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The facts in Pipecoil Technology Ltd v Heathcote

Mr Heathcoat (“the Claimant”) commenced employment with Pipecoil Technology Ltd (“the Respondent”) on 30 September 2008 as a mechanical design engineer. He suffered a serious injury in June 2009 and returned to work in August 2009 part-time. He returned to work full-time after Christmas in 2009. In April 2010 the Respondent became concerned about the Claimant’s timekeeping, his use of personal email at work, and what it considered to be erroneously completed time sheets. The Claimant was invited to a disciplinary hearing which he declined to attend. He was subsequently dismissed on all 3 counts by Mr Fiddes, the Managing Director. An appeal was later heard and dismissed by Mr Batchelor, the Operations Director.

The Claimant subsequently submitted a claim to the Employment Tribunal for (among other things) unfair dismissal. He succeeded in his claim and was awarded £17,445. The main reason for the Tribunal’s finding was that Mr Fiddes had predetermined the outcome of the disciplinary hearing. The Respondent appealed on the following points:

  1. The Tribunal failed to set out the issues which it had to determine
  2. The Tribunal misapplied the Burchell (“the reasonable range of responses”) test
  3. The Tribunal failed to recognise that the band of reasonable responses is to be applied when considering the fairness of the procedure adopted by the Respondent
  4. The Tribunal failed to consider whether the appeal stage could “cure” defects in the disciplinary
  5. The Tribunal erred in failing to apply the Polkey rule
  6. The Tribunal misapplied the law on failure to mitigate
  7. The Tribunal made an incorrect finding of fact (that Mr Fiddes had predetermined the outcome of the disciplinary hearing)

We shall address ground no 6 in this post, namely that the Tribunal misapplied the law on failure to mitigate.

The law relating to mitigation of loss

Under s.123 of the Employment Rights Act 1996 an employee’s loss should be calculated by the Employment Tribunal having reference to “’the same rule concerning the duty of a person to mitigate his loss as to damages recoverable under the common law”. An employee therefore has a duty to mitigate their loss once dismissed. This duty arises once the employee has been dismissed, not prior to dismissal or during the employee’s notice period.

The main question that arises in cases involving a failure to mitigate is: “has the employee made reasonable efforts to obtain alternative employment?”. The onus is on the Respondent (the previous employer) to prove that the employee hasn’t taken reasonable steps. The best thing that the former employee can do in the circumstances is make a chronology of all the applications they have made, whom the applications were made to, and the results of the applications. Further, the employee should save the evidence of such applications so they can present this to the Tribunal.

If the employee has failed to mitigate their loss sufficiently the Tribunal should reduce the compensatory award (not the basic award) utilising a “staged” procedure. This involves the Tribunal looking at the date on which they believe that the employee would have found work if the employee had made reasonable efforts to obtain alternative employment. The Tribunal would then make a finding as to what value of remuneration the employee would have received from that date and reduce the compensatory award accordingly. What the Tribunal should not do is reduce the compensatory award by a “broad brush” percentage amount.

The Employment Appeal Tribunal’s decision in Pipecoil Technology Ltd v Heathcote

The Employment Appeal Tribunal decided to uphold the Respondent’s appeals relating to the Polkey issue and failure to mitigate. The EAT considered that the Tribunal had failed to give adequate reasons for its decision that the Polkey rule didn’t apply in the circumstances and further failed to give adequate reasons for its decision that the Claimant had not failed to mitigate his loss. All of the other grounds of appeal were rejected. The EAT rejected the Claimant’s cross-appeal related to a failure to increase the compensatory award by 25% because of a breach of the ACAS Code of Conduct.

Our specialist unfair dismissal lawyers’ views on Pipecoil Technology Ltd v Heathcote

This case is interesting from the point of view of both liability and remedy. The case hinged upon the employer’s frame of mind at the time of the dismissal – something that’s fairly difficult to prove in the Employment Tribunal. The Tribunal does, in the circumstances, seem to have been fairly sympathetic to the Claimant in this respect – possibly because of the Claimant’s disability and/or the Respondent’s actions or attitude both at the time of the dismissal and during the proceedings. In terms of remedy, the Claimant’s ambivalent frame of mind towards what he wanted to do in the future weighed against him. The EAT also were wary of the fact that the Claimant may have been holding out on obtaining employment because of his personal injury claim. The best thing to do if you’re claiming unfair dismissal is be able to demonstrate to the Employment Tribunal that you’ve made reasonable efforts to obtain employment (using evidence of applications etc.)

Redmans offer Employment Tribunal representation to both Claimants and Respondents.

About Chris Hadrill

Chris is a specialist employment lawyer at Redmans. He specialises in contentious and non-contentious employment matters, including breach of contract claims, compromise agreements and Employment Tribunal cases. He writes on employment law matters on a variety of websites, including Direct 2 Lawyers, Lawontheweb.co.uk, LegalVoice, the Justice Gap and his own blog. Contact Chris by emailing him at chadrill@redmans.co.uk

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