Hilco Capital Limited v Denise Harrington

The Employment Appeal Tribunal allowed the employer's appeal in part, concluding that the tribunal had erred in accepting the claimant's assertion that she would be stigmatised as a whistle‑blower and so was excused from making any job applications, in the absence of evidence to support that assertion. The EAT applied the compensatory principle in section 123(1) Employment Rights Act 1996 and the approach in Abbey National plc v Chagger and Ur‑Rehman v Ahmad that stigma‑based loss requires an evidential foundation; an assertion or conjecture alone is insufficient. The EAT also noted the respondent had established that the claimant made no applications at all and that the burden lay on the claimant to provide an explanation supported by evidence. The remedy award was quashed in part and remitted for fresh assessment; separate consensual orders quashed award elements for breach of contract and certain bonus elements and provided for inclusion of payment in lieu of notice credit.

Background and parties:

• The claimant, Mrs Harrington, was dismissed by Hilco Capital Limited on 13 October 2017. She and two colleagues brought tribunal complaints; the tribunal found that she had been unfairly dismissed for making a protected disclosure (whistleblowing).
• The employment tribunal (Teesside) heard liability in 2018 and promulgated a liability judgment in February 2019 (corrected August 2019). A remedy hearing took place in November 2020 with a remedy judgment promulgated February 2021 (corrected May 2021), awarding the claimant a compensatory sum.

Nature of the appeal and relief sought:

• The respondent appealed the remedy award to the EAT. The appellant challenged the tribunal's mitigation findings, arguing error in law in the application of the principles on stigma damages and mitigation (relying on Abbey National plc v Chagger and Ur‑Rehman v Ahmad).

Issues framed by the EAT:

1. Whether the tribunal erred in law by accepting the claimant's untested assertion that she would be stigmatised as a whistle‑blower and therefore reasonably refrained from applying for any employment prior to promulgation of the liability decision.
2. Whether parts of the remedy award should be quashed because they related to damages for breach of contract or speculative bonus elements already compromised or requiring recalculation.

Court's reasoning and decision:

• The EAT emphasised that the compensatory award under section 123(1) ERA 1996 must be just and equitable and that mitigation is a factual question for the tribunal. However, where it is not disputed that the claimant made no job applications, the claimant must provide an evidential explanation for that failure.
• The EAT applied Chagger and Ur‑Rehman to hold that stigma losses cannot be inferred from mere assertion; there must be evidence from which stigma can reasonably be inferred (for example, extensive unsuccessful job applications showing a pattern). In this case no such evidence was produced because the claimant made no applications; the tribunal's acceptance of her assertion lacked factual findings or evidential support and thus was erroneous.
• By consent, the EAT quashed the element of the award for breach of contract that related to a settled equal pay claim, and quashed any compensatory element intended to compensate for future bonus loss pending recalculation; the compensatory award was remitted to the tribunal for fresh assessment, with credit to be given for payment in lieu of notice.

Outcome:

The EAT allowed the appeal in part, quashed specific award elements by consent, and remitted the compensatory award for reassessment because the tribunal had insufficient evidential basis for its mitigation finding on stigma.

Appeal allowed in part. The EAT held that the tribunal had erred in accepting the claimant's untested assertion that she would be stigmatised as a whistle‑blower and so was excused from applying for any jobs prior to the liability judgment; there was inadequate evidential basis and no factual findings to support that conclusion. By consent the award element for breach of contract and any element compensating future bonus were quashed and the compensatory award was remitted for fresh assessment, with credit for payment in lieu of notice.

Appeal to the Employment Appeal Tribunal from the Employment Tribunal (Teesside Justice Centre). The liability judgment was promulgated 19 February 2019 (corrected August 2019); the remedy hearing took place 24 November 2020 with judgment promulgated February 2021 (corrected May 2021). An earlier appeal on a Polkey point was dismissed at a rule 3(10) hearing before the EAT. The present appeal (Case No EA-2021-000557-AS) was directed to a full hearing and determined by HHJ Auerbach on 1 September 2022.