The following Employment guidance note provides comprehensive and up to date legal information covering:
An award of compensation for unfair dismissal generally consists of a 'basic award' and a 'compensatory award'.
The basic award is made to reflect the fact that the employee has been unfairly dismissed. It is calculated in much the same way as a statutory redundancy payment and depends on the gross weekly pay of the employee, their length of continuous employment before dismissal and their age. In some cases the basic award is set at a particular level or at a particular minimum level. The basic award may also be subject to a number of deductions.
The compensatory award is considered in Practice Note: The unfair dismissal compensatory award.
For information on unfair dismissal remedies generally, see Practice Note: Unfair dismissal remedies—general.
See also the LexisCalculate online calculators:
basic award calculator, and
automated unfair dismissal schedule of loss (and the related Practice Note: Guide to using the Lexis®PSL Employment Schedule of Loss application)
We set out below the conventional method for calculating a basic award, as defined by the provisions of the ERA 1996.
Note, however, that the ECJ judgment in Kücükdeveci v Swedex arguably leads to the conclusion that:
UK domestic provisions governing the calculation of unfair dismissal basic awards (and also statutory redundancy payments) discriminate on grounds of age, and cannot be justified under EU law
UK Courts and tribunals are obliged
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