Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What can be included in compensation for unfair dismissal?

1. Strict adherence to company policy

2. Breach of ethics

3. Redundancy pay and punitive awards

4. Merit-based pay increase

The correct answer is: Redundancy pay and punitive awards

Compensation for unfair dismissal often includes amounts that directly address the impact of the dismissal on the employee. Redundancy pay is a standard element of compensation when an employee is dismissed unfairly as it helps to cushion the financial blow of losing a job. Additionally, punitive awards may be granted in cases where the dismissal was particularly severe or without proper justification, serving both as a compensation for the individual and as a form of punishment for the employer's misconduct. This approach aims to restore the employee to a similar financial position as if the unfair dismissal had not occurred, while also deterring employers from engaging in similar unfair practices in the future. Other options, such as adherence to company policy, breaches of ethics, or merit-based pay increases, do not directly pertain to compensation for the actual act of unfair dismissal. They are more related to workplace procedures or performance appraisals, which do not directly result in compensation for the employee affected by unfair dismissal.