Basic Award Unfair Dismissal

Basic Award Unfair Dismissal (s.119 ERA 96)

The basic award is equivalent to a statutory redundancy payment and is calculated according to the set formula below:

Age Factor

The age factor is one week's compensation for each year of work between 22 and 40; 1.5 weeks for each year of employment beyond 41; Each year of work under 22 earns half a week.

Service

Service is the length of time in complete years an employee has been continually employed and is counted backwards from the EDT (as defined in s.97 ERA 96) to a maximum of 20 years.

Weeks Pay

Week’s pay is the actual gross weekly pay up to the maximum of £571 which is the Tribunal rates and compensation limits from 6 April 2023. If an employee's actual pay is less than £571 per week then it is the actual pay which is used in calculating the basic award.

Reductions to the basic award

The basic award is not compensation for loss of earnings; therefore it is never reduced on the basis of failure to mitigate. This means that if the employee obtains another job immediately he will still receive the basic award. The basic award is still subject to some other reductions.

1. Where the employee’s conduct contributed to his dismissal (s.122(2) ERA 96). The Tribunal can reduce the award by up to 100% to reflect the fact that the employee brought the dismissal on himself.

2. If it is otherwise ‘just and equitable’ to reduce the award. For example it may be just and equitable when the employer discovers misconduct of the employee after dismissal.

3. Where the employee has acted unreasonably in refusing an offer of reinstatement by the employer, this too will reduce the basic award (s122(1) ERA 96).

4. Where the reason for dismissal is redundancy, any redundancy payment awarded by the Tribunal or paid by the employer is deducted from the basic award. Since a statutory redundancy payment is calculated in the same way as the basic award, the employee only receives the redundancy payment plus the compensatory award (if any).