how is compensation for unfair and wrongful dismissal calculated?
Unfair Dismissal
Section 118 of the Employment Rights Act 1996 sets out that compensation for unfair dismissal is calculated on two levels:
On a simplistic basis, this is calculated as follows:
The Basic Award
The basic award is calculated in accordance with s.119 of the Act by determining the years of continuous employment, ending with the effective date of termination and multiplying this by the appropriate amount. Section 119(2) and (3) set out the appropriate amount guidelines as follows:
The Compensatory Award
This calculation has a less formulaic approach and s.123 of the Act states this is calculated on a case by case basis on what is considered to be just and equitable in the circumstances .
Wrongful Dismissal
The compensation for wrongful dismissal is calculated in accordance with the notice period of the contract. It represents the amount that would have been payable had notice been given . This is accordingly usually much lower than the compensation awarded for unfair dismissal.
The Employment Rights Act 1996
Astra Emir ‘Selwyn’s Law of Employment’ (17th Edition, OUP, 2012) page 434
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