Chaloner v Somerset County Council

In assessing unfair-dismissal compensation, an Employment Tribunal must distinguish loss caused by dismissal from a claimant’s duty to mitigate. A finding that post-dismissal conduct broke the chain of causation requires a coherent explanation. If the true issue is mitigation, the Tribunal must identify the reasonable step that should have been taken, when it would have generated income, and the income to be deducted.

Although pension-loss guidance is not binding and pension loss may extend beyond basic-pay loss, the Tribunal must give intelligible reasons for its chosen approach. An award that is accepted to require grossing-up, or to contain arithmetic errors, must be corrected.

The Claimant was unfairly dismissed by the local authority. The Exeter Employment Tribunal awarded compensation for loss of earnings, pension loss and a statutory right. On review, it confirmed the remedy award while supplying fuller reasons.

Both parties appealed. The Claimant challenged the failure to gross up the award above £30,000, arithmetic errors, the limitation of earnings loss after she began part-time work, and the pension withdrawal factor. The Respondent challenged the continuing pension-loss award and the adequacy of the Tribunal’s reasons concerning mitigation during the first year of unemployment.

The central issue was whether the Tribunal had lawfully and adequately explained its assessment of causation, mitigation, pension loss and compensation.

1. Both appeals were allowed. The Tribunal accepted on review that grossing-up was required to make the award just and equitable to the extent it exceeded £30,000, and that its original calculation contained errors. It acted inconsistently by confirming the original award without making the corresponding corrections.

2. The Tribunal’s reference to a break in the chain of causation for loss after the Claimant began part-time employment could not be understood from its reasons. The point had not been advanced by either party. The facts did not self-evidently establish a break, and the continuing pension award was difficult to reconcile with that conclusion. If the Tribunal had made such a finding, it gave inadequate reasons for it.

3. The reasoning instead appeared to concern mitigation. Under Employment Rights Act 1996, section 123, mitigation is assessed by reference to reasonableness and the just-and-equitable assessment; it should not be obscured by causation language. The Tribunal had to identify the step the Claimant should have taken, when it would have produced alternative income, and the amount of that income to be deducted. Its reasons did not show that it had undertaken that exercise.

4. The Tribunal was not bound by pension-loss guidance, and pension loss could in principle continue longer than loss of basic pay. Nevertheless, it gave no intelligible explanation for its approach to continuing pension loss, whether causation or mitigation was the basis adopted. It also failed adequately to explain its finding that the Claimant had reasonably mitigated her loss during the first year of unemployment, given the evidence said to bear on available jobs and the Respondent’s burden of proof.

5. The 60% pension withdrawal-factor issue fell away. The case was remitted to a new Employment Tribunal for a fresh determination of all remedy issues.

• Employment Appeal Tribunal: both appeals against the remedy judgment were allowed and the matter was remitted to a new Tribunal: [2014] UKEAT 0064_14_2306.
• Employment Tribunal, Exeter: found the Claimant unfairly dismissed and later awarded £49,288 compensation. At a review hearing it confirmed the remedy judgment while providing fuller reasons. No citation was stated.