Employment Law News Analysis

Unfair Dismissal Compensation - Expert Comments

David McRae
23rd Dec 2010

Unfair dismissal compensation breaks £80,000 barrier.

Employment law time off work

The maximum award in a claim for unfair dismissal will break the £80,000 barrier from 1 February 2011.


From this date, an ordinary claim for unfair dismissal, if successful, may result in a Claimant receiving a basic award and a compensatory award totalling £80,400.


The basic award is determined by reference to a week’s pay. The maximum level of a week’s pay is normally reviewed each year in February, however the last review took place in October 2009 when it was increased from £350 to £380. The purpose of the increase at that time was to attempt to provide greater financial assistance to employees being made redundant due to the recession. As a result of the increase in October 2009, the review in February 2010 did not take place.


From 1 February 2011 the limit on a week’s pay will increase from £380 to £400. The maximum basic award that may be made will therefore increase to £12,000.


In making a compensatory award, the Tribunal will consider what level of compensation is ‘just and equitable’ to award in the circumstances, having regard to the actual loss sustained by the employee as a result of the unfair dismissal. The current limit on the compensatory award of £65,300 will increase to £68,400 from 1 February 2011.


Notwithstanding these limits, an employee who is dismissed unfairly or selected for redundancy for reasons connected with health and safety matters or for making a public interest disclosure may still be awarded an unlimited level of compensation.


These increases bring into sharp focus the need for employers to follow a fair procedure when seeking to terminate an employee’s contract of employment.


Finally, we take this opportunity to wish you a Merry (and restful) Christmas.

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