Hello and welcome back to your weekly case law update. Last week we looked at the disclosure of documents and how legal advice might not be protected from legal privilege. This week we are looking at mitigation of claims.

If an employee is successful in an Employment Tribunal claim then they will be awarded a compensatory award inclusive of loss of earnings. However, an employee has a duty to mitigate their losses, this includes applying for and accepting new employment. An employee who does not make reasonable efforts to mitigate will have their compensatory award reduced because their losses would likely have been smaller had they made attempts to mitigate their losses. However, if the employee does make reasonable attempts, or, has a reasonable excuse such as a lack of reference or extenuating circumstances, then a tribunal may still give a full award.

This Week’s Question

Does a failure to mitigate losses for fear of being stigmatised in the industry reasonable?

Ms Harrington the Claimant, worked for Hilco Capital, the Respondent, a financial services company. The Claimant was dismissed in 2017 and was successful in a claim for unfair dismissal and whistleblowing. At a further remedy hearing the Claimant gave evidence that she had not sought new employment for fear of being stigmatised in the financial services industry as a result of her disclosures and the claim itself. Instead she wished to wait until the Tribunal judgment was in the public domain before applying for new jobs.

The Tribunal accepted the Claimant’s evidence and made a substantial compensatory award for loss of earnings. The Respondent appealed citing the failure to apply was not reasonable. The Employment Appeal Tribunal allowed the appeal. It held the Tribunal should not have simply accepted the Claimant’s evidence and instead examined whether the evidence provided amounted to reasonable excuse for not mitigating her loss. The Claim was remitted back to tribunal to redetermine the issue.

The Takeaway Point

Employees cannot simply use fear of stigmatisation to justify failure to mitigate loss. Had the Claimant applied for several posts and found she was being stigmatised then this would have likely been a reasonable attempt to mitigate. However, most employers would still argue the Claimant should have sought employment in a different industry.

If an employer does find itself presented with a claim there are a few tips to help them minimise the quantum of the claim:

  1. Do not give unnecessary adverse references. If a reference is adverse the employee will not be able to mitigate their loss and thus have higher losses. The sooner the employee sources new employment, the smaller the financial risk of the claim.
  2. Enquire whether the employee has made attempts to look for work. If an employee has not applied for many jobs then their loss of earnings will likely be reduced to factor in the failure to mitigate.
  3. Check to see if the employee has set up their own business.
  4. Enquire whether the employee has received any state benefits. If so these will be recoverable by the state via recoupment.