Unfair Dismissal Compensation

Proven otherwise, you are entitled to a 'basic salary award' & 'compensatory award' as unfair dismissal compensation. Know the process for tribunal here.
  • Author: Siva
  • Last updated: August 3, 2022
  • 6 Minutes
unfair dismissal compensation in the UK and its statutory laws explained by Papershift

Being dismissed from work can be a traumatic experience, especially if you feel that the dismissal was unfair. On top of the usual worries about how to pay the bills, keep on top of the mortgage payments, and look after the family, there is an added sense of injustice. Your employer has put you in this situation through their unfair behaviour.

Unfair dismissal claims are a regular occurrence at tribunals and employees winning their cases are often entitled to compensation. But how much is unfair dismissal compensation and how do you go about claiming it? Read on to find out more.

What is unfair dismissal?

Employees have legal rights relating to how their employment can be terminated by their employer. If an employee is sacked and their employer did not have a reasonable justification for it, the dismissal could be deemed unfair. In some cases, this may mean that the employee could be entitled to claim redress, either in the form of compensation or some other remedy.

Provided an employee meets the eligibility requirements (see later in the article), an employer must give a reason why they are sacking a worker. If the reason (or the main reason when there is more than one) cannot be justified as fair, the employee will be deemed to have been unfairly dismissed.

What is an Employment Tribunal?

Employment tribunals are a system of courts separate from the usual civil court system. The employment tribunal deal only with employment law cases, such as unfair dismissal and discrimination, 

How do I know if I am eligible for unfair dismissal compensation?

The first step to any unfair dismissal claim is establishing whether you meet the eligibility requirements. To be eligible, you must have been:

  1. An employee of the business
  2. Employed continuously for more than 2 years
  3. Dismissed

Let’s look at each in more detail:

You were an employee of the business

In everyday language, an employee often just means someone who works for someone else. But the legal definition of the word is a little stricter.  

Employees are legally defined as someone who has entered into, or works under, a contract of employment. The law also recognizes implied contracts of employment – i.e., contracts that have not been written down but can be ‘assumed’ to exist by the nature of the working relationship between you and your employer.

This can be confusing, but some of the main indications that you are an employee include:

  1. A written contract of employment.
  2. Paying PAYE tax.
  3. Having a work-based pension plan.

You were employed for over 2 years

In most cases, protection from being unfairly sacked or fired only begins when you have been employed for 2 or more continuous years. Some interruptions in employment may prevent you from meeting the 2-year continuous employment requirement.

In some situations, you may still be able to claim for unfair dismissal complication even if you have not been continuously employed for the minimum period. These include:

  • Situations where you were dismissed for a reason connected with a “protected characteristic” i.e., you were discriminated against on the grounds of:
    • Age
    • Sex
    • Sexual orientation
    • Disability
    • Gender reassignment
    • Marital status
    • Pregnancy and maternity
    • Religion or belief
    • Race/nationality/ethnicity
  • You were dismissed because of union membership or activities.
  • You were dismissed for being a member of the reserve armed forces.
  • You were dismissed for a reason specified in the Employment Rights Act 1996 which relate to:
    • Jury service
    • Leave for family reasons
    • Health and safety matters
    • Where there have been breaches of the Working Time Regulations 1998
    • Making a protected disclosure (also known as whistleblowing)
    • Asserting certain statutory rights (for example, the right to a minimum wage)
    • Flexible working
    • Redundancy

You were dismissed

To claim unfair dismissal, you must have been dismissed by your employer. This may sound obvious, but it’s important to note that you cannot claim unfair dismissal if you resigned or decided to leave your job yourself.

There are some important exceptions to this, including:

  • If you were pressured into leaving.
  • If you can successfully prove there was a ‘constructive dismissal’

How do I know if a dismissal is unfair?

Determining what is fair can be difficult. Here are some things to consider when deciding if a dismissal has been fair or not:

What was the reason for the dismissal?

Employers must provide their reason, or main reason, for dismissing an employee in writing. This can be used as evidence in any unfair dismissal claim.

In most cases the employee will need to request this statement from their employer who will then have 14 days to provide it. If they provide more than one reason, they must also indicate what the main reason is.

Is the reason automatically unfair?

There are a number of reasons for dismissal that employers will be unable to justify. If this is the case, it will be considered automatically unfair. The automatically unfair grounds for dismissal are:

  1. Discrimination. This could be based upon age, race, disability, sex, gender reassignment, sexual orientation, marriage/civil partnership, pregnancy/maternity, and religion or belief.
  2. Pregnancy and childbirth. If you are fired whilst pregnant this can be automatically considered as unfair. It may also constitute discrimination. 
  3. Assertion of specific statutory employment rights. This includes a long list of statutory rights provided by the Employment Rights Act 1996 and includes things like the right to a minimum wage and statutory holidays.

Is the reason for dismissal potentially unfair?

It is down to employers to show that a dismissal was fair. There are several categories of reason which are ‘potentially’ fair in law and employers will have to state which of these categories their reason falls into. These categories are:

  1. Capability
  2. Conduct
  3. Redundancy 
  4. Illegality, that is if remaining in your position would lead to the contravention of some legal provision.
  5. Some other ‘substantial reason’

What if an employer didn’t follow dismissal procedures?

If an employer has not followed the correct procedure when dismissing an employee, it does not necessarily mean the dismissal was unfair. However, the employer must show that even if they had followed the correct procedure, they would still have dismissed the employee and that the reason is fair.

How long can it take to receive unfair dismissal compensation?

That depends on how the case is resolved. Some cases may progress all the way through to tribunal which can lead to lengthy delays making it difficult to give an accurate indication of how long an unfair dismissal compensation claim will take.

What will I be awarded for a successful unfair dismissal claim?

The possible remedies to an unfair dismissal case are:

  • Reinstatement
  • Re-engagement
  • Compensation

How much compensation could I receive?

Unfair dismissal compensation is split into two kinds of ‘award’:

The Basic Award

This is linked to your salary and the length of your service. Usually, a week’s pay is used and applied for each year of continuous employment to a maximum of 20 years. 

Compensatory Award

The Employment Tribunal has discretion with the compensatory award. It will be for them to decide a figure that it considers to be fair and just. The Employment Tribunal will also examine what other losses you have incurred from your unfair dismissal under this award.

In conclusion

We hope you have enjoyed our guide to unfair dismissal compensation. For more useful workplace guides, check out the rest of our website.

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Written by Siva

I write & describe the value & benefits delivered by Paperhift's rota planning, staff time tracking, and employee payroll management software. Especially useful for Shift Planners, Rota Managers, Team Admins, and HR Teams :-)