Hilco Capital Limited v Denise Harrington

Where a claimant has made no attempt to seek alternative work, an employer may establish an initial case of unreasonable failure to mitigate. The tribunal must then evaluate any explanation advanced by the claimant.

A claimed risk that prospective employers will stigmatise a claimant for whistleblowing cannot, without more, justify making no job applications. There must be an evidential basis, and factual findings upon it, supporting the claimed stigma. A tribunal cannot treat a bare assertion, submission or speculation as sufficient evidence. The assessment remains fact-sensitive, but the requirement for an evidential foundation applies equally when mitigation of past loss is in issue.

The claimant succeeded in her claim that her dismissal was automatically unfair because she had made a protected disclosure. At the remedy hearing, she accepted that she had neither looked nor applied for any employed role after dismissal. She said that prospective employers would stigmatise her as a whistleblower, and that she had also hoped to join a venture established by former colleagues.

The Employment Tribunal awarded loss of remuneration until 1 June 2019. It held that the claimant’s involvement with the venture did not justify her failure to seek work, but accepted that her concern about explaining her dismissal justified her not applying for work until the liability decision was promulgated.

The employer appealed the mitigation finding. Other issues concerning contractual damages, bonus and notice pay were resolved by consent. The central issue was whether the tribunal could accept the alleged whistleblowing stigma as a sufficient explanation without evidence or factual findings supporting it.

1. Appeal allowed. The Employment Tribunal erred in holding that the claimant had not acted unreasonably by making no job applications before publication of the liability decision. The compensatory award was remitted for fresh assessment.

2. Under section 123(1) of the Employment Rights Act 1996, the employer bears the burden of establishing an unreasonable failure to mitigate. It must show that the claimant unreasonably failed to take a particular step; it is insufficient merely to show that the step would have been reasonable. Here, however, the claimant’s admitted failure to look or apply for any job at all established an initial case, subject to any adequate explanation.

3. The tribunal was entitled to find that the claimant’s limited involvement with her former colleagues’ proposed business did not justify her failure to seek paid employment. That conclusion concerned the whole relevant period, not merely the period after January 2020.

4. [2010] ICR 397 and [2013] ICR 28 establish that alleged stigma affecting employment prospects requires an evidential foundation. Evidence may take different forms. Repeated unsuccessful applications may support an inference of stigma, but another sufficiently compelling evidential basis could in principle support a claimant who had made no application.

5. There was no evidence or factual finding that this claimant would have been rejected because she was a whistleblower if she had applied for work. General industrial experience that whistleblowers can encounter difficulty obtaining work could not establish that all applications by her would have been futile. The tribunal had accepted only her assertion, rather than evidence supporting it. Its conclusion therefore could not stand, whether characterised as an error of law, perversity, or inadequate reasons under [1987] IRLR 250.

6. By consent, the contractual damages award and any bonus element were quashed. The remitted tribunal was also to give credit for the payment in lieu of notice.

• Employment Appeal Tribunal: Allowed the employer’s appeal on mitigation and remitted the compensatory award for fresh assessment. By consent, it quashed the contractual damages award and the bonus element of compensation.

• Employment Tribunal: In its corrected remedy decision of May 2021, awarded the claimant £244,328.45 and calculated loss of remuneration to 1 June 2019.

• Employment Tribunal: In its corrected liability decision of August 2019, upheld the claimant’s automatically unfair dismissal claim based on a protected disclosure.