Wright v Silverline Care Caledonia Ltd

In assessing mitigation after unfair dismissal, the employer bears the burden of proving that the employee acted unreasonably in refusing proposed steps to reduce loss. It is insufficient to show that accepting those steps, including re-employment, would itself have been reasonable.

The tribunal must recognise that more than one reasonable course may be open to a wronged employee. It must not reverse, disregard or treat as neutral the employer’s burden of proof. A failure to state and apply that distinction is a material error of law.

The claimant was found by the Employment Tribunal to have been constructively unfairly dismissed after the respondent’s management restructuring cumulatively breached the implied term of trust and confidence. After his resignation, the respondent upheld his grievance and offered re-employment in the role and structure which the claimant had sought. He declined the offer.

The Tribunal made no compensatory award because it held that he had failed to mitigate his loss. The claimant appealed only that remedy decision. The central issue was whether the Tribunal had applied the correct legal test, including the burden of proof, when deciding that refusal of re-employment was an unreasonable failure to mitigate under section 123 of the Employment Rights Act 1996.

1. Appeal allowed. The Employment Tribunal’s refusal of a compensatory award was set aside and the remedy issue was remitted to a fresh tribunal.

2. Under section 123(4) of the Employment Rights Act 1996, the wrongdoer bears the burden of proving a failure to mitigate. The correct question is not whether the employee acted reasonably in refusing re-employment. It is whether the employer proved that the employee acted unreasonably in refusing it. Wilding v British Telecommunications PLC, 2002 ICR 1079, establishes a real distinction: where more than one reasonable response is open, the wrongdoer cannot select the employee’s response.

3. The Tribunal twice formulated the test as whether refusal was reasonable, and later used reasonable and unreasonable interchangeably. It did not acknowledge that the respondent bore the burden. Those errors showed a failure to apply the governing distinction, rather than an isolated drafting slip. Its conclusion that the claimant had failed to mitigate was therefore unsound.

4. In the particular context of a repudiatory breach entitling an employee to resign, either accepting re-employment or refusing it may be reasonable. Refusal is unreasonable only if the facts establish that the employee could reasonably have been expected to take the offered return to work as the only reasonable course. The fact that the employer’s breach was unintentional does not resolve that issue.

5. The EAT did not decide whether it would necessarily be perverse to find both constructive unfair dismissal and unreasonable refusal of later re-employment. Bournemouth University v Buckland, [2010] ICR 908, concerned cure of repudiatory breach rather than assessment of loss, but illustrated the difficulty of allowing the contract-breaker indirectly to compel a return to employment. A fresh tribunal could nevertheless reach the same remedy conclusion after proper directions and further analysis of the period between resignation and the rejected offer.

6. The respondent was ordered to reimburse the claimant’s EAT fees of £1,600.

• Employment Appeal Tribunal: allowed the claimant’s appeal, set aside the remedy decision and remitted the compensatory-award issue to a fresh tribunal.
• Employment Tribunal: found that the claimant had been constructively unfairly dismissed, but made no compensatory award because it considered that he had failed to mitigate loss by declining re-employment.