Dench v Flynn and Partners, CA  IRLR 653
An unfairly dismissed employee has a duty to "mitigate" his or her loss. This normally means making reasonable efforts to obtain other work.
Most employees, faced with unemployment, will seek other work and may be compelled to accept a new job knowing that it is not entirely suitable. Starting a new job inevitably carries a certain degree of risk and frequently will be subject to a probationary period.
This risk is increased if the job is not suitable to begin with and the employee may soon be out of work again.
This was the predicament Ms Dench faced having previously been unfairly dismissed by Flynn and Partners, a firm of solicitors. Ms Dench was employed as a solicitor working in their conveyancing department. She was given three months notice of dismissal by reason of redundancy with effect from 16 September 1995.
During the notice period she made a number of job applications to other firms but only one of these was successful. She felt compelled to accept the job offered notwithstanding her reservations as to its suitability, that it was subject to a three-month probationary period and that she had been advised against it by a colleague.
She started the new job on 30 October but, as she had feared, the new job did not work out and she was dismissed from this employment with effect from 31 December 1995.
An unfair dismissal claim against Flynn and Partners was lodged with the Employment Tribunal who found in her favour on the basis that there was no redundancy situation at the time of the dismissal. On the question of compensation, the tribunal had to decide whether to assess loss up to the date she started the new job or to take account of her subsequent dismissal.
The tribunal decided on the former, stating: "This employment was not temporary work or work of a different nature...It was an appointment, unlimited in duration except for the usual probationary requirement, as a qualified solicitor carrying out work of which she already had experience...That in the event she was unable to work amicably with the sole principal...for whatever reason, was unfortunate but is not something for which we consider it would be appropriate to visit the financial consequences upon the Respondents".
The Court of Appeal disagreed, allowing the appeal and remitting the case to the tribunal to re-assess the amount of compensation. The tribunal had been wrong to take the view that compensation could only be assessed up to the date she started the new job.
Section 1, 2, 3 of the Employment Rights Act 1996 provides that the "amount of the compensatory award shall be such amount as the Tribunal considers just equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer".
The tribunal has to determine whether the loss in question was caused by the unfair dismissal or by some other cause. The tribunal must then ask what amount is just and equitable to award.
This decision is to be welcomed but likely to have limited impact. In most cases the Applicant will not be able to prove that loss arising from the termination of subsequent employment was caused by the original unfair dismissal.
It will remain the case that as a general rule the obtaining of new employment of a permanent nature at an equivalent or higher salary, will serve to put a stop to the period by which compensation can be recovered. This case does, however, recognise that there may be circumstances in which a link can be proven and if so there is no reason why an Applicant should not recover compensation.