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Limit on tribunal awards to increase

Meredith Hurst Tuesday, January 25, 2011

The maximum limit on employment tribunal awards will increase on 1 February 2011.  The headline changes are those to the compensatory award for unfair dismissal and the increase in a week's pay, which is used to calculate statutory redundancy.  The limit on unfair dismissal compensation will rise from £65,300 to £68,400 and the maximum amount of a week's pay will increase from £380 to £400.  In cases involving dismissal, the new figures will apply where the termination date is on or after 1 February 2011.  

The increase in unfair dismissal compensation does not mean that an employee who is dismissed unfairly is automatically entitled to the maximum.  Whilst compensation for unfair dismissal is usually the largest element of compensation awarded in cases of unfair dismissal, more often than not, an employee will not reach the maximum award.  

The compensatory award is intended to reflect the actual financial loss that an employee suffers as a consequence of the dismissal.  The employment tribunal will award such amount as it considers just and equitable in all the circumstances with reference to the net amount that the employee would have continued to receive had the dismissal not occurred.  The employee may have to account for earnings in new employment since dismissal.  An employment tribunal may also reduce an award where it feels that the employee has failed to mitigate loss - in other words - to find another job. 

Future loss may be awarded for the period beyond the date of the employment tribunal hearing.  Calculation of future loss is a speculative exercise for the employment tribunal.  There may be no future loss if an employee has secured alternative employment.  Alternatively, where a dismissed employee is older or lives in an area of high unemployment an award for future loss may be considerable.  Career long loss on the other hand is rare.  The size of the award will depend upon an individual's earning capacity and the ability to find alternative employment.  

One instance where the maximum may be achieved is where an employee benefitted from a final salary pension.  Dismissal will have a detrimental effect upon the value of such a scheme and so complex calculations will have to be made by a specialist employment lawyer in order to assess the extent of that loss. 

The increase in the maximum possible awards will come as a welcome boost for employees and their representatives, less so for employers.  Whether you are an employer or an employee, please contact us if you require advice about any employment law matter. contact us here