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What compensation could you receive with a successful Constructive Dismissal claim?
If a tribunal award was made, the compensation amounts shown below would be applicable. However, most situations don’t continue to courtroom litigation and can be resolved if the proper approach is used. In certain situations, a lump sum that is roughly based on the guidelines listed below can be negotiated. Please do not hesitate to seek professional counsel regarding your situation.
In the event that an employment tribunal grants you compensation for Constructive Dismissal, it will be divided into a basic award and a compensatory award.
The basic award is a statutory award that is determined by multiplying the relevant factors of your age, a week’s salary, and the length of continuous service (up to a maximum of 20 years), as follows:
- After turning 41, one and a half week’s pay for each year of employment;
- A week’s salary for every year of employment between the ages of 22 and 40;
- For every year of employment before the age of 22, one-half of a week’s salary is awarded.
Usually, your typical weekly gross salary at the time of termination will be used to calculate the redundancy payment, up to the maximum amount, which is £643 as of April 6, 2023. Typically, overtime money is not included in a week’s pay. The most you can be paid under a Basic award is £19,120.
Even if your actions did not directly cause your dismissal, a tribunal may decide to lower the basic award if it determines that your behaviour before being fired or receiving notice of your termination was such that doing so would be just and equitable.
If you were fired because of redundancy, the tribunal will deduct any redundancy payments you received or were granted as part of the compensation from the basic award. However, no such reduction to the basic award will be granted if your employer is unable to persuade the tribunal that redundancy actually constituted the primary cause of termination.
The often bigger compensatory award will be taken into consideration once the basic award has been addressed.
According to the Employment Rights Act, compensation will be “such amount as the Tribunal considers just and equitable in all the circumstances taking into account the loss sustained by the complainant in consequence of the dismissal insofar as that loss is attributable to action taken by the Employer.“
In light of this, the losses must have occurred:
- resulting from the resignation;
- due to the acts of your employer;
- as well as that giving the award is fair and just.
What are the primary loss categories that can be covered by a Compensation Award?
These are the following:
- Wage loss
- Future wages loss;
- loss of legal rights. Before you are eligible for a redundancy payment or unjust dismissal protection, you must wait two years;
- Pension loss.
In terms of compensation, this includes advantages outlined in a contract, such as a corporate car or private health insurance. It may even contain extra perks as long as you have a reasonable expectation of them. though you had a reasonable expectation of receiving a bonus or commission, even though those payments were optional, you may also include that in your claim.
You must take into account any income you received during the period that would have been your notice period when computing your damages, unlike in unjust dismissal awards. In other words, if you start a new job, for instance, within a month of quitting your previous one and your notice term is three months, you cannot use a Constructive Dismissal claim to get the additional two months of notice.
The tribunal’s assessment of future loss will always be speculative and will be based on your ability to mitigate your loss and find new employment before the hearing date when you did so, how much you earned at your new job, and other factors. In the event that you do not have any new job as of the hearing date, the tribunal will need to decide on a reasonable cut-off point for compensation.
The current statutory restriction of £105,707 or 52 weeks of gross salary—whichever is lower—limits the amount that you can get as compensation for Constructive Dismissal. This is in addition to the basic award, which the Tribunal may order up to a maximum of £19,290. These numbers are as of April 6, 2023.
Benefits in kind, pension contributions, and discretionary bonuses are not included in the calculation of a year’s salary.
In the event that you win your lawsuit, the tribunal will determine your overall loss, and you will be required to give your employer credit for whatever money you have previously received from them, such as increased redundancy payments or pay in lieu of notice.
According to the “Norton Tool” strategy, tribunals would not lower the compensation to reflect any money you may have earned from another employer during the notice period if you were abruptly or unfairly fired without notice or without payment in place of notice. This is not the case, though, if your claim involves Constructive Dismissal, in which case earnings from other jobs during the notice period should be included.
Due to the £89,493 statutory cap, you have to carefully consider whether filing an unfair dismissal claim is reasonable if you have already received a sizable severance payment. However, this does not exclude reaching a settlement beyond this amount through discussion (which we have done numerous times).
The amount of compensation that may be granted in specific circumstances is uncapped. These include situations where a claim for discrimination or whistleblowing is made in addition to a Constructive Dismissal.
As previously stated, an Employment Tribunal has the authority to lower both the Basic award and the Compensatory award when determining a compensation award in these instances. This might occur if a tribunal determines that an employee’s actions contributed to the problem, or if an employer can demonstrate that, even if they had followed the right procedure, the decision to fire the employee would still have been the same (this is referred to as a Polkey reduction of damages).
We at SGT Law Firm are a renowned firm of employment law solicitors, representing senior executives and employees in the City and across the UK. Call us at 0141 881 8795 for more details on Constructive Dismissal for a free consultation. You can also contact us online.