When an employer terminates an employee’s contract of employment in a way that is considered unfair or unjust, the employee may be able to make a claim for unfair dismissal. If successful, the employee may be entitled to receive compensation in the form of a financial award known as the unfair dismissal maximum award. In this article, we will discuss what the unfair dismissal maximum award is, how it is calculated, and what factors may affect the amount awarded.
What is the unfair dismissal maximum award?
The unfair dismissal maximum award is the maximum amount of compensation that can be awarded to an employee who has been unfairly dismissed by their employer. In the United Kingdom, the current maximum award for unfair dismissal is £88,519 or 52 weeks’ gross pay – whichever is lower. This means that even if an employee’s actual losses exceed this amount, they will not be able to claim more than the maximum award.
How is the unfair dismissal maximum award Calculated?
The unfair dismissal maximum award is calculated based on the employee’s age, length of service, and gross weekly pay. The employee’s age is used to calculate the basic award, which is based on a week’s pay for each year of service under the age of 41, and one and a half week’s pay for each year of service over the age of 41. The maximum length of service that can be taken into account for calculating the basic award is 20 years.
Once the basic award has been calculated, the compensatory award is then determined based on the employee’s gross weekly pay. The compensatory award is subject to the statutory cap mentioned earlier of £88,519 or 52 weeks’ gross pay – whichever is lower. The compensatory award is intended to compensate the employee for any financial losses incurred as a result of the unfair dismissal, such as loss of earnings and benefits.
Factors that May Affect the unfair dismissal maximum award
There are several factors that may affect the amount of the unfair dismissal maximum award that an employee may receive. These factors include:
1. Length of Service: Employees with longer service may be entitled to a higher award as the basic award is calculated based on the employee’s length of service.
2. Gross Weekly Pay: The compensatory award is calculated based on the employee’s gross weekly pay, so employees with higher wages may receive a larger award.
3. Mitigation: Employees are required to take reasonable steps to mitigate their losses following an unfair dismissal. Failure to do so may result in a reduction in the amount of compensation awarded.
4. Contributory Fault: If the employee contributed to their dismissal in some way, such as through misconduct, the amount of compensation awarded may be reduced.
5. Polkey Reduction: If the employer can demonstrate that, even if fair procedures had been followed, the employee would still have been dismissed, the compensation may be reduced.
6. ACAS Early Conciliation: Employees are required to notify ACAS and attempt early conciliation before making a claim for unfair dismissal. Failure to do so may impact the amount of compensation awarded.
In conclusion, the unfair dismissal maximum award is the maximum amount of compensation that can be awarded to an employee who has been unfairly dismissed by their employer. The award is calculated based on the employee’s age, length of service, and gross weekly pay. There are several factors that may affect the amount of compensation awarded, including length of service, gross weekly pay, mitigation, contributory fault, Polkey reduction, and ACAS early conciliation. If you believe you have been unfairly dismissed, it is important to seek legal advice to understand your rights and options for pursuing a claim for unfair dismissal and potentially receiving the maximum award.