How does an Employment Tribunal decide how much compensation to award?

An Employment Tribunal decides whether or not an employment claim is successful in an Employment Tribunal hearing. They make the decision on how much compensation to award in a separate hearing called a ‘remedy hearing’. It is important to have an employment law solicitor represent you at these hearings.

The method used by the Employment Tribunal for deciding how much compensation to award will depend on the type of employment claim, for example, regarding an employee’s redundancy entitlement, unfair dismissal claim, or discrimination claim. This article will contemplate the calculation of compensation for unfair dismissal claims and claims that involve discrimination, as these are the two most common types of claim that are heard by Employment Tribunals.

The compensation award for unfair dismissal claims is calculated in two parts. The first part is the basic award. This is calculated on the employee’s weekly pay, their age and their length of employment with the employer. The week’s pay is capped at £350, and compensation can be given for a maximum of 20 years service.

The second part is the compensatory award. This award is intended to compensate the claimant for their financial losses that are attributable to the action taken by their employer. The Employment Tribunal can consider future losses in addition to losses already incurred by the claimant. The compensatory award is capped at £66,200. The respondent can produce mitigating evidence, such as job adverts that are suitable for the claimant, in order to show the claimant has not done all they reasonably can to reduce their financial losses.
When an employment claim involves a claim of discrimination, the amount of compensation an Employment Tribunal can award is discretionary and is awarded to compensate the claimant for injury to feelings. The Employment Tribunal will consider the Vento guidelines that divide compensation for discrimination into three bands. An unfair dismissal lawyer can explain these guidelines and how they could impact on your claim.
The top band is for the most serious cases of lengthy campaigns of discrimination and harassment. The award for the top band is between £15,000 and £20,000. The award for less serious cases in the middle band is between £5,000 and £15,000. The lowest band is isolated incidents. The award will be between £500 and £5,000.

However, there is no cap to the amount the Employment Tribunal can award and they will award compensation beyond the top band in cases of discrimination carried out with ‘malice and bad intentions’. An employment law solicitor can argue your case to obtain the best possible level of compensation. Never attempt to bring a case before an Employment Tribunal without taking legal advice and having full representation by a solicitor.
For claims regarding an employee’s redundancy entitlement, many cases settle out of court. A compromise agreement might be a suitable way of agreeing upon a redundancy entitlement dispute.