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Basic Award

Compensation for unfair dismissal is normally made up of two component parts:

  1. basic award
  2. compensatory award.

The basic award formula is the same as that used for calculating statutory redundancy pay. It is simply a multiple of a week’s gross pay and is not related to financial loss suffered by the claimant (employee). It is calculated according to a formula which takes into account years of service and age of the claimant (employee).

The formula is:

  • half a week's pay for each year worked before 22nd birthday;
  • 1 week's pay for each year worked between age 22 and 40;
  • 1.5 week's pay for each year worked age 41 years and above

The most recent 20 years (only) are taken into account for the purposes of this calculation if a long service employee is being dismissed. The value of a week’s wage is currently capped at £430.

In certain specified cases the basic award must be not less than a statutory minimum. Tribunals can reduce basic award, even to nil, if the employee's conduct merits a reduction.

Contact us here for further advice on basic award calculations.

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