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Mitigation of Loss

Posted on September 07, 2012

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Mitigation of Loss:

When an employee claims compensation for loss of earnings against his employer in an Employment Tribunal, he should be prepared to demonstrate that he has taken all reasonable steps to mitigate his losses. Usually, this will involve the employee actively searching for another position with a third party. But does the employee have to accept any offer … even an offer of self-employment from his old employer?

 

Employees must to take all reasonable steps to mitigate their losses but it is up to the employer to show that the employee failed to do so. To do this, the employer needs to show that the employee acted unreasonably by not seeking or taking opportunities. Sometimes the employee’s former employer will make an offer of reinstatement/reengagement, perhaps as a strategic move to enable it to argue that the employee failed to mitigate his losses. When considering if an employee has acted unreasonably in refusing such an offer by the former employer, the Tribunal will consider a number of factors, including the employee’s reasons for refusing the offer, the attitude of the employer and the way the employee has been treated.

 

In the recent case of F & G Cleaners Ltd v Saddington, the employees were cleaners whose employment transferred to a new employer under the Transfer of Undertaking (Protection of Employment) Regulations 2006 (TUPE) following a re-tendering exercise. However, the new employer failed to acknowledge that TUPE applied and offered the employees self-employed contracts instead, which the employees refused to accept.

 

Other reforms are largely technical in nature. Despite press The EAT held in the employee’s favour. They had not failed to mitigate their losses by refusing the offer of self-employment. The duty to mitigate their losses did not arise until after they had refused the offer. In any case the employee’s decision to refuse the offer of self-employment was reasonable because they would have given up significant employment rights and job security.

 

An employee does not have to accept self-employment to mitigate his losses. While there is no firm rule that an employee must accept an offer from a former employer, there is also not a principle that it will always be reasonable for an employee to refuse such an offer. To a certain extent, these cases will depend on their own facts.

 

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