Mitigating losses 




Claimants have a legal duty to take reasonable steps to mitigate (i.e. reduce) their losses, mainly by looking for alternative work. It is vital to be well-organised and to think ahead about proving all losses.
Claimants should keep a careful record, such as a job search diary of all efforts to find work, and copies of all adverts, application forms, online applications, responses received, as well as a record of any interviews attended and all travel and other costs incurred. These will need to be shown to the tribunal.
Employers facing a ruling that a dismissal was unfair are likely to produce evidence of lots of jobs they say the claimant could have applied for, to try to reduce the compensatory award.




An employee who is dismissed without notice need not give credit in their unfair dismissal compensation for any wages from a new job earned during the notice period (Norton Tool Company Limited v Tewson [1972] ICR 501). This rule of “good industrial practice” was upheld by the Court of Appeal in Burlo v Langley [2006] EWCA Civ 1778, even though it can result in “double-recovery” of compensation during the notice period. Confusingly, the rule is different in claims for wrongful and constructive dismissal, where the claimant must give credit for any sums earned in a new job during the notice period (Stuart Peters Ltd v Bell [2009] EWCA Civ 938).




Earnings from any new job are taken into account to reduce the compensatory but not the basic award. The compensatory award will be reduced by earnings from new full or part-time work, self-employment, agency or casual work. 




The tribunal will not take into account earnings from a second job that a claimant already had before dismissal, nor the income from any insurance product, such as income protection insurance, nor from any source unrelated to the employment.




An employee who finds a new higher-paid job will have no ongoing claim for lost earnings. 




There are sometimes alternative ways of mitigating losses apart from finding a new job, such as setting up a new business or attending a training course. For example, in Orthet v Vince-Cain [2004] IRLR 857, the EAT ruled that a dismissed employee had mitigated her losses by attending a university course, since she was unlikely to get a comparable new job to the one she had lost without further qualifications.




It is for the employer to show that an employee has unreasonably failed to mitigate their loss (Fyfe v Scientific Furnishings [1989] IRLR 331). In Cooper Contracting Limited v Lindsey [2015] UKEAT/0184/15/JOJ, the EAT commented that claimants must not be put on trial as if the losses were their fault. In that case, the claimant did not unreasonably fail to mitigate his loss when he decided to work as a self-employed carpenter instead of looking for a better paid job.



An unreasonable refusal of an offer of re-employment by the same employer can be a failure to mitigate, but the tribunal will take into account all the circumstances, including the employer’s behaviour (Wilding v BT [2002] IRLR 524). Where the employer has fundamentally breached the employment contract, for example, by withholding pay, a refusal to accept an offer of re-engagement by the same employer is unlikely to be unreasonable (Bloxwich Fencing Limited v Banks [2010] UKEAT/0469/09/DM).



It is not normally a breach of the duty to mitigate to refuse an offer by your former employer of self-employed terms (F&G Cleaners Limited v Saddington [2012] UKEAT/140/11/JOJ).