If you’ve already made or are thinking of making a claim in the Employment Tribunal for constructive unfair dismissal against your former employer (we’ll call them the “Respondent”) then one of the first things you’ll want to know is “how much is my claim worth?”. This article aims to allow Claimants in constructive unfair dismissal and unfair dismissal cases to value their claim either prior to or during Employment Tribunal proceedings. It assumes that your claim is simply for constructive unfair dismissal (or unfair dismissal) and not for any other claim (such as discrimination).
What we’ll cover, then, includes:
- What you’ll need to be able to value your claim
- How you value your claim
- What kind of award you should expect (using historical Employment Tribunal data)
What you’ll need to value your claim
- The value of your gross and net hourly/daily/weekly/monthly/annual wage at the Respondent. Use a copy of your payslip.
- A list of all of the contractual benefits that you received at the Respondent. Use a copy of your contract of employment and any other relevant documentation to calculate this.
- If you’ve got a new job, the value of your gross and net hourly/daily/weekly/monthly/annual wage at your new employer
How do you calculate compensation in a constructive unfair dismissal claim?
Constructive unfair dismissal claims are composed of two main parts – the Basic Award and the Compensatory Award.
The Basic Award
The Basic Award is similar to the calculation used for a redundancy payment. To calculate the Basic Award you use the following formula:
Multiplier * Your gross wages
You calculate the multiplier by multiplying your age by the number of years’ continuous employment you had with the Respondent. A table you can use to calculate the multiplier can be found here. If your gross weekly wages were higher than £430 then you must cap the gross wages claimed in the Basic Award at £430 (current at June 2012).
Worked example: Bob, 44, worked for X Ltd for 10 years. His multiplier, using the table, is 11.5. His gross weekly wage at X Ltd was £600 per week. This would be capped at £430.
Bob’s calculation for his Basic Award would therefore be 11.5*£430 = £4,945
The Compensatory Award
The Compensatory Award is used to calculate your losses from the date of your dismissal until these losses either stop (because, for example, you’ve found a new job) or the date of your Employment Tribunal arrives. There are two elements to the Compensatory Award:
- Prescribed Loss
- Continuing and On-going Loss
The method of calculation of the Prescribed Loss differs depending upon whether you’ve started in a new job by the time of your Employment Tribunal Hearing.
If you’ve received a new job prior to the Hearing then you should calculate whether your gross earnings are higher or lower than when you worked at the Respondent. If your gross earnings are higher in your new job (and you are still working in this job at the date of the Employment Tribunal) then your losses would stop when you started earning in this job. If they are lower then your losses are the difference between your gross weekly wage at the Respondent and your gross weekly wage at your new employer.
Two worked examples of the above:
New job paying more than the old job
Ben was unfairly dismissed by X Ltd on 6 December 2011. He earned £700 gross per week at X Ltd (£480 net). His Employment Tribunal is listed for 20 October 2012. He started work at a new job at Y Ltd on 6 May 2012. He earns £850 gross per week at Y Ltd (£550 net). As his wages at Y Ltd are higher than those he was previously earning at X Ltd his losses only cover the period from 7 December 2011 to the date he started his new job – 6 May 2012. He earned £480 net per week at the Respondent. He was out of work for approximately 22 weeks. His Compensatory Award (assuming he was still in his new job on 20 October 2012) would be £480 * 22 = £10,560.
The total compensatory award in this case would be £10,560.
New job paying less than the old job
Bill was unfairly dismissed by X Ltd on 6 December 2011. He earned £600 gross per week at X Ltd (£420 net). His Employment Tribunal is also listed for 20 October 2012. He started work at a new job at Y Ltd on 12 March 2012. He earns £400 gross per week at Y Ltd (£280 net). There are two different periods of losses in Bill’s case.
The first period is from 7 December 2011 until 11 March 2012. This is a period of full loss – the entire £420 net per week: 14 weeks @ £420 per week for a total of £5,880.
The second period is from 12 March 2012 until 20 October 2012. This is a period of “reduced” loss – the difference between the wages at Y Ltd and X Ltd: 32 weeks @ £140 per week for a total of £4,480.
The total compensatory award in this case would be £10,360.
Continuing and on-going loss
Continuing and on-going loss is split up into two elements:
- Contractual benefits
- Statutory rights lost
Contractual benefits lost
You should calculate the value of your contractual losses from the date of your dismissal until the date of the Employment Tribunal. Examples of contractual benefits include your contractual entitlement to shares at your previous employer, your car allowance, your living allowance, your medical insurance, your annual bonus, your commission, and your pension rights.
Statutory rights lost
You will almost always be awarded losses for your statutory rights. Currently this is set at £300.
What kind of award you should expect
We’re going to use data from the Employment Tribunal to calculate what you should expect to receive from your constructive unfair dismissal claim.
According to the Employment Tribunal report for 2010-11 46,370 cases of unfair dismissal (including constructive unfair dismissal) were accepted. Of these cases 10,300 (22%) proceeded to a Hearing of some form (either a Preliminary Hearing or a full Liability Hearing) and 4,200 claims were successful (9%). However, in only 2,600 of the 46,370 cases accepted was compensation awarded. That’s only 5.6% of cases in which compensation was awarded.[easychart type=”pie” title=”Outcome in claims in the Employment Tribunal (2010-11)” groupnames=”Jurisdictions disposed, Claim withdrawn, ACAS-conciliated settlement, Claim struck out, Successful at Hearing, Unsuccessful at Hearing, Default Judgment awarded” group1values=”12300″ group2values=”20500″ group3values=”5400″ group4values=”5400″ group5values=”1400″ group6values=”4200″ group7values=”4800″ group8values=”1200″ chartfadecolor=”FFFFFF”]
However, if you get as far as an Employment Tribunal Hearing then you have a roughly 40% chance of succeeding. That means that there’s an approximate 60% chance that your claim will not succeed at a Hearing.
If you are successful at your Employment Tribunal Hearing and are awarded compensation then you’ll want to know what kind of compensation you can expect. If you’ve done the above calculations then you’ll have a good idea of what your claim is worth. However, you might (for a variety of reasons, including your duty to mitigate among others) not get that much. Below is data for the median and average awards in the Employment Tribunal from 2005 until 2011.[easychart type=”line” height=”350″ width=”350″ title=”Median and average awards in unfair dismissal cases (2005-2011)” groupnames=”Median award, Average award” valuenames=”2005-6, 2006-7, 2007-8, 2008-9, 2009-10, 2010-11″ group1values=”4228, 3800, 4000, 4269, 4903, 4591″ group2values=”8679, 7974, 8058, 7959, 9120, 8924″]
As you can see, the average and median awards in the Employment Tribunal is not as high as is often reported (£8,924 and £4,591 respectively in 2010-11).The reason for the wide difference between the median and average awards in unfair dismissal cases was that a relatively small number of cases in which there were large or very large awards would have pushed the average value of an award up. You should therefore look to the median award to provide a more accurate analysis of compensation in the Employment Tribunal.