Tribunals must consider the full picture on mitigation when assessing compensation

Background

In SBH Windermere Limited & Anor v Nunns, the claimant successfully brought several complaints of harassment against the respondent. At the remedy stage, the tribunal awarded the claimant compensation of over £35,000, which included an element for future losses calculated by reference to the claimant's wages less the Universal Credit he would receive.

Shortly after the remedy judgment, the claimant contacted the tribunal explaining that, once the compensation was paid into his bank account, his savings would exceed the £16,000 threshold for Universal Credit eligibility. He would therefore lose his monthly Universal Credit payments of £1,100.

The tribunal reconsidered its judgment and increased the total compensation to just over £43,000 to account for this loss.

The respondents appealed, arguing that if the tribunal was going to revisit its award on the basis of the claimant's Universal Credit position, it should also have considered whether the claimant was entitled to claim other benefits. They had expressly raised this argument during reconsideration, but the tribunal had not addressed it.

EAT decision

The Employment Appeal Tribunal (EAT) considered two grounds of appeal.

It rejected the argument that the tribunal should not have reconsidered its judgment. The EAT regarded the Universal Credit point as fresh material drawing an argument to the tribunal’s attention, rather than necessarily fresh evidence. Even if the rules governing fresh evidence applied, they were satisfied.

However, the EAT upheld the central ground of appeal. It was against the interests of justice to consider only the impact of the £16,000 threshold without also considering mitigation in the wider sense. Damages should not exceed the real loss, and compensation requires a robust and realistic assessment. The tribunal’s assessment was incomplete because it had not considered what other benefits might have been available.

The claimant explained that he had not claimed Jobseeker’s Allowance because his mental ill health meant he was not seeking work, and claiming it would have been dishonest. The EAT observed that Employment and Support Allowance appeared, at first sight, suited to his circumstances. There might nevertheless be reasons why he had not claimed it.

The matter was remitted to the same tribunal solely to determine whether the claimant should have mitigated his loss by seeking either benefit. The EAT did not decide that he had failed to mitigate, and permitted no wider arguments.

Learning points for employers

Employers should be ready to raise relevant arguments about alternative benefits where these could affect the claimant’s actual loss. Whether a claimant could reasonably have claimed them will depend on eligibility and individual circumstances.

Where a claimant seeks reconsideration of compensation, employers should consider the wider implications of the proposed change and ensure the tribunal addresses relevant mitigation arguments.

Employers and their advisers should scrutinise schedules of loss early, including the assumptions about earnings, benefits and efforts to find work, so they are ready to respond.

For more information or advice, please get in touch with Philip Mahboobani in our Employment team.