Unfair Dismissal: New Compensation Rate Announced

New compensation rates will apply from the 1st February 2010 to unfair dismissal cases. Compensation in unfair dismissal cases is made up of a basic award and a compensatory award (the latter compensating victims of unfair dismissal for the financial loss arising out of their dismissal).

The basic award is calculated according to a formula based upon age, length of service, and average gross weekly pay. The figure for average weekly pay will continue to be capped at ВЈ380 per week maximum from the 1st February 2010 and only the most recent 20 years will be taken into account in terms of length of service. The basic award is calculated in detail as follows: Years of service below 22 years of age, the weekly pay is multiplied by 0.5; Years of service between age 22 and 41, the weekly pay is multiplied by 1; Years of service from age 41 onwards, the weekly pay is multiplied by 1.5.

Accordingly, the maximum basic award is 20 years at ВЈ380 x 1.5 = ВЈ11,400.00.

Where an employee is dismissed for a reason connected with their role and they were an employee representative, an occupational pension trustee, a trade union member or representative, or a safety representative (or were in the process of becoming a safety representative), then the absolutely minimum basic award will continue to be ВЈ4,700.00 from the 1st February 2010 (although this may be reduced in certain circumstances).

The maximum compensatory award from the 1st February 2010 will be reduced to ВЈ65,300.00 from ВЈ66,200.00.

The basic and compensatory awards when combined will therefore produce an overall maximum award of ВЈ76,700.00 from the 1st February 2010. This is a reduction from the previous maximum of ВЈ77,600.00. The fall has been brought about by the reduction in the compensatory award which has been reduced on account of the fall in inflation during 2009.Richard Antrobus is a Solicitor with The Employment Law Solicitors who handle dismissal and discrimination cases on behalf of both employers and employees nationwide throughout the United Kingdom. He is also the author of the firms Website, The Employment Law Solicitors . Visit the website at: http://www.theemploymentlawsolicitors.co.uk