Mitigation of loss

In the recent case of Cooper Contracting Ltd v Lindsey, the EAT has given a useful summary of the principles concerning mitigation of loss.  These are the principles that tribunals should apply when considering whether a successful claimant’s compensation should be reduced to reflect failure to mitigate loss in unfair dismissal claims.

Mr Justice Langstaff, rejected the suggestion that the duty to mitigate is a duty to take all reasonable steps to lessen the loss. He summarised the principles governing mitigation of loss as:

• the burden of proof is on the employer – a claimant does not have to prove that he or she has mitigated his or loss;
• the burden of proof is not neutral and if no evidence on the point is put before the tribunal by the employer then the tribunal has no obligation to find it;
• what has to be proved is that the claimant acted unreasonably;
• there is a difference between acting reasonably and not acting unreasonably;
• what is reasonable or unreasonable is a matter of fact for the tribunal;
• it is the tribunal’s assessment of reasonableness and not the claimant’s that counts;
• the tribunal is not to apply too demanding a standard to the claimant and should not put them to proof that the losses are not their fault.

In summary, it is for the employer to show that the claimant acted unreasonably in failing to mitigate. If (as in this case) it may be perfectly reasonable for a claimant to have taken on a better paid job, that fact does not necessarily satisfy the test and does not mean the Claimant has failed to mitigate his loss. It will be important evidence that may assist the tribunal to conclude that the claimant has acted unreasonably but it is not in itself sufficient to conclude that the claimant has failed to mitigate his losses.  Whilst this is a not a ground breaking decision, it is a helpful reminder of the principles of mitigation of loss.