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CHAPTER 15 Unfair dismissal and redundancy claims. Unfair dismissal and redundancy claims. Overview This section looks at the rules about making a claim for unfair dismissal or a redundancy payment.

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CHAPTER 15

Unfair dismissal and redundancy claims


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Unfair dismissal and redundancy claims

Overview

This section looks at the rules about making a claim for unfair dismissal or a redundancy payment.

  • First, we consider the strict time-limits for making a complaint to an employment tribunal. We then look at conciliated settlements and compromise agreements or using arbitration as an alternative to presenting a complaint to the tribunal.


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Unfair dismissal and redundancy claims

  • We go on to examine the remedies for unfair dismissal, which consist of reinstatement, re-engagement or compensation.

  • There is then a consideration of how levels of compensation are arrived at and the method for calculating redundancy payments.

  • The section concludes by outlining the rights of employees if the employer becomes insolvent.


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Unfair dismissal and redundancy claims

Unfair dismissal

Complaints of unfair dismissal must normally arrive at an employment tribunal within three months of the effective date of termination.

  • Where employees dismissed in industrial action allege that they should have been offered re-engagement, a complaint must be lodged within six months.


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Unfair dismissal and redundancy claims

Sickness may be taken into account but will be more important if it is in the latter part of the three-month period than at the beginning.


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Unfair dismissal and redundancy claims

Employees who have not received a redundancy payment will normally be entitled to make a claim only if within six months of the relevant date they have:

  • given written notice to the employer that they want a payment, or

  • referred a question as to their right to a payment, or its amount, to a tribunal, or

  • presented a complaint of unfair dismissal to a tribunal.


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Unfair dismissal and redundancy claims

ACAS will assist the employee and the employer by conciliating to try to reach an agreement to settle the complaint. Copies of unfair dismissal applications and redundancy claims and subsequent correspondence are sent to an ACAS conciliation officer who has the duty to promote a settlement of the complaint

  • if requested to do so by the complainant and the employer (known as the respondent), or

  • if, in the absence of any such request, the conciliation officer considers that he or she could act with a reasonable prospect of success.


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Unfair dismissal and redundancy claims

Remedies for unfair dismissal include:

  • reinstatement

  • re-engagement

  • compensation.


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Unfair dismissal and redundancy claims

Reinstatement

Tribunals have the power to order reinstatement or re engagement. They must ask employees if they wish an order to be made, and can only make one if so requested. If no order is made, the tribunal must turn to the question of compensation.


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Unfair dismissal and redundancy claims

Where re-employment is sought, a tribunal must first consider whether reinstatement is appropriate and, in so doing, must take into account the following matters:

  • whether the complainant wishes to be reinstated

  • whether it is practicable for the employer to comply with an order for reinstatement

  • where the complainant caused or contributed to some extent to the dismissal, whether it would be just to order reinstatement.


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Unfair dismissal and redundancy claims

Reinstatement is defined as treating the complainant ‘in all respects as if he had not been dismissed’.


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Unfair dismissal and redundancy claims

Re-engagement

The tribunal may order re-engagement and decide the terms, including the identity of the employer, the nature of the employment and the remuneration payable.


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Unfair dismissal and redundancy claims

Compensation

Compensation for unfair dismissal usually consists of a basic award and a compensatory award.


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Unfair dismissal and redundancy claims

The basic award is calculated in the same way as a redundancy payment, and will be reduced by the amount of any redundancy payment received. Where the dismissal is related to union membership or the employee’s health and safety responsibilities, there is a minimum award in 2009 of £4,700.


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Unfair dismissal and redundancy claims

The compensatory award is an amount which a tribunal ‘considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal insofar as that loss is attributable to action taken by the employer’.

The maximum compensatory award in 2009 is £66,200 and is linked to the retail price index.


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Unfair dismissal and redundancy claims

Redundancy pay

The size of a redundancy payment depends upon the employee’s age, length of service and the amount of a week’s pay.


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Unfair dismissal and redundancy claims

Redundancy payments are calculated according to a formula, with a maximum of 20 years’ service being taken into account. Starting at the end of the employee’s period of service and calculating backwards:

  • one and a half weeks’ pay is allowed for each year of employment in which the individual was 41 and over


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Unfair dismissal and redundancy claims

  • a week’s pay for each year of employment in which the individual was between the ages of 22 and 40

  • half a week’s pay for each year of employment between the ages of 18 and 21.

    Thus the maximum statutory redundancy payment in 2009 is £10,500 (ie 30 x £350).


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Unfair dismissal and redundancy claims

Employee rights on insolvency

If an employer becomes insolvent or bankrupt, an employee’s wages in respect of the four months beforehand, up to a maximum of £800, become a preferential debt.


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Unfair dismissal and redundancy claims

With regard to these circumstances Schedule 6 of the Insolvency Act 1986 treats the following as wages:

  • a guarantee payment

  • remuneration payable under suspension on medical or maternity grounds

  • remuneration payable during a protective award

  • any payment for time off for union duties, antenatal care, or to look for work or make arrangements for training in a redundancy situation.


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Unfair dismissal and redundancy claims

Section 182 ERA 1996 gives employees the right to make a written request to the Secretary of State for a payment out of the National Insurance fund to meet certain other debts which arise out of the employer’s insolvency.


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Unfair dismissal and redundancy claims

These debts are:

  • arrears of pay up to a maximum of eight weeks – this includes any of the matters treated as wages for the purposes of the Insolvency Act 1986

  • wages payable during the statutory notice period. It should be noted that employees are still required to mitigate their loss

  • holiday pay up to a maximum of six weeks, provided the entitlement accrued during the preceding 12 months


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Unfair dismissal and redundancy claims

  • a basic award of compensation for unfair dismissal

  • any reasonable sum by way of reimbursement of the whole or part of any fee or premium paid by an apprentice or articled clerk.


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