Claimants must evidence stigma on the job market

In Hilco Capital Limited v Harrington [2022] EAT 156, the EAT found that it was not reasonable for an employee who had been dismissed for whistleblowing not to apply for alternative employment based on an unsubstantiated assumption that prospective employers would stigmatize her for having blown the whistle against her former employer. A claimant cannot simply assert that they will be prejudiced in the labour market to justify not taking steps to mitigate their loss but will need to provide evidence of why it was unreasonable for them to do so.

It is long-established that a Claimant who successfully claims compensation from their former employer (whether for unfair dismissal, discrimination or whistleblowing) is under a duty to mitigate their loss, most typically by seeking to secure employment with another employer. However, it is also widely accepted that whistleblowers in particular are often unfairly stigmatized as trouble-makers and can struggle to find alternative employment, even where their claims are legitimately pursued and are ultimately successful. The Harrington case examined whether, in such circumstances, it is reasonable for a claimant to delay applying for other roles whilst awaiting the outcome of their claim, because they expect to be stigmatized.

In determining compensation for discrimination or whistleblowing, an Employment Tribunal (“ET”) can award “stigma damages” to reflect difficulties some claimants experience finding alternative employment. The Claimant must demonstrate that they have been prejudiced in the job market because they brought legal proceedings.   It can be difficult to establish such losses given that prospective employers are unlikely to admit to not offering a claimant work because they sued a former employer. The case of Abbey National plc v Chagger [2010] ICR 397 set out principles upon which stigma damages should be awarded. In particular, Elias LJ made clear that ETs should not infer that a Claimant would suffer stigma simply because the Claimant asserts as much.  Rather, the Claimant will need to produce compelling evidence that they have been prejudiced in the labour market for having brought proceedings.

The Claimant was dismissed in October 2017. In February 2019, the Claimant succeeded in her complaint that she had been unfairly dismissed for whistleblowing, having raised issues of serious financial irregularity. She did not apply for any alternative roles in the interim. One of the issues the ET addressed at the remedy hearing was whether, by not applying for any alternative roles prior to the liability outcome being delivered in February 2019, the Claimant had unreasonably failed to mitigate her loss.

The Claimant accepted that there had been jobs for which she could have applied. One of her reasons for not doing so was her belief that any application would have been pointless because, once it discovered her status as a whistleblower, any prospective employer would stigmatize her and not employ her.

The EAT held that the ET had erred in finding that it was not unreasonable for the Claimant not to have looked for or applied for any job at all prior to the liability decision being handed down. It considered that the Claimant had to evidence that she would have been stigmatized had she applied for jobs. The fact that she had not made any job applications was not of itself necessarily fatal to her case. However, some evidence needs to be put forward, which the ET evaluates and makes factual findings about, which goes to the question of whether the failure to look for any jobs or make any applications at all was reasonable. The ET should have reached a factual finding on whether the Claimant had an explanation to justify not making a single job application and should not have unquestioningly accepted her assertion that she would be stigmatized or prejudiced by prospective employers.

What to take away

Assuming that they are well enough to do so, Claimants who are suing their former employer (whether for whistleblowing or some other unlawful reason) should always apply for alternative roles at the earliest opportunity, even where they are not optimistic that they are likely to succeed owing to their having issued legal proceedings. They should comprehensively record all roles they apply for, and the outcomes of such applications. A claimant who has made many unsuccessful applications for alternative employment is likely to be in a much stronger position to evidence that they have been stigmatised by prospective employers than a claimant who has not done so based on an assumption that they will be unsuccessful. A claimant who chooses not to seek alternative employment pending their case being determined will need to provide compelling evidence as to why they did not apply for alternative roles if they are to avoid an ET finding that their failure to mitigate was unreasonable.

A claimant who has unsuccessfully applied for alternative employment, and believes the reason is because they have brought a discrimination claim against their former employer, can always bring a claim for victimisation against the prospective employer. However, such claims tend to be difficult to succeed with, if the prospective employer has documented a non-discriminatory rationale for offering the role to someone else.

The EAT decision can be accessed here: Hilco_Capital_Ltd_v_Denise_Harrington__2022__EAT_156.pdf (publishing.service.gov.uk)