Many Complainants are aware that the maximum compensation available to an employee who is taking a claim under the Unfair Dismissals Act 1977 - 2015 ("Unfair Dismissals Acts") is two years remuneration. It is always important to remember that this compensation is limited to the employee's actual loss of earnings and for the Respondent to put the Complainant on full proof of those losses. 

Section 7(2) of the Unfair Dismissals Acts clearly states that "In determining the amount of compensation payable, consideration shall be given to —the measures (if any) taken by the employee to mitigate the loss or, as the case may be, his failure to take such measures." Under s. 7(3) of the Unfair Dismissals Act “financial loss” in relation to the dismissal of an employee, includes any actual loss and any estimated prospective loss of income attributable to the dismissal and the value of any loss or diminution, attributable to the dismissal, of the rights of the employee under the Redundancy Payments Act, 1967 to 1973, or in relation to superannuation. “Remuneration” includes allowances in the nature of pay and benefits in lieu of or in addition to pay. In assessing mitigation of loss it is important to consider how the actions of the employees, and in some cases, employers can impact on loss of earnings.

Several exceptionally high awards made in 2024 are worth reviewing in that regard. The first of these cases was Gary Rooney V Twitter International Unlimited Company ADJ-00044246/2024. The Complainant held an executive position at the time of his dismissal. Following the acquisition of the Respondent company by Elon Musk, a number for employees received the following e-mail on 16 November 2022: “Going forward, to build a breakthrough Twitter 2.0 and succeed in an increasingly competitive world, we will need to be extremely hardcore. This will mean working long hours at high intensity. Only exceptional performance will constitute a passing a grade.[….]. If you are sure that you want to be part of the new Twitter, please click yes on the link below. Anyone has not done so by 5pm ET tomorrow (Thursday) will receive three months of severance.". Further correspondence was received suggesting employees' terms and conditions might be subject to change however, the implications of agreeing to stay in employment was unclear. The Complainant failed to respond to the e-mail and was dismissed. The fact of dismissal was in dispute in circumstances where the Respondent claimed that the Complainant had resigned by failing to click "yes" on the email. The Complainant obtained alternative employment on 18 September 2023. The Complainants total yearly compensation package was substantial and included a basic package, performance bonus and impact award and equity grant. The figure of €363,461 was accepted by the Adjudication Officer as a fair and reasonable estimate of the compensation package but was reduced slightly in relation to the deduction of the performance bonus, leaving an overall remuneration of €323,560. Ultimately an award of €550,131 (to include a substantial award for future loss of earnings) was made, the highest ever award made by the WRC to date. This case is currently under appeal to the Labour Court.

In relation to mitigation, the Respondent alleged that the Complainant's failure to click "yes" to the e-mail would have resulted in the retention of his role and a complete mitigation of loss. The Adjudication Officer rejected this argument and concluded that the failure to tick "yes" was incapable logically of being construed as a failure to mitigate loss because at the time of the omission no loss had occurred. The Adjudication Officer also raised issue with the requirement placed on the Complainant to prospectively accept changes to his terms and conditions with no indication of what those changes might be. It was also argued by the Respondent that the Complainant had made insufficient efforts to acquire a new role. Despite the incredibly substantial package held by the Complainant at the time of the dismissal, this argument was rejected by the Adjudication Officer who stated that the Complainant "was not obliged to take any job at any salary but rather to seek suitable alternative employment attracting an income as close as he could get to the overall compensation package he had enjoyed prior to the dismissal."

The case of Michael Kiely v Hyph Ireland Limited ADJ-00037708/2024 involved a musician and music producer who was terminated after approximately eight years' service. The fact of the unfair dismissal was not in dispute and the hearing only addressed loss of earnings. The Complainant was successful and an award of €440,000 was made.

The Complainant argued that he was 58 years old and that it would be difficult to rebuild what took many years to establish. There was a 12-month restrictive covenant in the employment contract which was enforced by the Respondent. Evidence was provided by the Complainant that he was refused permission to commence a new company and/or become a contractor of the Respondent on foot of that restrictive covenant. Post dismissal the Complainant established a holiday business from his home in County Clare but earned limited income during the pandemic. When the non-compete clause expired, the Complainant began to network and explore new business opportunities to include setting up a new business. It was alleged by the Respondent that the Complainant failed to engage in a meaningful way to mitigate his loss and that he should have looked outside his area of interest for a temporary period. Ultimately the Complainant set up a new business and claimed for 17 months compensation but no future losses.

It was determined by the Adjudication Officer that the trust and confidence in the employment relationship was breached in a "particularly cruel manner". It was also accepted that the manner of the employee's summary dismissal impacted on his ability to mitigate his loss and extended the time for him to commence his new venture. The WRC found that "the Complainant was a successful entrepreneur and has every right to pursue that goal to re-establish himself in a similar position that he was dismissed from. He has used his time well to do this. It is not reasonable that he compromises that legitimate goal and accept any work that detracts from that objective".  The Adjudication Officer stated that the Complainant significantly mitigated his loss by commencing a new business venture which demonstrated "considerable effort and tenacity".

Finally, the case of Wim Naude v University College Cork ADJ-00042625/2024 involved the termination of a professor's contract of employment due to a failure to re-locate to Cork to perform his teaching duties on site. The employment contract had commenced during Covid when remote teaching was facilitated by the University. When the college re-opened the employee struggled to secure accommodation in Cork due to the housing crisis. The company dismissed the employee via email with limited engagement alleging he had frustrated the contract due to his continued refusal to re-locate.  

The employee's salary was set at €150,000 which increased to €166,000 in his second year of employment. The Complainant had not secured a new role at the time of the hearing despite his senior position. The Complainant confirmed that he had made significant efforts to mitigate his loss to include applying for over 50 roles at universities, applying for unemployment insurance in the Netherlands (where he was based) and asking the Respondent for a reference. The Complainant also created a website to market his services. At the time of the hearing, the Complainant had an honorary position at Aachen University, which was unpaid. He was also a shareholder in an AI start up but the business was dormant. The Complainant gave evidence he was struggling to get consultancy work as he was not currently associated with a university. Robust arguments were made by the Respondent's solicitors disputing the efforts made by the Complainant. The Adjudication Officer clearly accepted the evidence of the Complainant stating that "the losses suffered by the Complainant far exceed the maximum jurisdiction of the Act". Having considered what was fair and equitable with reference to the reasonableness of the behaviour of the employer and the mitigation by the employee, the losses to the date of the hearing as well as future losses an award of €300,000 was made, the maximum award that was available to the WRC (having deducted the earnings evidenced by the Complainant).

It is also worth briefly mentioning a number of other interesting cases which issued in 2024.  In the case of Amanda McKeown v Retro Fit Design Limited ADJ-00043441/2024 it was determined that family circumstances leading to non-availability for work could not be considered in calculating mitigation of loss. It was accepted in the case of Darryl Scales v Ennistymon Parish & Community Group ADJ-00047886/2024 that participation on the full-time course left the employee unavailable for work and loss of earnings could not accrue during that period. In the case of Graziano D'amato v Tripadmit Ltd ADJ-00047459/2024 it was determined that a failure by an employer to give a reference contributed to the Complainant's loss of earnings. Finally, in the case of Gráinne Sherlock V Pluralsight Ireland Ltd ADJ-00044941/2024 it was found that attaining a new employment which lasted 15 weeks did not stop the clock in relation to loss of earnings in circumstances where the employee did not pass their probationary period in the new role.

Takeaways

A number of useful learnings arise from these cases as follows:

• The WRC has demonstrated a willingness to make very substantial awards to employees on substantial packages who demonstrate efforts to mitigate loss particularly if circumstances around the dismissal present the employer in a poor light. 
   
• An employee does not have to accept the first role they are offered and are entitled to seek suitable alternative employment provided they are actively seeking employment on an ongoing basis.
   
• The establishment of a new business may be considered sufficient mitigation of loss depending on the circumstances of the case without the necessity to apply for roles.
   
• Employers should consider whether it is necessary to enforce restrictive covenants contained in the employee's contract employment if litigation is likely and those restrictive covenants are likely to significantly increase loss of earnings. 
   
• Actions taken by the employer such as a refusal to provide a reference to an employee by an employer which inhibit them in attaining a new role can result in an increased loss of earnings award.
   
• Time spent where the Complainant is unavailable for work will not be considered when determining loss of earnings. 
  A short interim employment may not stop the clock in relation to mitigation of loss if the Complainant remains unemployed at the date of the hearing.