How far does an employee have to go to mitigate their loss?

In the recent case of Cooper Contracting Ltd v Lindsey, the Employment Appeal Tribunal ("EAT") dismissed an appeal challenging the level of compensation awarded to Mr Lindsey following a finding of unfair dismissal in his favour.

By way of brief background, following Mr Lindsey's dismissal from Cooper Contracting Ltd, he had returned to his role as a self-employed carpenter (at a lower average rate of pay than his salary at Cooper Contracting Ltd). Cooper Contracting Ltd argued that, by failing to explore more lucrative employment opportunities, Mr Lindsey had failed to take all reasonable steps to mitigate his loss.

The EAT has set out the following principles in relation to mitigation of loss:

1. It is not for the employee to prove that they mitigated their loss but rather the burden of proof is on the employer as opposed to the employee.

2. If the employer does not address the issue of mitigation, the Tribunal need not consider it.

3. If the employer does raise the issue of mitigation, they must prove that the employee acted unreasonably; the employee however does not have to show that what they did was reasonable. For example, it might be reasonable for an employee to accept the most lucratively paid job, it is not necessarily unreasonable for them to accept a lesser paid job due to a preference for the nature of that particular role. In the case in question, Judge Foxwell emphasised that, "there may come a time in a person's working life when some types of work are no longer appropriate...Mr Lindsey's evidence was that he preferred to be his own boss having had the experience of employment with the Respondent. It is very much his own choice."

4. The employee does not have to take all reasonable steps to mitigate their loss. If such a position were adopted, the employer would be able to argue that the employee's compensation should be reduced on the basis of a single reasonable step not taken.

5. Ultimately, it is the Tribunal's view of what is unreasonable in the circumstances that matters, however, the Tribunal will take into account the views and wishes of the employee as one of the circumstances. For example, Mr Lindsey had been self-employed previously and did not wish to work for another employer after his experience at Coopers.

6. The Tribunal stressed that it is not for the Claimant to be put on trial when looking at mitigation of loss; they are not the party at fault in the proceedings.