 5)[Age factor and service for 41+]+(1 x 5) [Age factor and service for 22-41] x £450 [week’s pay-capped] = £5,625. Therefore this employee would be owed a basic award of £5,625.

Compensatory Award

This is where things can get a bit tricky as there are no hard and fast rules for how much a claimant will receive if they are successful within their claim of unfair dismissal. The basis for the award is laid out in s.126 Employment Rights Act in which the tribunal will award to the successful Claimant an amount that is ‘just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal’^[2]

At present the cap for the maximum compensatory award in unfair dismissal claims is set at £74,200.^[3] or 52 weeks wages whichever is lower. However it is rare for a claim to reach this level of compensation. The average level of compensation for 2011/2012 stands at £9,133 with the median award sitting at £4,560.^[4]

The elements that can make up this award include

Current loss of wages: This is up to the date of the tribunal or till the start of a higher paid job if it’s before the tribunal date (this can often be given an exact figure as you know exactly how much you should have earnt in this time.). Any earnings received prior to this date will be subtracted from this value;
Future losses: This is estimated by the tribunal and depending on the job that you have lost this will normally equate to between 6 and 12 month losses. Again if you are on a lower paid job then any earnings will be subtracted from this value and if you are in a higher paid job it is doubtful you will get any compensation in this category;
Loss of benefits: This can include company car, health options, pension benefits etc.

So because these are all quite variable it is hard to put an exact figure on the value you are likely to receive if successful and why any unfair dismissal calculator will never necessarily give the same answer as another. To gain a rough figure for your compensatory award if you are yet to find a new job then take the wage loss from your dismissal till the tribunal and then a further 6 months loss after that.

Reductions to Compensatory Awards

The Tribunal also has the power to reduce your compensatory award as well.

You have a duty following your dismissal to mitigate your losses. This means that you should be out there looking for work whilst also pursuing your claim for unfair dismissal. If it can be shown that you weren’t mitigating your loss sufficiently the tribunal might reduce the compensation that is awarded.

They can reduce the compensation if even though the dismissal was unfair you contributed to your dismissal.[4]

Thirdly if the Tribunal viewed the dismissal as procedurally unfair they can look at whether if the correct procedure was followed you would have been dismissed. If they feel that this is the case then it is likely your compensation will be completely negated apart from for the amount of time it would have taken to complete the correct procedure.

What next?

If you have been dismissed and you are considering making a claim for unfair dismissal but aren’t sure exactly what you could receive then do not hesitate to contact us on 0203 838 0781. We can offer free advice on what your claim is worth and whether it is worth making a claim.