Effective date of termination

The effective date of termination for the purpose of calculating length of service is, in general, the date on which dismissal takes effect, except where the employee has not been given the required statutory notice, in which case the effective date of termination is the date on which that notice would have expired if it had been given.

Notice period

The required statutory notice is one week if the employee has been employed for one month but less than two years, two weeks for two years, three weeks for three years and so on up to 12 years. After 12 years' service the period of notice required is 12 weeks. The employee may be entitled to longer notice under the contract of employment. If a business is transferred from one person to another, the period of employment of an employee in the business at the time of the transfer counts as a period of employment with the transferee and does not break the continuity of the period of employment.

Interim relief

Employees may make an application to a tribunal for interim relief if they consider that the reason or principal reason for their dismissal was:

• their trade union membership or activities or their non-membership of a trade union; or
• that they performed or proposed to perform any functions they had as health and safety representatives or committee members or as employees designated to carry out workplace health and safety activities; or
• that they performed or proposed to perform any functions they had as an occupational pension scheme trustee; or
• that they performed or proposed to perform any functions they had as an employee representative for consultation about redundancy or business transfers or as a candidate to be a representative of this kind or that they participated in the election of such a representative; or
• that they performed or proposed to perform any functions they had as a representative of members of the workforce or as a candidate to be a representative of this kind for the purposes of the Working Time Regulations 1998; or
• that they made a protected disclosure within the meaning of the Public Interest Disclosure Act 1998; or
• that they exercised or sought to exercise rights relating to trade union recognition procedures; or
• that they exercised or sought to exercise their right to be accompanied to a disciplinary or grievance hearing or that they accompanied or sought to accompany a fellow worker to such a hearing.

If at the interim hearing, the tribunal decides that they think it likely that at the full hearing the employee will be found to have been unfairly dismissed for one of these reasons, they may make an order that the employer temporarily reinstate or re-engage the employee or for the contract of employment to be continued until the complaint of unfair dismissal has been finally settled by agreement or decided at a tribunal hearing.
Applications for interim relief must be received by the tribunal within seven days of the effective date of termination.

Order for reinstatement or re-engagement

In deciding whether to make an order that the employer should reinstate the employee in the same job or re-engage the employee under a new contract of employment, the tribunal will take into account:

• the employee's wishes;
• whether it is practicable for the employee to return to work for the employer (there may, for example, be circumstances in which it is not practicable because relationships at the work place have been seriously damaged);
• in cases where the employee was partly to blame for the dismissal, whether or not it would be just to make such an order.

If the employer fails to comply with the terms of an order for reinstatement or re-engagement the tribunal, on being notified of the failure, will make an award of compensation calculated in the ordinary manner provided for in the legislation. Also the tribunal will make an additional award of compensation to be paid by the employer, unless the employer satisfies the tribunal that it was not practicable to comply with the order for reinstatement or re engagement as the case may be.

How awards of compensation are worked out

Basic award

The basic award is calculated by adding up the following amounts, but only continuous employment within the last 20 years can count:

• 1½ weeks' pay for each complete year of employment when an employee was between the ages of 41 and 65 inclusive;
• 1 week's pay for each complete year of employment when an employee was between the ages of 22 to 40 inclusive;
• ½ week's pay for each complete year of employment when an employee was below the age of 22.

The maximum number of weeks' pay that may be awarded is 30. There is also a maximum week's pay that can be used to calculate the award. (The limit on a week's pay may vary from year to year: the current figure is given in the document Limits on Payments (PL827)).

In trade union, health and safety, employee representative, workforce representative and occupational pension scheme trustee cases (see Interim Relief), there is a minimum figure for the basic award. (This minimum may vary from year to year: the current figure is given in the document Limits on Payments (PL827)).

The basic award, including the minimum award in trade union and health and safety cases, can be reduced if the employee:

• contributed to some extent to the dismissal, or his or her conduct prior to the dismissal otherwise justified the reduction;
• has already been awarded or has received a redundancy payment;
• was within a year of age 65 at the effective date of termination;
• unreasonably refused an offer of reinstatement or unreasonably prevented the employer from complying with an order of reinstatement;
• has been awarded any amount in respect of the dismissal under a designated dismissal procedures agreement.

Compensatory award

This award compensates the employee for the loss suffered as a result of the dismissal insofar as the employer is responsible for this loss. As well as covering loss of earnings between the dismissal and the hearing and an estimate of future loss, the tribunal will also consider matters such as loss of pension and other rights and any reasonable expenses incurred by the employee as a result of the dismissal.

The compensatory award is an amount the tribunal considers just and equitable in the circumstances, but there is a maximum compensatory award in cases of unfair dismissal. (The maximum compensatory award may vary from year to year: the current figure is given in the document Limits on Payments (PL827)).The tribunal will reduce the award if it finds that the employee was partly to blame for the dismissal or the employee did not mitigate his or her loss: for example, by failing to make a reasonable effort to obtain another job. Certain payments made by the employer to the employee, for example wages in lieu of notice or an ex gratia payment, will normally result in a reduced compensatory award. The compensatory award will also be reduced by the amount of the employee's earnings from any other employment between the dismissal and the tribunal hearing.

Tribunals have the power to reduce the compensatory award where employees have not made use of an internal appeals procedure whose existence they were informed of at or shortly after the time of dismissal. Similarly the tribunal can make a supplementary award where employers have not allowed the employee to use an appeal procedure provided by them. The reduction or supplementary award can be subject to a maximum of two weeks' pay.

Compensation awards in unfair dismissal cases where the reason for the dismissal is that the dismissed employee made a protected disclosure under the Public Interest Disclosure Act 1998, or took action relating to health and safety are not subject to a maximum.

Additional Award

This award compensates the employee for the additional loss suffered because of the employer's failure to comply with a tribunal's order for reinstatement or re-engagement. The additional award will be between 26 and 52 weeks' pay. There is a maximum week's pay that can be used to calculate the additional award. (The limit on a week's pay may vary from year to year: the current figure is given in the document Limits on Payments (PL827)).

Note: Employment tribunals may however exceed these limits if the total compensation awarded (apart from the basic award) would otherwise be less than the arrears of pay element of the original award with which the employer failed to comply.

Interest on tribunal awards

Legislation provides that an employer who does not pay the compensation awarded by the tribunal within 42 days of the tribunal's decision, will be required to pay simple interest on the amount outstanding.

However, in relation to awards in cases of discrimination on the grounds of sex, race and disability, interest begins to accrue from the day after the day on which the tribunal's decision is sent to the parties. However no interest will be payable if the full amount of the award is paid to the complainant within 14 days of the decision being sent out.

Exemption from the unfair dismissal provisions

The parties to a dismissal procedures agreement may apply jointly to the Secretary of State to substitute the agreement for the unfair dismissal provisions of the legislation. He may do so if he is satisfied on all the following points:

• that every trade union which is a party to the dismissal procedures agreement is an independent trade union;
• that the agreement provides for procedures to be followed in cases where an employee claims that he or she has been, or is in the course of being, unfairly dismissed;
• that these procedures are available without discrimination to all employees falling within any description to which the agreement applies;
• that the remedies provided by the agreement in respect of unfair dismissal are on the whole as beneficial as (but not necessarily identical with) those provided by the legislation;
• that the procedures provide either for arbitration in every case, or at least arbitration in cases where a decision cannot be reached and the right to submit any question of law arising out of a decision to arbitration; and
• that the provisions of the agreement are such that it can be determined with reasonable certainty whether a particular employee is one to whom the agreement applies or not.