EVERYDAY LAW: Unfair dismissals – options and awards
Today I begin to consider the options available to an employee for unfair dismissal under the Employment Rights Act 2012.
Once a complaint for unfair dismissal has been found to be established, the Employment Rights Tribunal must explain to the employee the orders for reinstatement and re-engagement and the circumstances in which such orders can be made, and inquire of the employee whether he wishes the tribunal to make such an order.
Where the tribunal determines it is not appropriate to make an award for reinstatement or re-engagement or where it makes such an order and it is not complied with, the tribunal shall, in accordance with Section 37 of the act, make an award for compensation for unfair dismissal to be paid by the employer to the employee.
Where neither an order for reinstatement nor re-engagement has been made, the tribunal must make an order for compensation calculated in accordance with the Fifth Schedule of the act. The schedule provides for an award consisting of an aggregate of the following amounts:
(1) A basic award determined in accordance with the statutory formula set out in the act. This compensation depends on the length of the period of continuous employment of the employee and his or her weekly earnings;
(2) An amount such as the tribunal thinks fit of any benefit which the employee might reasonably be expected to have had but for the dismissal;
(3) An amount, not exceeding 52 weeks’ wages, where the dismissal was for a reason specified in Section 30 (i)(c) or, there was more than one reason for dismissal, one of those reasons was a reason so specified. Those reasons are, in fact, for the automatically unfair reasons for dismissal.
For example, if an employee was dismissed because of his race, colour or religion, that dismissal would be subject to an award based on this provision in the act.
In most cases, where compensation is awarded, it will consist of an aggregate of the basic award and an award for any benefit which the employee might reasonably be expected to have had but for the dismissal.
The formula for calculating the basic award is set out in Sections 2(2) to 2(5) of the Fifth Schedule of the act and the amount of compensation depends on the earnings of the employee and the length of service.
In other words, the calculation is somewhat similar to that of a severance payment though it is not identical.
Section 2(2) provides: The basic award shall be calculated in accordance with the following table, and in that table “period” means the period of continuous employment of the employee:
(a) where the period is less than two years, but subject to Section 27(3) – 5 weeks’ wages;
(b) where the period is two years or more but less than ten years – two and a half weeks’ wages for each year of that period
(c) where the period is ten years or more but less than 20 years – three weeks’ wages for each year of that period;
(d) where the period is 20 years or more but less than 33 years – three and a half weeks’ wages for each year of that period.
It should be noted that no continuous employment beyond 33 years shall be counted.
Additionally, the basic award as calculated in Subsection 2(2) above shall be reduced by any severance payment paid to the employee on dismissal pursuant to the Severance Payment Act, and by any payment made by the employer to the employee, whether in pursuance of the Severance Payment Act or otherwise, on the ground that the dismissal was by reason of redundancy.