Cooper Contracting Ltd v Lindsey

In assessing mitigation of loss, the burden lies on the wrongdoer to prove that the dismissed employee acted unreasonably. It is insufficient to show that the employee could reasonably have taken a different step. The tribunal must assess reasonableness objectively in all the circumstances, including the employee’s wishes, without imposing an unduly demanding standard on the victim.

Under section 123 of the Employment Rights Act 1996, a tribunal may limit future compensation to a period it considers just and equitable. That assessment may reflect the employee’s choice to remain self-employed rather than pursue better-paid employment, even though that choice has not amounted to a failure to mitigate past loss.

The employer appealed against remedies awarded after the Employment Tribunal held that Mr Lindsey, a carpenter treated for tax purposes as self-employed, was an employee and had been unfairly dismissed. Liability was not challenged.

After dismissal, Mr Lindsey resumed self-employed work. The Tribunal found that this was reasonable up to the remedy hearing, but awarded only three months’ future loss because he preferred self-employment despite potentially better-paid employed opportunities. It also awarded loss of statutory employment rights and calculated earnings by reference to the agreed daily rate.

The appeal challenged mitigation, the assessment of future loss, the calculation of net earnings, and the award for loss of statutory rights.

1. Appeal dismissed. The Employment Tribunal made no error of law in finding that the employee had reasonably resumed and continued self-employed work until the remedy hearing.

2. The correct mitigation inquiry is whether the employer has proved that the employee acted unreasonably. The employee bears no burden of proving mitigation. A reasonable alternative course, including potentially better-paid work, is relevant evidence but does not itself establish unreasonable conduct. The assessment is objective and fact-sensitive, but must take account of the employee’s views and wishes and must not impose an unduly stringent standard on the victim. The Tribunal’s concise reasons, read with its findings about the employee’s prior experience, preference and circumstances, were sufficient and were not perverse.

3. The Tribunal had distinguished between past mitigation and future compensation. It did not find that continued self-employment after three months would be unreasonable. Rather, applying section 123(1) of the Employment Rights Act 1996, it made a just and equitable forward-looking assessment. It was entitled to conclude that the employer should not indefinitely compensate the financial consequences of the employee’s preference to remain self-employed where more remunerative employed work was available.

4. A future-loss award is predictive and may be expressed as a fair period of loss. Where there has been no established failure to mitigate, the Tribunal need not identify the precise date by which the employee would probably have secured alternative employment.

5. The challenge to the earnings calculation failed because the employer had not provided the material needed to show that the relevant argument and evidence had been advanced below. An appeal lies only on an error of law; a tribunal cannot be criticised for failing to decide a case that the parties did not put before it.

6. The loss-of-statutory-rights point was a new point on appeal and was not exceptionally permitted. In any event, dismissal had caused a compensable loss of employment rights and the conventional award was not necessarily erroneous.

• Employment Appeal Tribunal: dismissed the employer’s appeal against the remedy decision.
• Employment Tribunal: Employment Judge Foxwell at Colchester held that the claimant was an employee who had been unfairly dismissed, and made compensatory awards on 24 February 2015.