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Basic and Compensatory Awards for Unfair Dismissal

Unfair Dismissal Basic and Compensatory Awards

Unfair Dismissal Awards

Where an employment tribunal decides that an employee has been unfairly dismissed, it must award a basic award and may also award a compensatory award.

Basic Award

For each year of employment those employees deemed unfairly dismissed:

- over the age of 41 are entitled to 1.5 weeks pay; 
- between the ages of 22 and 41 are entitled to 1 weeks pay; and 
- under 22 are entitled to 0.5 weeks' pay.

This multiple may be increased (higher basic awards) where employers fail to comply with an employment tribunal order as to reinstatement or re-engagement.

If an employee contributes to their own dismissal or refuses reinstatement, the basic award can be reduced or extinguished.

Compensatory Award

In addition to the basic award, the employment tribunal can also award a compensatory award to take into account loss of net earnings (immediate and future), pension rights and other fringe benefits (e.g. company car and expenses).

If the employee does not make reasonable efforts to gain alternative employment i.e. to mitigate their loss, the award may be reduced accordingly. The award will also be reduced by earnings from any alternative employment.

It should be noted that compensation can be increased by up to 25% if the ACAS code of practice is not followed by the employer.

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