Mitigation

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Introduction

See Fair Work Act 2009 s.392(2)(d)

When considering ordering compensation it is necessary to consider what steps a person has taken to mitigate their loss.^[1]

This means that a person must provide evidence that they have taken reasonable steps to minimise the impact of the dismissal.^[2]

What is reasonable depends on the circumstances of the case.^[3]

A person is not required to take unreasonable steps to mitigate their loss such as:

expending money, or
destroying or sacrificing their property rights.^[4]

Mitigation means the employee has taken deliberate, positive steps to lessen the effect that the dismissal has had on them, such as by seeking new employment.

Offers of re-employment

The general position is that a wrongfully dismissed person cannot claim a loss which would have been avoided by accepting a reasonable offer of new employment.^[5] The refusal of another position with the employer at the same rate of pay may amount to a failure to mitigate.^[6]

The following circumstances may not amount to a failure to mitigate when re-employment is offered:

the refusal of another position with the employer at the same rate of pay but with lesser status, or^[7]
the refusal of a position with the employer where the employee has lost trust and confidence.^[8]

Case examples

Employee mitigated loss

Re-employment offer

Owens v Allied Express Transport Pty Ltd [2011] FWA 1058 (Hampton C, 28 February 2011).

The applicant's refusal to accept was in effect an offer of reinstatement immediately after dismissal was held not to constitute a failure to mitigate loss, given that the employer's prior conduct in seeking unilaterally to reduce the employee's salary represented 'a further major breach of the fabric of the employment relationship'. The applicant, who was pregnant, had gained some short-term employment prior to giving birth.

There was no reduction of compensation for any failure to mitigate loss. The employer's application to appeal was refused.

Medical incapacity

Hillbrick v Marshall Lethlean Industries Pty Ltd [2010] FWA 7704 (Cribb C, 15 October 2010).

The employee was unable to mitigate his losses for a period of time between being dismissed and recovering from surgery.

He obtained employment soon after he was given medical clearance. It was found that it was reasonable for the employee not to mitigate his loss for the recovery period. No amount was deducted for failure to mitigate.

The Fair Work Commission ordered 10 weeks' payment in lieu of reinstatement.

Alternative employment

SB v FC Pty Ltd [2010] FWA 4179 (Hampton C, 16 June 2010).

The employee gained alternative employment 10 days after her dismissal.

No amount was deducted as it was found that she had actively taken steps to mitigate her loss.

Employee did NOT mitigate loss

Re-employment offer

Bechara v Gregory Harrison Healey & Co (1996) 65 IR 382.

The employee was dismissed by her employer. The following day she was offered reinstatement and given the option of negotiating the terms. The employee declined the offer as she had already decided to start her own practice.

It was found that, while there was no valid reason for dismissal, the employee could have reasonably accepted the bona fide offer of re-employment.

No compensation was ordered due to the employee refusing to mitigate her loss.

Delay in seeking job

Robat v Iveco Trucks Australia Ltd [2011] FWA 2915 (Lewin C, 16 May 2011).

The employee did not make any substantial effort to seek employment until some months after the dismissal.

The period in which the employee was not looking for work was deducted from the compensation amount.

References

^[1] Fair Work Act s.392(2)(d).

^[2]Biviano v Suji Kim Collection, PR915963 (AIRCFB, Ross VP, O'Callaghan SDP, Foggo C, 28 March 2002) at para. 34; citing Lockwood Security Products Pty Limited v Sulocki and Ors, PR908053 (AIRCFB, Giudice J, Lacy SDP, Blair C, 23 August 2001) at para. 45.

^[3]Biviano v Suji Kim Collection, PR915963 (AIRCFB, Ross VP, O'Callaghan SDP, Foggo C, 28 March 2002) at para. 34; citing Payzu Ltd v Saunders [1919] 2 KB 581.

^[4]Biviano v Suji Kim Collection, PR915963 (AIRCFB, Ross VP, O'Callaghan SDP, Foggo C, 28 March 2002) at para. 35; citing Burns v M.A.N. Automotive (Aust.) Pty Ltd (1986) 161 CLR 653, 659 per Gibbs CJ and at 677 per Brennan J; Jewelowski v Propp [1944] 1 All ER 483, 484 (Lewis J); and Elliot Steam Tug v Shipping Controller [1922] 1 KB 127, 140‒141.

^[5]Biviano v Suji Kim Collection, PR915963 (AIRCFB, Ross VP, O'Callaghan SDP, Foggo C, 28 March 2002) at para. 45; citing Williamson v Commonwealth (1907) 5 CLR 174, 185.

^[6]Biviano v Suji Kim Collection, PR915963 (AIRCFB, Ross VP, O'Callaghan SDP, Foggo C, 28 March 2002) at para. 45; citing Brace v Calder [1895] 2 QB 253.

^[7]Biviano v Suji Kim Collection, PR915963 (AIRCFB, Ross VP, O'Callaghan SDP, Foggo C, 28 March 2002) at para. 48.

^[8]Biviano v Suji Kim Collection, PR915963 (AIRCFB, Ross VP, O'Callaghan SDP, Foggo C, 28 March 2002) at para. 47; citing Bostik (Australia) Pty Ltd v Gorgevski (No. 1), (1992) 36 FCR 20, 32.

Updated time

Last updated

15 January 2020

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Introduction

Offers of re-employment

Case examples

Employee mitigated loss

Employee did NOT mitigate loss

References

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