Mitigation of Loss - Unfair Dismissal

Introduction

Recently, the Workplace Relations Commission (WRC) addressed the issue of compensation payable to an employee, particularly in light of their efforts to mitigate their sustained loss (Michal Wrobel -v- Haccius Logistics Limited ADJ-00035911). 

Facts

Mr Wrobel (the Complainant) lodged a complaint of Unfair Dismissal. He had been employed by Haccius Logistics Limited (the Respondent) from 4 July 2016 to 8 October 2021. The Complainant resigned from his position with effect from 1 November 2022. 

Upon commencement of the adjudication in July 2022, the Complainant noted that he had been on sick leave since 20 June 2020 as a result of back pain. The Complainant had a history of difficulty regarding the allocation of machines and equipment between 2017-2020. In addition to this, the Complainant claimed that he had worked excessive hours, sometimes amounting to 55-63 hours per week. The Complainant sought compensation amounting to six weeks pay for the termination. 

Interestingly in this case, the employer actually conceded that Mr Wrobel’s dismissal had been unfair and wished to move directly to the issue of compensation to be awarded. 

The Respondent noted that the Complainant had been on sick leave for a considerable period between the date of the termination of employment and the hearing of the complaint. Furthermore, the Complainant’s attempts to find new employment had been severely hindered by his physical condition and his desire to work as a heavy machine operator. It was noted that within the period that Mr Wrobel was available to work, he had only applied for two positions. 

Findings

The Adjudication Officer noted that it is well established that a Complainant must be able to demonstrate that upon their termination, they made every effort to mitigate their loss. 

He noted section 7(2)(c) of the Unfair Dismissals Act 1977, which states that when determining the amount of compensation to be awarded, one must consider: 

“the measures (if any) adopted by the employee or, as the case may be, his failure to adopt measures, to mitigate the loss aforesaid….”

The Adjudication Officer noted the case of Sheehan v Continental Administration Co Ltd (UD/858/1999) where the Employment Appeals Tribunal had stated that a Complainant who is unemployed is required to spend “a reasonable amount of time each weekday seeking work”. They also commented that merely posting adverts or informing agencies that you are available to work is insufficient. 

The Adjudication Officer also drew attention to section 6(a) of the Unfair Dismissals (Amendment) Act 1993, which amended section 7 of the principal Act. This section stipulates that:

“if an employee incurred no such financial loss, payment to the employee by the employer of such compensation (if any, but not exceeding four weeks renumeration in respect of the employment from which he was dismissed calculated aforesaid) as is just and equitable having regard to all of the circumstances.”

In this instance, the Adjudication Officer found that the attempts made by the Complainant to secure alternative employment were entirely insufficient and demonstrated a failure on behalf of the Complainant to mitigate his loses. In light of this, the Complainant was only awarded four weeks’ pay, rather than the six weeks claimed. 

Other Cases

There have been numerous other recent cases where the issue of mitigation of losses has been discussed in relation to the calculating of compensation. 

In Daniel McLoughlin v North Dublin Inner City Homecare & Home Help Services Company Limited by Guarantee t/a North Dublin Home Care (ADJ – 00030296) it was noted that the Complainant had not applied for work in the four months after his employment had been terminated. The Complainant had not applied for work due to the fact that he did not believe there would be any suitable work for a vulnerable person like himself on a remote basis. The Complainant then did not search for work for a further four months due to a diagnosis of depression and anxiety. 

The Adjudication Officer noted the case of Coad v Eurobase (UD1138/2013) where the Tribunal had stated that: “In calculating the level of compensation the Tribunal took into consideration the efforts of the Complainant to mitigate his losses”. Taking this into account, the Adjudication Officer stated that there is an active obligation on Complainant’s to mitigate their loss. It was found that the Complainant in this case had failed to do so and the Adjudication Officer reflected this is the compensation awarded to him. 

The efforts of the Complainant to mitigate their loss was also discussed in Aisling Ryan v Pharmacy O’Riain Limited (ADJ -00029267). In this case, the Adjudication Officer noted the decision of the Labour Court in Philip Smith v Mark Leddy (UDD1974). In this case, the Labour Court had set out a test for proof of efforts to mitigate one’s loss. The test was that “the court expects to see that employees who are dismissed spend a significant portion of each normal working day, while they are out of work, engaged actively in the pursuit of alternative employment”. If this test is not met, then the Labour Court made it very clear that this had to be reflected in the compensation awarded. 

The Adjudication Officer found that the Complainant had failed to meet this test. He noted that she had only applied for 23 positions between 29 June 2020 and August 2021. He also noted that having been made redundant, she failed to apply for subsequent positions which had been advertised by the Respondent. 

Conclusion

The above cases clearly demonstrate that when an employee brings a claim of unfair dismissal, they will typically be awarded loss of earnings for the period from the date of termination to the date of the hearing. 

However, an employee must be able to demonstrate that they have made every reasonable effort, as far as is practicable, to secure alternative employment within this period. If an Adjudication Officer determines that insufficient efforts have been made, then the compensation they award will likely be lower than what would typically be given.