Where the impact of an employer’s behaviour is such that an employee believes they will never work again, employees can try to recover “career loss” from the Tribunal. This means they demand compensation for the loss of salary and benefits (including pension contributions and bonuses) which they would have received from their employer had they remained in employment until retirement.  Given the statutory cap which limits the recovery of a compensatory award to £78,962 (2016/17 tax year), claims for career loss are generally only relevant to uncapped claims (such as discrimination and whistleblowing claims). They are most commonly sought in discrimination claims, which is the focus of this article.

In assessing a claimant’s financial losses arising from a discriminatory dismissal, the court will consider:

  • past losses; and
  •  if the claimant is still out of work as at the date of the remedies hearing, the estimated future losses.

Calculating past loss is usually relatively straight forward, and if the claimant remains unemployed at the hearing date the Tribunal will consider what payments and other benefits the claimant would have received in the period between the dismissal and the remedies hearing (loss of earnings, benefits, pension entitlement, etc).

What is the relevant period to be taken into account in assessing future loss?
The Tribunal must decide at what point it considers that the claimant's future loss will stop – i.e. at what point will they be able to find an equivalent role to the one they held, or would have held, at the respondent before the discriminatory act? This is inevitably a speculative exercise. 

If the claimant is seeking to recover losses until retirement, this is known as “career loss”. Claims for career loss are typically made in disability cases, cases involving older workers or cases where the discrimination has led to serious psychiatric injury. Occasionally, the claimant might argue that the timing and circumstances of their dismissal have had a detrimental impact on the career path that they would otherwise have chosen to follow and that this will cause them a measure of financial loss for the rest of their career (also known as “stigma damages”). 

In “stigma damages” cases, the Tribunal will again have to assess the likelihood of the claimant working again on a comparable salary, usually based on statistics and the relevant market.

Leading Cases
The Court of Appeal has considered career loss in two contrasting discrimination cases:

Chagger v Abbey National plc and another [2010] IRLR 47
Key findings:

  • it is appropriate to take into account the chances of the claimant being dismissed even if there was no discrimination (such as by virtue of a non-discriminatory redundancy exercise);
  • the chances of a voluntary resignation can be taken into account where this would have been to give up work altogether (e.g. retirement) or where it would have happened whether or not he/she had another job to go to;
  • in contrast it is not appropriate to take into account the chances of a voluntary departure in other circumstances:
  1. here Abbey identified a number of reasons why Mr Chagger would not have remained in employment with them for long: his relationship with his boss, his past employment history, his enquiries regarding voluntary redundancy, and statistical evidence showing that there was a high turnover within Abbey for persons with Mr Chagger's age and job band;
  2. these were not relevant because they did not take into account of the fact that it is generally easier to obtain employment from a current job than from the status of being unemployed, the labour market might be more difficult, by the time jobs are available again, Mr Chagger might have been out of a job and out of the industry for such a period that potential employers will be reluctant to employ him. In addition, he may have been stigmatised by taking proceedings, and that may have some effect on his chances of obtaining future employment; 
  • it is important to note that in this case, Mr Chagger adduced evidence showing that he had made 111 unsuccessful job applications and been considered for more than that, and worked with 26 recruitment agents in order to find a new role. 

Wardle v Credit Agricole Corporate and Investment Bank [2011] IRLR 604 and Wardle v Credit Agricole Corporate and Investment Bank (No 2) [2011] IRLR 819
Key findings:

  • the Court of Appeal said that it will only be appropriate to award career-long loss in rare cases “Exceptionally, a tribunal will be entitled to take the view on the evidence before it that there is no real prospect of the employee ever obtaining an equivalent job”; and
  • the correct test is to award losses up to the point at which there is a “better than evens chance that he would have obtained an equivalent job”, not when the tribunal was sure that he would.  In this case that was found to be after approximately 2.5 years.

Practical Application
Although Chagger opened the door for claimants claiming career loss because of “stigma”, Wardle reaffirmed the position that career loss cases are exceptional and clarified that the correct test for the period of future loss for the tribunal to assess the point at which the claimant would have a better than evens chance of obtaining an equivalent job. In cases which do not involve ill-health/disability, employment law practitioners’ experience is that tribunals often find a period of between 1 to 2 years in total from the date of termination to be the relevant period for assessing loss.

Duty to mitigate
A claimant is expected to take reasonable steps to mitigate their loss by looking for a new job. Claimants only need take "reasonable steps" to mitigate; they do not need to show that they have taken all possible steps, or even used their "best endeavours". The respondent has the burden of proving that the claimant has not taken reasonable steps – for example, providing evidence of any jobs which the respondent alleges the claimant could have applied for or undertaken. 

If a tribunal finds that a claimant has unreasonably failed to mitigate their loss, financial compensation can be reduced by a figure which the tribunal considers appropriate, depending on the extent of their failure.

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