Hilco Capital Ltd v Harrington – reasonable and unreasonable mitigation of losses

Facts

Mrs Harrington brought a successful claim against her employer for unfair dismissal and whistleblowing. At a remedy hearing, the employment tribunal decides how much compensation should be awarded in the circumstances based on several factors. One factor includes whether the successful claimant has mitigated her losses i.e.: by applying for jobs, receiving employment benefits and/or securing new work. In general terms, employment tribunals reduce compensatory awards given to Claimants who unreasonably fail to mitigate their losses.

In this case, Mrs Harrington did not apply for any new jobs between the date of her dismissal and the date of the remedy hearing. This was a 3-year period. She explained the Employment Tribunal that that she had not sought new employment for fear of being stigmatised as a whistle blower. She believed that all employers would reject her job applications for this reason and so she intended therefore to wait until the full facts were in the public domain.

The Employment Tribunal accepted the Mrs Harrington’s arguments and awarded her £151,026 in total compensation.

The employers appealed against this decision on the grounds that her failure to mitigate her losses in this way was unreasonable for several reasons including, but not limited to, there being no evidence in the public domain at the relevant time for employers to stigmatise her and the fact she had not applied for any jobs at all for a significant period of time.

Decision

The EAT upheld the appeal of the employer and found that a claim for stigma damages must be based in evidence for the arguments to be reasonable. Such argument of prejudice cannot be speculated.

What should businesses consider

This case is a reminder to employers of the importance of considering whether employees have put forward reasonable arguments when claiming compensation.

If you would like to discuss any of the above matters please contact one of our Employment experts on 0161 832 3434.