In this case, the EAT dismissed both the employee's appeal and the employer's cross-appeal against an employment tribunal's assessment of a compensatory award for unfair dismissal, noting that the burden of proof is on the employer to prove that the employee had acted unreasonably in failing to mitigate, and holding that the tribunal had been entitled to treat the claimant’s personal circumstances, including her relocation and caring responsibilities, as factors relevant to the assessment of reasonableness.
Background
A compensatory award for unfair dismissal is set at the level the tribunal considers just and equitable in all the circumstances, with regard to the employee's loss suffered as a result of the dismissal. This will necessarily include consideration of whether the employee took reasonable steps to mitigate their loss, with employers often arguing that the employee failed to take reasonable steps to look for alternative employment.
Facts
MacAusland Design Ltd (MD) dismissed Ms Portosi from her role as an architect on 30 September 2020. Ms Portosi successfully claimed unfair dismissal. At the remedy hearing in July 2022, the employment tribunal made a basic award of £2,421 and a compensatory award of £16,924.36 (which included a 15% uplift for MD's failure to follow the Acas Code of Practice and a 50% deduction for Ms Portosi's contributory fault).
The tribunal calculated the compensatory award on the basis that Ms Portosi had not unreasonably failed to mitigate her past losses up to the date of the remedy hearing, so this part of the award was based on the difference between her salary with MD and the lower salary she earned in an alternative job with a public sector employer in Italy. However, the tribunal considered that Ms Portosi had unreasonably failed to mitigate her future losses from the date of the remedy hearing, so calculated that part of the award based on the smaller difference between Ms Portosi's salary with MD and the salary she might have earned had she pursued a possible alternative opportunity with a UK architectural practice.
The EAT dismissed both MD's appeal against the tribunal's calculation of Ms Portosi's past losses and Ms Portosi's appeal against its calculation of her future losses. The tribunal's conclusions involved no error of law, and nor were they perverse.
The EAT emphasised that in relation to an alleged failure to mitigate, the burden is on the employer to prove that the employee acted unreasonably; the employee does not have to prove that they acted reasonably. The questions the tribunal had to answer were what steps Ms Portosi should have taken, and when those steps would have produced an alternative income.
Ms Portosi had obtained a three year fixed term contract with a public sector employer in Italy in July 2021, and had promised that employer that she would remain in post for at least one year. Her father then passed away in December 2021, and she wished to remain in Italy to care for her mother following his death. In light of these factors, the tribunal had been entitled to conclude that Ms Portosi's decision not to pursue a potential opportunity of higher paid employment with a UK architectural practice in August 2021 did not immediately amount to an unreasonable failure to mitigate her loss.
However, Ms Portosi's promise to remain with her Italian employer for a year did not include a formal commitment not to explore other opportunities during that time so that she would be able to take up alternative employment by the end of that period. The tribunal had therefore also been entitled to conclude that, by the time of the remedy hearing in July 2022, when her promise to her Italian employer would have expired, the opportunity with the UK architecture practice could have generated a higher income for her. Her failure to pursue that opportunity therefore amounted to an unreasonable failure to mitigate from that date. The tribunal's reference to Ms Portosi's actions being a matter of "personal choice" did not mean that the tribunal had failed to take her circumstances into account, but that it had considered what weight to accord to them.
What does this mean for employers?
Questions of mitigation are set to increase in importance when the cap on the unfair dismissal compensatory award is removed in January 2027. As the burden of proof is on the wrongdoer, employers wishing to challenge an employee's claimed losses on the basis of a failure to mitigate will need to put forward clear evidence that the employee has acted unreasonably, e.g. by failing to apply for relevant opportunities or pursue offers of alternative employment.
The EAT in this case emphasised that there is a difference between acting reasonably and not acting unreasonably, and that what is reasonable or unreasonable is a question of fact for the tribunal. Challenging such decisions on appeal is likely to be difficult in the absence of a clear error of law.
