372 Chapter 13Employment (1): The contract of employment, employment rights and dismissal
The week’s pay is the gross pay which the employee normally earns, excluding overtime.
However, there are two limits on the size of the award. First, the employee can only claim
for up to 20 years’ continuous employment. Second, the week’s pay is capped at £380. (This
amount is increased periodically to keep up with inflation.) There is no duty to mitigate loss
because the basic award is not an award of damages. However, the award can be reduced
if the tribunal considers that the employee’s behaviour makes this equitable.Example
Asif and Bill are both unfairly dismissed. Asif is 28 and has ten years’ continuous employ-
ment. His normal weekly wage is £200 and the continuous employment started on his 18th
birthday. The four years worked while under the age of 22 entitle Asif to two weeks’ pay. The
six years worked since becoming 22 entitle Asif to six weeks’ pay. Asif is therefore entitled
to eight weeks’ pay, at £200 per week, which equals £1,600. Bill is 63. He has 40 years’
continuous employment and earns £600 a week. Bill can count only 20 years’ continuous
employment. As his best 20 years were all worked while over the age of 41, this entitles
Bill to 30 weeks’ pay. Bill’s normal weekly pay is capped at £380. Bill therefore gets the
maximum basic award possible of £11,400.There can also be a compensatory award of up to £65,300. In cases where discrimination has
occurred, the amount of damages which can be awarded is unlimited. The compensatory
award takes account of matters such as immediate and future loss of earnings, with no
upper limit on the weekly pay, loss of statutory rights, loss of pension rights and a supple-
mentary amount which can be awarded if the employer failed to go through an established
appeals procedure. However, here the employee has a duty to mitigate any losses and so
would have to take another suitable job if one arose. The award will also be reduced by the
amount of jobseeker’s allowance which the applicant has received. Section 123(6) ERA 1996
allows the award to be reduced on the grounds of contributory negligence. For the purposes
of the compensatory award, the weekly pay received is the net pay rather than gross pay.
However, it is the net pay which would actually have been received and there is no upper
limit.
An additional awardof between 13 and 26 weeks’ pay can be made if the employer
refuses to comply with a re-engagement or reinstatement order. If the dismissal was on
the grounds of discrimination, the additional award is of between 26 and 52 weeks’ pay. As
regards these awards, the week’s pay is still subject to the statutory maximum.
An employee who has been made redundant but who has refused an offer of suitable
alternative employment will be entitled to an award of two weeks’ pay.Wrongful dismissal
An employee is summarily dismissed when he is dismissed without notice. The employee’s
behaviour might justify such a dismissal, in which case he will have no remedy. If an
employee is summarily dismissed without a justifiable reason, however, then his contract
of employment, which will entitle him to a period of notice, will have been broken. The
employee can then sue the employer for breach of contract, and such an action is known as
an action for wrongful dismissal. Of course, it is possible that the employer may lawfully
dismiss the employee without notice. This would be the case if the employee had behaved