In this case the Employment Appeal Tribunal (EAT) has given a useful summary of the principles that Employment Tribunals should apply when considering whether a successful Claimant’s compensation should be reduced to reflect failure to mitigate loss following unfair dismissal
This summary offers valuable guidance for both Employees and Employers involved in unfair dismissal claims before an Employment Tribunal.
The Claimant (L) worked as a carpenter for Cooper Contracting Limited (CC Ltd) for 21 months until his dismissal in December 2013. He claimed unfair dismissal and the Tribunal upheld his claim. When it came to assessing compensation for the unfair dismissal, the Tribunal noted that, since his dismissal, L had chosen not to seek alternative employment but had been working as a self-employed tradesman. It found that this was a reasonable course of action and that it should not limit L’s compensation for loss up to the date of the hearing on the basis of failure to mitigate. However, it noted that there were other opportunities for employed work at higher remuneration, if L wished to look for them, and the Tribunal considered that this justified limiting his future loss to three months. CC Ltd appealed against the compensation award to the EAT arguing, among other things, that the Tribunal’s finding that better-paid alternative employment was available to L should have led to a finding that he had failed to mitigate his loss.
The EAT dismissed the appeal and rejected the suggestion that the duty to mitigate is a duty to take all reasonable steps to lessen the loss.
The EAT very helpfully went on to summarise the principles governing mitigation of loss as follows:
(1) the burden of proof is on the wrongdoer – a claimant does not have to prove that he or she has mitigated his or loss;
(2) the burden of proof is not neutral and if no evidence on the point is put before the tribunal by the wrongdoer then the tribunal has no obligation to find it;
(3) what has to be proved is that the claimant acted unreasonably;
(4) there is a difference between acting reasonably and not acting unreasonably;
(5) what is reasonable or unreasonable is a matter of fact;
(6) it is to be determined taking into account the views and wishes of the claimant as one of the circumstances, although it is the tribunal’s assessment of reasonableness and not the claimant’s that counts;
(7) the tribunal is not to apply too demanding a standard to the victim;
(8) the test may be summarised by saying that it is for the wrongdoer to show that the claimant acted unreasonably in failing to mitigate; and
(9) in a case in which it may be perfectly reasonable for a claimant to have taken on a better paid job that fact does not necessarily satisfy the test. It will be important evidence that may assist the tribunal to conclude that the claimant has acted unreasonably but it is not in itself sufficient.
Applying these principles to the tribunal’s judgment, the EAT was satisfied that there was no error of law.
Guidance for Employers and Employees:
Failure by an unfairly dismissed Claimant to mitigate his or her loss could lead to a reduction in the amount of compensation that an Employment Tribunal will award. However as this case confirms it is not for the Claimant to prove that he or she has mitigated his or her loss, the burden of proof is on the wrongdoer (the dismissing Employer) who must prove that the Claimant has acted unreasonably.
This case underlines the importance of gathering evidence before an Employment Tribunal. As point (2) above states if no evidence is placed before the Tribunal on the point the Tribunal has no obligation to find it.
Employees claiming unfair dismissal should ensure that they keep records of all efforts that they have made to find alternative work from the date of their dismissal. Where work has been found and undertaken then the Claimant should be in a position to provide evidence of his or her earnings from the date of the dismissal to the date of the hearing. In the event that the Claimant has failed to apply for or accept better paid work following dismissal then he or she should be prepared to be questioned on the reasons for this to ascertain whether he or she acted unreasonably. It would be reasonable for example for a Claimant to fail to apply for a well-paid job that is outside a reasonable daily travelling distance from home and this should not affect his or her compensation. Remember that the test is that the Claimant has acted unreasonably and if there are good reasons for not applying for or accepting a particular role then the Claimant has not acted unreasonably.
Employers facing an unfair dismissal claim should from the start of proceedings gather evidence to show what roles are available in the local area that would suit the Claimant and the general conditions of the labour market. This may include copying job advertisements from a local paper or trade journal or details of jobs available from an Employment Agency. As the Tribunal pointed out in this case unless the Employer produces evidence for the Tribunal to consider it will not look for it. Reduction of compensation for failure to mitigate could be substantial (as much as 100%) and so compiling this evidence, where relevant, is critical.
Sunley Solicitors Limited
5th January 5, 2016