Making Sense of Employment Law
Compensation for unfair dismissal is normally made up of two component parts:
- basic award
- 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 more information on how to calcualte a basic award
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