In circumstances where an employee has succeeded in a substantive claim for unfair dismissal or unlawful discrimination, a crucial issue influencing the compensation that the employment tribunal will award will be the individual’s actual and prospective loss – and the extent to which the claimant could have minimised that loss by seeking other alternative employment. If the employee fails to use reasonable efforts to obtain alternative employment or remuneration this may be taken into account by the employment tribunal in determining compensation on the basis that the employee has failed to comply with what is often described as the duty to mitigate loss.
Burden of proof is on the employer
The EAT considered that the views and wishes of the employee need to be taken into account and that the employment tribunal must not apply too demanding a standard to the employee who is a victim of the employer’s wrongdoing. It may not always be unreasonable for an employee not to accept a higher paid job than one actually taken up if there are circumstances justifying that decision. Importantly, the EAT made the point that, since the burden of proof lies with the employer, if the employer does not put forward any evidence about mitigation, the tribunal is not obliged to make a finding on the issue.
Percentage reduction to compensation for failure to mitigate?
Earlier this year in Hakim v The Scottish Trade Unions Congress an employment tribunal applied a 30% reduction to the loss suffered by an unfairly dismissed employee when determining the compensation to be awarded to him to reflect a variety of matters that it considered should lead to compensation being reduced. The claimant employee’s new employment paid him less than his job with his former employer but the employment tribunal found that this ongoing loss should be treated as at an end when the claimant failed to secure permanent employment in his new role at the end of a probationary period.
In Hakim, the EAT held that employment tribunals should not adopt a “broad brush” approach to mitigation – such as a percentage reduction as the employment tribunal had applied in this case – if a more objective approach is available based on periods of unemployment or ongoing wage loss. The EAT also held that the employment tribunal did not have a proper basis to find that for the claimant employee not to secure permanent employment broke the “chain of causation” such that losses arising from that point onwards could not be taken into account. The issue of compensation was remitted to the employment tribunal for reconsideration.
When preparing for an employment tribunal case employers should consider from an early stage what evidence they can gather demonstrating the availability of job opportunities which would enable the claimant employee to mitigate his or her loss. Employers will wish to gather evidence of vacancies for which the employee could have applied and potentially even call expert evidence about recruitment prospects for the individual in question. The employer will also wish to consider what action the claimant employee could have taken by way of registering with employment agencies and headhunters to seek alternative employment. With this evidence the employer will, if it is unsuccessful in defending the employee’s claim, be better placed to challenge the award of compensation sought by the claimant employee and the employee’s arguments about the adequacy of their efforts to find alternative employment.
Mitigation in the pandemic
This provides summary information and comment on the subject areas covered. Where employment tribunal and appellate court cases are reported, the information does not set out all of the facts, the legal arguments presented and the judgments made in every aspect of the case. Employment law is subject to constant change either by statute or by interpretation by the courts. While every care has been taken in compiling this information, we cannot be held responsible for any errors or omissions. Specialist legal advice must be taken on any legal issues that may arise before embarking upon any formal course of action.