Court makes significant statements on mitigation of loss and contribution | Employment Law Update

Chief Judge Inglis has provided clarity on two issues in an unjustified dismissal decision.

The first relates to the mitigation of loss (usually, the seeking of new employment) that an employee seeking reimbursement of lost wages is required to do. The Chief Judge shunned any suggestion that this is a box-ticking exercise, concentrating instead on whether, in the circumstances before her, it was reasonable that the dismissed employee had made no effort to find other employment. She found that it was. She said:

"It is well established that in ordinary breach of contract cases a plaintiff is under no duty to mitigate their losses. And no positive duty emerges from the wording of the Act. The key question is not whether a legal duty exists but what the prerequisites for reimbursement are. The asserted duty on employees to mitigate their losses, which has become a well-engrained mantra in this jurisdiction, tends to be used as an unhelpful shorthand which focusses the inquiry on steps taken, or not taken, by an employee rather than what — if anything — might reasonably have been expected in the particular circumstances. To the extent that [Gorrie Fuel (SI) Ltd v Marlow EmpC Christchurch CRC 9/05, 21 November 2005] can be interpreted as expressing a blanket rule that a failure to take any steps to find alternative work means that an employee has lost no wages as a result of the grievance, and accordingly is entitled to no reimbursement, I respectfully disagree with it…"

The second issue was to do with whether the employee had contributed to the circumstances of his dismissal and accordingly should have a reduction in remedies. The Employment Relations Authority had reduced remedies by 50%. The Judge noted that a 50% reduction applied in over a quarter of cases in which the Authority reduced for contribution and the average reduction was about 32%. This was despite the fact that the Employment Court had said in 2016 that a reduction of 50% should be reserved for exceptional cases and that care should be taken before imposing a reduction of 25% because even that was of “particular significance”. In the case before it, the Court reduced only the compensation and limited that to 20%.

Information reproduced with permission of Wolters Kluwer

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Court makes significant statements on mitigation of loss and contribution | Employment Law Update