How To Calculate Your Basic Award: 5 Steps for Unfair Dismissal Claims

If you’ve been unfairly dismissed, correctly performing a basic award calculation could add thousands to your employment tribunal compensation.

Understanding the Basic Award in Unfair Dismissal Claims

Basic award calculation forms a crucial part of any unfair dismissal claim in the UK. Under the Employment Rights Act 1996 (ERA 1996), the basic award provides a statutory minimum compensation similar to a redundancy payment, rewarding your years of service and age at dismissal. This guide breaks it down into five simple steps to help you calculate it accurately for your employment tribunal claim.

Unlike the compensatory award, which covers your actual financial losses, the basic award is a fixed formula based on gross week’s pay, length of service, and age bands. It applies to most unfair dismissal cases and some other claims, ensuring you receive a fair baseline payout regardless of mitigation efforts.

Mastering basic award calculation empowers you to represent yourself confidently, spot errors in employer calculations, and maximise your remedies in tribunal.

Step 1: Determine Your Length of Continuous Service

Start by counting your complete years of continuous employment, up to a maximum of 20 years, working backwards from your effective date of termination.

Continuous service begins on your start date with the employer or any associated employer under ERA 1996 rules. Include full years only, up to 20, counting backwards from the effective date of termination (EDT), which is usually your dismissal date or last day of notice if applicable.

For example, if you started on 1 January 2010 and were dismissed on 15 March 2024, you have over 14 years. You count 14 full years backwards, ignoring partial years at the start. Periods of absence like maternity leave often count towards continuity.

Step 2: Calculate Your Age at the Effective Date of Termination

Your age at EDT determines the multiplier for each service year: 0.5 week’s pay if under 22, 1 week if 22-40, and 1.5 weeks if 41 or over. Assign ages to each year backwards from EDT.

Using the example above, if you turn 45 in 2024, your most recent year (age 44-45) gets 1.5, previous (43-44) also 1.5, down to earlier years adjusting for age bands.

• Under 22 years old: ½ week’s pay per year
• 22 to 40 years old: 1 week’s pay per year
• 41 years and over: 1½ week’s pay per year

Step 3: Apply Age-Based Multipliers to Your Service Years

Tally years in each band: e.g., 5 years under 22 (5 x 0.5 = 2.5 weeks), 10 years 22-40 (10 x 1 = 10 weeks), 5 years 41+ (5 x 1.5 = 7.5 weeks). Total: 20 weeks.

This mirrors redundancy basic award calculations under ERA 1996 s119, ensuring fairness for longer-serving older workers.

1. List service years backwards from EDT.
2. Assign age band to each.
3. Multiply by factor: 0.5, 1, or 1.5.
4. Sum for total weeks.

Step 4: Determine Your Week’s Pay

Calculate gross normal weekly pay under ERA 1996 ss220-229, subject to the statutory cap (currently around £525-£700, updated annually).

Week’s pay basic award uses gross pay for the 12 weeks before the calculation date (EDT or notice end). Average normal remuneration; exclude overtime unless contractual. Capped per Employment Rights (Increase of Limits) Orders.

For variable hours, average over 12 weeks. If no normal hours, use s229 method. This gross figure ensures tax-free status in practice.

Step 5: Total Your Basic Award and Consider Adjustments

Final basic award = total weeks x week’s pay. E.g., 20 weeks x £500 = £10,000. Tribunal may reduce for contributory fault (Polkey deduction) or increase in special cases like health/safety dismissals.

Max basic award around £14,000-£19,000 depending on current limits. Add to compensatory award for total remedy, subject to overall cap except protected claims.

1. Total weeks from Step 3 x week’s pay from Step 4.
2. Apply cap if exceeded.
3. Subtract any % reduction for fault.

Wrapping Up Your Basic Award Calculation

Mastering basic award calculation equips you to claim what you’re owed in unfair dismissal basic award proceedings. Follow these 5 steps precisely, using ERA 1996 basic award rules, to build a strong tribunal case.

Remember, this complements other employment tribunal compensation like compensatory awards. Always verify current week’s pay basic award caps and seek ACAS guidance.

With accurate figures, you can negotiate settlements or argue effectively self-representing in tribunal.