EAT confirms principles governing mitigation of loss

In Cooper Contracting Ltd v Lindsey, the EAT has given a useful summary of the principles that tribunals should apply when considering whether a successful claimant’s compensation should be reduced to reflect failure to mitigate loss following unfair dismissal. Mr Justice Langstaff, President of the EAT, confirmed that 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, and that it must be proved that the claimant acted unreasonably.

L worked as a carpenter for CC Ltd for 21 months until it dispensed with his services in December 2013. He claimed unfair dismissal. Although CC Ltd argued that L had worked for it on a self-employed basis, the tribunal found that he was in fact an employee and went on to uphold his claim. When it came to assessing compensation, 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 considered that this justified limiting his future loss to three months. CC Ltd appealed against the compensation award to the EAT. It argued, 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. Mr Justice Langstaff, President of the EAT, rejected the suggestion that the duty to mitigate is a duty to take all reasonable steps to lessen the loss. He 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, Langstaff P was satisfied that there was no error of law. The tribunal had given adequate reasoning for its finding that it was reasonable for L to re-enter the job market as a self-employed tradesman; and the decision to limit future loss to three months was within the tribunal’s ‘just and equitable’ discretion in the amount of compensation to be awarded under S.123 of the Employment Rights Act 1996.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *