How is Unfair Dismissal Calculated?

How Much Can I Receive in an Unfair Dismissal Claim?

The Ministry of Justice statistics show that the amount of unfair dismissal claims received by employment tribunals is rising. 17,384 claims were made in the year 2017/18 compared to just 12,038 claims in the previous year. The amount of compensation awarded for unfair dismissal claims has also increased with the highest sum awarded for any tribunal claim in 2016/17 being compensation for unfair dismissal of £1,744,576.

Total Unfair Dismissal Claims 17,38412,03813,30212,65228,528
Unfair Dismissal Maximum Compensation AwardedNot yet published £1,744,576£470,865£238,216£3,402,245

Source: ET and EAT Tables 2017 – 2018 (Excel file) on Tribunals and gender recognition certificate statistics quarterly: January to March 2018 – GOV.UK.

If you are not sure if your dismissal is unfair please call our helpline now on 0800 000 11 to receive a free legal consultation with one of our expert unfair dismissal solicitors.

Alternatively, read our guide below which offers a useful insight into how unfair dismissal is calculated. This guide will help you decide if your dismissal is unfair and whether you have a valid unfair dismissal compensation claim.

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Guide to How Unfair Dismissal is calculated

This guide will provide you with all the information you need to determine whether you have a right to claim compensation for unfair dismissal and the relevant steps you will need to take. It will also provide you with information on how to get free expert legal advice from an employment solicitor specialising in unfair dismissal claims and advice on how you can start your claim.

Definition of Unfair Dismissal

How To Calculate Unfair Dismissal

How To Calculate Unfair Dismissal

Unfair dismissal is defined as an act of employment termination, with or without notice, by an employer for unfair/inadmissible reasons or by an employee’s resignation as a result of the employer’s conduct for breach of contract (also known as constructive dismissal) or by the expiry of a limited-term contract without renewal. When a dismissal takes place, the employer must establish that the dismissal is for a substantial reason, such as gross misconduct, an inability to perform duties or redundancy. If your employer does not show a substantial reason for your dismissal you could be owed thousands in compensation for unfair dismissal.

Can I claim for Unfair Dismissal?

You will be able to make a claim for unfair dismissal if you can satisfy the following conditions:

  • you are an employee;
  • you have been dismissed;
  • you have the requisite 2 years qualifying period of service (unless the dismissal is for an automatically unfair reason);
  • your work has been done in Great Britain or you have a sufficient connection to Great Britain which brings you within the territorial scope of the Employment Rights Act 1996; and
  • none of the exclusions from the right to claim apply.

You will also need to demonstrate that your dismissal was unfair. If your employer dismisses you without giving you a valid reason for doing so, this may suffice for an award of compensation for unfair dismissal to be paid. You may also be entitled to compensation even if your employer does have a valid reason for the dismissal if it can be demonstrated that the wrong procedure was used when handling your case.

For you to receive an award of compensation for unfair dismissal, your employer must not have dismissed you for any one of the five potentially fair reasons listed below:

  • Employee conduct/misconduct: it is potentially fair to dismiss you for a reason relating to your conduct. This can range from minor issues such as poor timekeeping and attendance to more serious misconduct such as; theft of company property or information, racist or aggressive behaviour, physical violence or gross negligence;
  • Capability or poor performance: your dismissal is potentially fair if you have ill health which makes it difficult for you to carry out your day-to-day job or if you are a poor performer;
  • Redundancy: if your employer can demonstrate that there is a business need to make you redundant such as; a change of business location, business closure, a lack of work for you to undertake your particular role or if your particular role is no longer required then you will not be able to make an unfair dismissal compensation claim;
  • Breach of a statutory duty or restriction: if you are breaking the law by continuing to work then you will not have a claim for unfair dismissal. For example, if you are a taxi driver and lose your licence then you would be breaking the law if you continued to work in that capacity; and
  • Any other substantial reasons: this category is designed to catch potentially fair dismissals that do not fall under any of the other categories and may include various different reasons ranging from a key client not wanting to work with you anymore to you refusing to work with a particular colleague or piece of equipment. A dismissal under this category would have to be reasonable and would be based on the individual circumstances of the case.

Before your employer can dismiss you for any of the reasons mentioned above they will need to have followed the formal and reasonable procedures that are in place. These are usually contained in your contract of employment or employee handbook and will include the steps that need to be taken in certain situations. For example, your employer may be required to provide you with a verbal or written warning in the first instance and offer you the chance to explain/defend your actions prior to you being dismissed. If your employer dismissed you without taking the necessary steps first, then they will not be able to rely on any of the five valid reasons listed above.

Essentially, your employer will need to have provided you with the opportunity to resolve any problems/issues first before dismissing you otherwise compensation for unfair dismissal will be payable to you.

If you have been unfairly dismissed and choose to go to a tribunal, the onus will be on you to prove that unfair dismissal has taken place. Your employer will be required to prove that they had a valid reason for dismissing you and that the correct procedures were followed to avoid having to pay you compensation for unfair dismissal compensation.

If your employer is unable to prove that a) the proper procedures have been followed; b) that you have not been treated as a special case; and c) that you had previously been made aware of the company rules and procedures, compensation for unfair dismissal will be awarded.

You will only be able to go to a tribunal if you can demonstrate that you have followed the company’s usual procedures and have still not achieved a satisfactory outcome. It is important that you keep notes of anything relevant to your claim and keep copies of all correspondence you have had with the company so that you can demonstrate your case easily.

How much could my Unfair Dismissal claim be worth?

If the tribunal finds that you have been unfairly dismissed, it will then have to decide what remedy you shall be awarded with. There are three different types of remedies available which are:

  • Reinstatement;
  • Re-engagement; and
  • Compensation.

The tribunal will ask you if you want to seek reinstatement or re-engagement of your employment whilst also considering whether this option would be reasonably practicable for your employer to comply with and whether your conduct had contributed to the dismissal.

Compensation is the remedy that is used in most cases and will include a basic award, a compensatory award and/or an additional award.

The basic award is based on a formula which takes into account your age, length of service and the amount you would receive for a week’s pay (subject to a statutory cap). In certain circumstances, the basic award is set at a minimum amount otherwise the tribunal will have the discretion to reduce the amount payable.

Basic award calculation:

 Age 41-65Age 22-40Below Age 22
Amount1.5 weeks pay for each complete year of employment1 weeks pay for each complete year of employment0.5 weeks pay for each complete year of employment

The compensatory award is determined by the tribunal and is based on what it believes is just and reasonable in the circumstances. The financial loss that you have suffered as a result of the unfair dismissal will be taken into account and will include your salary, pension and other employee benefits you receive. The period the financial loss will be calculated on will be based on the period up until alternative employment is found or for a period of time the tribunal considers just and equitable. You will need to ensure that you have taken steps to mitigate any loss as deductions will be made by the tribunal for a failure to do so. Adjustments can also be made by no more that 25% for failing to follow the ACAS Code of Practice.

The compensatory award is usually subject to an upper cap, although this will not apply for those dismissals that are considered automatically unfair such as; whistleblowing or reasons relating to health and safety.

The maximum compensatory award is the lower of either 52 weeks pay or a numerical figure which changes annually in line with inflation (currently set at £83,682 06 April 2018 – 05 April 2019).

What are the Unfair Dismissal time limits?

You should make an application as soon as you receive notice of the dismissal as all claims must be made within three months of the effective date of termination less one day. Although a tribunal may consider your application after this date, this will only be if they believe that it was not reasonably practicable for you to have made the complaint sooner.

What is the 2 Year Unfair Dismissal Rule?

The 2 year unfair dismissal rule, also known as the qualifying period rule, generally means that you will not be able to claim compensation for unfair dismissal unless you were employed by your employer for at least 2 years.

But, there are various exceptions to this 2 year rule and so even if you don’t have the requisite 2 years qualifying period of service, you may still be able to make a claim for unfair dismissal if you can satisfy one of the following:

  • the dismissal is discriminatory – compensation for a discriminatory dismissal claim is calculated in a similar way to compensation for unfair dismissal except for the fact that there is no cap and you may also be entitled to an injury to feelings award;
  • the dismissal arose from you making a protected disclosure under the public Interest Disclosure Act 1998;
  • the dismissal is for a health and safety reason;
  • the dismissal is the result of you having asserted a statutory right;
  • the dismissal occurred because you are a trade union representative;
  • your employer has not followed its contractual disciplinary or redundancy policy; or
  • any other exceptions such as; attending jury service, refusing to work on a Sunday, exercising your rights to maternity, paternity or parental rights, flexible working, working tax credits, working time legislation, part-time workers legislation and taking part in a protected industrial action.

How is Unfair Dismissal calculated?

Basic Award

The basic award for unfair dismissal is calculated according to a formula based on the employee’s age, length of service and weekly pay. The maximum that can be awarded under the formula is 30 weeks’ pay and the employee’s weekly pay will be subject to the statutory limit on a week’s pay. There is no minimum award, except for in certain automatically unfair dismissal cases.

Maximum that can be awarded in the basic award  
6 April 2018 – 5 April 2019 £15,240
6 April 2017 – 5 April 2018 £14,670
6 April 2016 – 5 April 2017 £14,370
6 April 2015 – 5 April 2016 £14,250
6 April 2014 – 5 April 2015 £13,920

Automatically Unfair Dismissal Basic Award

Some automatically unfair dismissals attract a minimum basic award. Such amount is adjusted annually by the Secretary of State in line with RPI.

Such cases are where the reason or principal reason for dismissal is:

  • trade union membership or activities;
  • carrying out activities as a health and safety representative;
  • carrying out functions as a workforce representative;
  • carrying out duties as an occupational pension scheme trustee; or
  • carrying out functions or activities as an employee representative.

The maximum basic award is the same as in other unfair dismissal cases (see Basic award above).

 Minimum Award for automatically Unfair Dismissals Maximum Award for Automatically Unfair Dismissals
6 April 2018 – 5 April 2019£6,203£15,240
6 April 2017 – 5 April 2018£5,970£14,670
6 April 2016 – 5 April 2017£5,853£14,370
6 April 2015 – 5 April 2016£5,807£14,250
6 April 2014 – 5 April 2015£5,676£13,920

Compensatory Award

The compensatory award in the vast majority of unfair dismissal cases is subject to a statutory upper limit or “cap” which is adjusted annually by the Secretary of State.

The relevant date for determining the applicable limit is the effective date of termination (EDT), not the date the tribunal makes its award.

The limit is raised every 6 April in line with any annual increase in RPI measured in the previous September. If there is no change or a decrease in RPI, the limit remains the same.

Compensatory Awards  
6 April 2018 – 5 April 2019 £83,682
6 April 2017 – 5 April 2018 £80,541
6 April 2016 – 5 April 2017 £78,962
6 April 2015 – 5 April 2016 £78,335
6 April 2014 – 5 April 2015 £76,574

The statutory cap does not apply where the reason for the dismissal was that the claimant:

  • was carrying out health and safety activities;
  • had made a protected disclosure; or
  • was selected for redundancy for one of the above reasons.

Additional Award

An employment tribunal may order that an additional award be paid in unfair dismissal cases if an employer does not comply with a reinstatement order or re-engagement order. The minimum and maximum amounts which can be ordered are calculated with reference to a week’s pay, subject to statutory limits.

The minimum order will be the lower of 26 weeks’ pay or the amount in the Minimum column in the table below, while the maximum order will be the lower of 52 weeks’ pay or the amount in the Maximum column below.

 Minimum Order for Additional Awards Maximum Order for Additional Awards
6 April 2018 – 5 April 2019 £13,208 £26,416
6 April 2017 – 5 April 2018 £12,714 £25,428
6 April 2016 – 5 April 2017 £12,454 £24,908
6 April 2015 – 5 April 2016 £12,350 £24,700
6 April 2014 – 5 April 2015 £12,064 £24,128

Unfair Dismissal case study

There are a number of different situations which could give rise to a claim for unfair dismissal. Although your employer does have the right to dismiss you, they must do so fairly to prevent such a dismissal being challenged. You will only be able to challenge a dismissal however if you are an employee, have worked for your employer for a minimum of two years and the law says that the reason you were dismissed was unfair.

The following case study provides an example of what might be considered unfair by an employment tribunal. Here, the question of whether an unfair dismissal or a resignation had taken place was determined by the Employee’s unfair dismissal lawyer and a fair outcome which the Employee was happy with was achieved.

Unfair dismissal or Resignation?

Here an Employee had been in employment for a period of 7 years before falling ill due to workplace stress resulting in a Transient Ischaemic Attack (TIA). The Employee had previously been informed by his Employer that he had the benefit of a full contractual sickness pay. However, after being signed off work due to his illness, the Employee only received full pay for 1 week and statutory sick pay thereafter.

An argument between the Employee and the Employer broke out shortly after this and it was alleged by the Employer that the Employee had said words to the effect of his resignation from the employment. The Employer also alleged that the Employee had informed him of his intention to leave the employment at an undetermined date in the near future when it was considered more convenient for the business.

After being off sick for a period of time, the Employee stopped receiving sick pay and when he confronted his Employer about this he was told that his resignation (allegedly taking place during the argument) was accepted as a verbal resignation and that the same had been confirmed in a letter sent out to him. The Employee advised that he had never received such letter and so was not aware that he was no longer employed.

The Employee was advised to make a claim for unfair dismissal in the Employment Tribunal even though his Employer was arguing that he had resigned. His solicitor advised him that it is up to the Employment Tribunal to decide, based on the arguments of both side, what discussions they believed to have taken place and the intention of the parties when deciding if an unfair dismissal or a resignation had taken place.

If the Employment Tribunal finds that the words used by either party are ambiguous an objective test will be used, taking into account the circumstances of the case and the nature of the workplace, to determine the intention of the parties. If the Employment Tribunal is still unsure of the parties intent it will then make an assessment as to what a reasonable employer would have understood the words to mean in a comparable situation.

Although parties in an Employment Tribunal are usually only entitled to rely on words that are unambiguous, resignations are generally excluded from this on the basis that things are often said in the heat of the moment that are not actually the parties true intentions. If an employee resigns in the heat of the moment it will be up to the Employer to follow this up to make sure that his intentions were true, although each case will be determined based on its individual facts and circumstances.

An early settlement was reached in this case due to the Employee having a strong case to argue if it ended up at an Employment Tribunal. The Employee’s solicitor calculated the figures they believed the Employee would be awarded if it went to a tribunal, taking into account any deductions that might be applied as a result of the Employees contribution to the dismissal. Using these figures negotiations were entered into and a settlement agreement was reached. The Employee was happy that he was able to obtain compensation without having to go to an Employment Tribunal and believed the amount that he received was fair.

Unfair Dismissal Claim: what can I include?

The basic award is based on a statutory formula of multiplying the length of service by your age and a weeks pay as follows:

  • after the age of 41 – 1.5 weeks pay for each year of employment.
  • between the ages of 22 and 40 – 1 weeks pay for each year of employment.
  • Under the age of 22 – 0.5 weeks pay for each year of employment.

The compensatory award will be used after the basic award has been addressed and will be such amount that is considered just and equitable in all the circumstances having regard to the losses you have sustained as a result of the dismissal.

The losses that will be taken into account include:

  • loss of wages (taking into account all employee benefits);
  • loss of future wages (this will depend on whether you have taken steps to mitigate any loss and found alternative employment);
  • loss of statutory rights; and
  • loss of pension.

Unfair Dismissal compensation claims calculator

Find out how much you could claim if you have been unfairly dismissed from your employment by using our compensation claims calculator below. Our calculator will help you determine how much you may be entitled to. All you have to do is simply fill in the form and let us do the calculations for you. We will provide you with a breakdown of your basic award, compensatory award and final award.

You may also be entitled to up to £300 Loss of Employment Rights as well as other losses, such as loss of pension rights, company car etc. Please contact us for further details.

Working with a No Win No Fee Unfair Dismissal Solicitor

Choosing to work with a No Win No Fee unfair dismissal solicitor is highly recommended as you will receive an initial free legal consultation from your solicitor who will then evaluate your claim to determine its likelihood of success. If your claim looks promising they will then be able to take you on under a Conditional Fee Agreement, No Win No Fee which means that you will pay nothing if your claim is unsuccessful.

Why Choose to make your Unfair Dismissal claim

If you choose to go with us to pursue your claim on your behalf you will not be disappointed. We have a team of expert solicitors on hand to deal with your claim for unfair dismissal and because we offer to work with you on a No Win No Fee basis what have you got to lose?

Call Us Today

Call us today on 0161 696 9685 for a free consultation with one of our expert advisors who will be able to guide you through the process.

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