The compensatory award

The compensatory award (section 123, ERA 96) is intended to cover financial losses resulting from the dismissal. The tribunal has discretion to award an amount it considers “just and equitable”. However, it is not allowed to award damages beyond the financial loss actually caused by the dismissal (Dunnachie v Kingston upon Hull City Council [2005] ICR 1052).

It is never possible to claim compensation for injury to feelings or personal (psychiatric) injury in unfair dismissal cases, no matter how bad the employer’s behaviour (Dunnachie v Kingston upon Hull City Council [2004] IRLR 727).

A claimant can only recover losses resulting from the employer’s actions. For example, a hospital consultant was not entitled to recover earnings from external private work, because these were not earnings he was entitled to under his contract with the NHS Trust. This remains the case even if the dismissed employee can show that the extra earnings were dependent on the existence of his lost job (Schlesinger v Swindon & Marlborough NHS Trust EAT/0072/04).

It is important to be realistic about the level of any likely award. The median award for unfair dismissal in 2012-13 was just £4,832.