If a tribunal upholds a claim of unfair dismissal, it may order the employer to re-employ the employee (re-employment ). If the tribunal decides not to order re-employment, it will award the employee compensation (basic award ).
In certain cases, an employee who considers that he or she has been unfairly dismissed can apply to an employment tribunal for an order that the employer should continue to employ him or her until the claim is heard or settled. This remedy, known as interim relief, is available if the employee alleges that he or she was dismissed because of his or her trade union membership or activities (dismissal on union grounds ) or because of his or her activities as:
- a health and safety representative;
- a workforce representative under the Working Time Regulations or a candidate for election as a workforce representative;
- an occupational pension scheme trustee; or
- an employee representative for the purposes of collective consultation on large-scale redundancies or business transfers or as a candidate or taking part in an election of employee representatives.
Interim relief is also available if the employee was dismissed for making a protected disclosure ( Protection for 'whistleblowers' ) or for supporting or resisting an application for union recognition under the statutory recognition procedure (statutory procedure for recognition).
The employee must apply for interim relief either before being dismissed or in the seven days following his or her effective date of termination (effective date of termination ). If the tribunal that hears the application considers it likely that the employee's claim will succeed, it can order the employer to reinstate the employee into his or her old job or to re-engage the employee in another job on broadly similar terms and conditions, until the claim is heard or settled. If the employer is unwilling to reinstate or re-engage the employee, the tribunal will order that the employee's contract should continue. This means that the employee will have the right to be paid and receive all his or her other contractual benefits until the claim is heard or settled.
If a tribunal upholds an unfair dismissal claim, its first consideration will be whether the claimant wishes to be re-employed by the employer. This could involve either reinstatement into his or her original job or re-engagement in a comparable alternative post. If the claimant does not want to be re-employed, the tribunal will go on to award compensation, as outlined below (see 'Basic award'). If the claimant does want to be re-employed, the tribunal will consider whether it should make a re-employment order. In deciding whether to order re-employment, the tribunal will take into account whether it would be practicable for the employer to re-employ and, if the claimant caused or contributed to the dismissal, whether it would be just to order re-employment in those circumstances.
If the employer is ordered to re-employ the claimant but fails to do so, the tribunal will award the employee compensation, as outlined below (see 'Basic award'). It will also award the employee an additional award of compensation of between 26 and 52 weeks' pay, unless the employer can prove that it was not practicable for it to comply with the re-employment order. For these purposes, a week's pay is calculated in the way set out elsewhere in this Guide ( Calculating a week's pay ) and is subject to a limit. This limit is updated annually in line with the retail prices index. For the year from February 2008 it stands at £330.
In practice, re-employment orders are rarely made.
Compensation for unfair dismissal is made up of two elements: the basic award and the compensatory award.
The basic award is calculated by reference to the employee's age, length of service and week's pay. The employee is entitled to:
- half a week's pay for each complete year of service in which he or she was under 22;
- one week's pay for each year of service in which he or she was 22 or over but under 41; and
- one-and-a-half weeks' pay for each complete year of service in which he or she was 41 or over.
The maximum number of years' service that can be taken into account is 20. A week's pay is calculated in the way set out in the appendix. There is also a limit on the amount of a week's pay, which is adjusted each year in line with the retail prices index. From February 2008, the limit was raised to £330 and the maximum basic award is £9,900.
Minimum basic award
If the dismissal was unfair because the employer failed to comply with statutory minimum dismissal procedures ( Minimum dismissal procedures ), or to notify a retiring employee of his or her right to request to work on (retirement), the basic award will be increased, if necessary, to a minimum of four weeks' pay, unless the tribunal considers that increasing it would result in injustice to the employer.
There is a minimum basic award of £4,400 in certain other cases. These are where the employee has been dismissed, or selected for redundancy, for:
- acting as a health and safety representative;
- acting as a workforce representative under the Working Time Regulations or as a candidate for election as a workforce representative;
- acting as an occupational pension scheme trustee;
- acting as an employee representative for the purposes of collective consultation on large-scale redundancies or business transfers or as a candidate or taking part in an election of employee representatives; or
- reasons relating to union membership or activities.
The basic award will be two weeks' pay if the employee has been unfairly dismissed for redundancy but has been re-employed or has unreasonably refused an offer of re-employment.
There are various circumstances in which a basic award may be reduced. The tribunal may reduce the award if the employee has unreasonably refused an offer of reinstatement or if the tribunal considers that it would be just and equitable to reduce the award because of the employee's conduct before dismissal. Any redundancy payment that the employee has received will also be offset against the basic award.
The second element of unfair dismissal compensation is the compensatory award. This is whatever sum the tribunal considers it just and equitable to award in the circumstances, having regard to the loss the employee has suffered as a result of the dismissal, in so far as that loss is due to the employer's actions. The aim of the award is to compensate the employee, not to penalise the employer.
There is a limit to the compensatory award, which is adjusted annually in line with the retail prices index. For the year from February 2008, it stands at £63,000. In two cases the limit does not apply. These are where the employee was dismissed or selected for redundancy for certain reasons relating to health and safety (health and safety concerns) or for making a protected disclosure ( Protection for 'whistleblowers' ).
The bulk of a compensatory award is likely to be made up of compensation for earnings and other financial benefits, such as pension rights, that the employee has lost as a result of the dismissal. The tribunal will first calculate the employee's loss up to the date of the hearing, based on the net wage or salary of the old job less any income the employee has received from the old employer, such as pay in lieu of notice, or from new employment. If the employee has not secured another job by the date of the hearing, or has another job that is paid less than the one from which he or she has been dismissed, the tribunal will then need to assess how long the employee's loss is likely to continue into the future. If the employee has been unemployed since the dismissal, for example, the tribunal will need to decide how long it will take for him or her to secure another job, in the light of the employee's skills and experience and the conditions in the relevant job market.
The employee is under a duty to minimise his or her loss, and so will be expected to make reasonable efforts to secure another job. If he or she does not do so, the tribunal may decide to award loss of earnings only up to the date by which it considers the employee could have found other work. If the employee has incurred expenses in finding another job, these can be included in the compensatory award.
The tribunal may reduce the compensatory award by whatever proportion it considers just and equitable if the employee caused or contributed to the dismissal by some form of blameworthy or culpable conduct. Any redundancy payment that the employee has received in excess of the basic award will be offset against the compensatory award.
Minimum dismissal procedure
If the employee was dismissed without the requirements of the statutory minimum dismissal procedure being met by the employer ( minimum dismissal procedures ), the tribunal has power to increase the compensatory award by between 10 and 50 per cent but not beyond the statutory limit of £63,000. If the employee was responsible for the non-completion of the procedure by, for example, failing to exercise his or her right of appeal, the compensatory award may be reduced by 10 to 50 per cent.