UNFAIR DISMISSAL - 30.11.2023

Q&A - duty to mitigate losses

Q. We’ve been told that if we dismiss an employee and they subsequently issue an unfair dismissal claim, they’ve a duty to mitigate their losses . What does this mean?

A. An employee who is dismissed for redundancy, capability or misconduct, and who wishes to issue an unfair dismissal claim is legally obliged to take reasonable steps to find alternative employment to reduce their loss of earnings. If they fail to do so the tribunal may refuse to award them their full loss of earnings, assuming their claim is successful. Where a former employee has failed to mitigate their losses , it is up to the employer to prove that this is the case; it can’t be a mere allegation. Also, the tribunal won’t automatically consider this issue - the employer has to raise it (but should only do so if there is adequate evidence which can be relied upon).

Tip. It’s important to note that the test is one of taking reasonable steps, as opposed to all reasonable steps which is a much higher threshold. An employee can mitigate their losses by taking lower paid employment, even if it is substantially less than their previous role.