Unfair dismissal and mitigation of loss – Commercial Motors (Wales) Ltd v Howley

The facts in Commercial Motors (Wales) Ltd v Howley

Mr Howley (“the Claimant”) was employed by a company until he was transferred under the Transfer of Undertaking (Protection of Employment) Regulations 2006 (“TUPE”) to Commercial Motors (Wales) Ltd (“the Respondent”). The Respondent failed to “take over” his contract of employment and the Claimant was dismissed on 3 February 2009. The Claimant subsequently submitted a claim of automatic unfair dismissal to the Employment Tribunal and succeeded in his claim. The Employment Tribunal awarded the Claimant

  • Compensation for past and future loss of £40,021.50 (which was subsequently reduced to £20,010.75 after a Polkey reduction)
  • £6,003.23 because of the Respondent’s failure to complete the statutory procedures that were in force at the time

The Claimant was also awarded losses during his 3 month notice period of:

  • £3,993.36 for the loss of his company car
  • £96 for the loss of the use of his mobile telephone; and
  • £300 for loss of his fuel allowance

The Respondent appealed on the following grounds:

  1. The Claimant was not entitled to claim for the loss of the company car and fuel allowance
  2. That the award for the loss of the mobile telephone by the Claimant was perverse;
  3. That the Employment Tribunal failed in their analysis of the Claimant’s mitigation of loss; and
  4. That the award of loss of earnings was excessive and not a decision that any reasonable Tribunal would have come to.

The Claimant cross-appealed on the basis that he had not been awarded losses for a training the course and that the Employment Tribunal failed to award losses for loss of the company car, mobile telephone and fuel allowance beyond the duration of the Claimant’s notice period.

The law relating to mitigation of loss in unfair dismissal cases

Claimants have, under s.123 of the Employment Rights Act 1996, a duty to mitigate their loss. A Claimant will be expected to explain to the Employment Tribunal what action they have taken in respect of mitigation. This includes looking for work and applying for state benefits. The steps that the Claimant has to take are only what are reasonable in all the circumstances of the case – the Employment Tribunal will not apply an overly onerous burden to Claimants. Further, the burden of proof is on the Respondent to show that the Claimant has failed to take reasonable steps in the circumstances. The Respondent will therefore often attempt to show that the Claimant has not applied for any (or enough) jobs and will seek to introduce evidence of vacancies. The Respondent may seek to argue that the Claimant has failed to mitigate their loss in other ways, such as:

  • Failure to appeal their dismissal
  • The unreasonable refusal of an offer of employment
  • Pursuing an unreasonable career change or incurring unreasonable fees for training courses

The Employment Appeal Tribunal’s decision in Commercial Motors (Wales) Ltd v Howley

The Employment Appeal Tribunal dismissed the Claimant’s appeals. It allowed the Respondent’s cross-appeal on the first ground above. The Employment Appeal Tribunal found Claimant had had access to a company car for his new employment for the period of the two months that he was working there. He had submitted invoices to his new employer for this and was therefore deemed to have mitigated his loss in this respect (and that of the fuel allowance). The amount of the sum awarded for the loss of the company car and the loss of the fuel allowance was therefore decreased by four-ninths to reflect the Claimant’s mitigation.

Our specialist employment lawyers’ thoughts on Commercial Motors (Wales) Ltd v Howley

This is a rather unremarkable case that turns upon the reasonableness of the Claimant’s actions with regards to mitigating his loss.