Somerset County Council v Chaloner

Under Employment Rights Act 1996, section 123 requires a tribunal to quantify loss, determine whether it is attributable to the dismissal, and then make the award that is just and equitable. Mitigation is ordinarily assessed as part of that final exercise.

Where inadequate mitigation is found, the tribunal must identify the reasonable step that should have been taken, when it would have generated alternative income, and deduct that income. It must not use causation as an unexplained substitute for that analysis. Reasons must also coherently explain any different treatment of earnings and pension loss. A failure to correct accepted errors in grossing up or calculation is inconsistent with affirming the original remedy judgment.

The claimant succeeded in her unfair-dismissal claim and the Exeter Employment Tribunal later awarded compensation of £49,288 at a remedy hearing. Both parties sought review. The Tribunal confirmed its award while giving fuller reasons.

The claimant appealed the failure to gross up compensation above £30,000, calculation errors, the restriction of continuing earnings loss after she began part-time work with Artslink, and the pension withdrawal factor. The council cross-appealed the continuing pension award and the Tribunal’s finding that the claimant had reasonably mitigated loss during her first year of unemployment.

The central issues were whether the Tribunal had properly distinguished causation from mitigation, adequately reasoned its pension and mitigation conclusions, and corrected accepted errors in the award.

1. Both appeals were allowed. The remedy decision could not stand and was remitted to a newly constituted Employment Tribunal for a fresh determination of every remedy issue.

2. The Tribunal had accepted that grossing up was required, so far as necessary to make the award just and equitable, for the taxable part above £30,000. It was inconsistent to acknowledge that error but confirm the original award without making the correction. The same applied to the accepted arithmetical errors, for which no corrected calculation or revised schedule was produced.

3. The Tribunal’s limitation of earnings loss after the claimant took the Artslink role was inadequately reasoned. Neither party had presented the matter as a break in the chain of causation. The reasons instead appeared to concern the reasonableness of further mitigation. The facts did not self-evidently establish a causal break, and the Tribunal did not explain one.

4. If the Tribunal intended to find inadequate mitigation, it had failed to apply the required exercise from Gardiner-Hill: identify the step that should reasonably have been taken, the date on which it would have produced alternative income, and the amount of that income to deduct. Its reasons did not reveal those findings.

5. The reasoning on continuing pension loss was likewise opaque. A tribunal is not bound by pension-loss guidance and may, in principle, award pension loss for longer than basic earnings loss. But it had to explain why an asserted causal break affecting earnings did not affect pension loss, or, if mitigation was the true issue, what alternative income and pension benefits would have resulted from reasonable mitigation.

6. The Tribunal also failed adequately to explain its conclusion that the claimant had reasonably mitigated her loss during the first year of unemployment, despite the council’s evidence about alternative jobs. Applying Sinclair Roche Temperley v Heard [2004] IRLR 763, remittal to a fresh Tribunal was the appropriate course.

• Employment Appeal Tribunal: both parties’ appeals from the remedy decision were allowed. Remedy was remitted to a new Tribunal.
• Employment Tribunal (Exeter): following a liability judgment in the claimant’s favour, it awarded unfair-dismissal compensation at a remedy hearing on 11 July 2012. On review, it confirmed the award while providing fuller reasons.