The basic award 


The basic award is calculated using a formula linked to length of employment and age. The longer the service, the higher the award. There is no upper age limit. 


The basic award is calculated as a number of “weeks’ pay” according to age and length of service, as follows: 


• aged under 22 — half a week’s pay for each full year worked under this age;


• aged 22 to 40 — one week’s pay for each full year worked between these ages; and


• aged 41 and over — one and a half weeks’ pay for each full year worked from this age onwards. 


A “week’s pay” is capped at the statutory maximum of £479 (April 2016 – March 2017). Weekly earnings over this amount are not included in the calculation of the basic award (although they are used to calculate the compensatory award: see below). Where weekly earnings are below the cap, a week’s pay will be based on actual gross pay. Where earnings are irregular, a week’s pay is averaged over a 12-week period. 


Overtime is only included if there is a contractual obligation on the employer to offer it and on the employee to work it (British Coal v Cheesbrough [1990] IRLR 148). 


The “week’s pay” cannot be less than the National Minimum Wage (see Chapter 4), even if the employee was not receiving it (Paggetti v Cobb EAT/136/01 [2002] IRLR 861). 


The maximum number of years of work that can be taken into account is 20. The number of years is calculated by reckoning backwards from the dismissal date (section 119(1)(b), ERA 96).


In cases of dismissal for trade union duties and activities, for carrying out the duties of a health and safety rep, an employee rep, a rep for the purposes of the Working Time Regulations, or of a trustee of a pension scheme, there is a minimum basic award of £5,853 (from April 2016). There may also be an entitlement to an additional award (see below).