Employees Duty to Try to Mitigate Loss

A dismissal employee has a duty, like any other claimant for compensation, to demonstrate that attempts were made to mitigate the loss suffered. Failure to make such attempts will affect the decision whether to award compensation and the amount of any compensation. Section 392(2)(d) of the FW Act requires FWA to take into account the efforts of the employee (if any) to mitigate the loss suffered by the employee because of the dismissal when determining the amount of compensation to award.
In one of the Australian leading cases on the issue of mitigation, Bechara v Gregory Harrison Healey & Co (1996) 40 AILR 3-312, it was held that an unfairly dismissed employee was not entitled to compensation because she had failed to accept an offer of reinstatement from the employeer (upheld on appeal - see (1996) 40 AILR 3-421). Relevantly, it was held that the reinstatement offer was made in good faith and that it was not impracticable for the employee to have either accepted it or negotiated a variation of it. The court noted that the employee was psychologically sturdier than most and so, despite the fact that the employer had spoken to her in offensive and vulgar terms, reinstatement would have been practicable.
A deferent decision was reached in the case of Brandecker v Mazel Foods Pty Ltd (AIRC, N9077, 24 February 1997), in which the AIRC found that an offer of reinstatement by an employer did not dis-entitle the employee to compensation should be paid to the employee. It found that the case could be distinguished from Bechara on the basis that the employee was not psychologically sturdier than most and also that he was offered a position of lower status, rather than reinstatement to his position.
In a later decision, Biviano v Suji Kim Collection (2002) 51 AILR 4-582(41), the AIRC gave extensive consideration to the principle of mitigation and made the following observation:
In employment cases the question of whether a dismissed employee acted unreasonably in refusing an offer of re-employment depends on the circumstances. Courts have determined that it is not unreasonable to refuse such an offer in circumstances where the level of remuneration or status of the position offered is less than that previously enjoyed by the dismissed employee. But with the passage of time it may be reasonable for the dismissed employee to lower their sights. Even where re-employment is offered on substantially the same terms and status it will not be unreasonable to refuse in circumstances where the employee no longer trusts his or her former employer or where there is friction between the two parties. The AIRC went on to note that in previous decisions in which mitigation has been considered, it has been held that:
An applicant may mitigate loss by establishing a venture on his or her own account. Where this is the case it may be appropriate to make some allowance for deferred income, particularly where income is not generated in the early stages of the venture
The fact that the applicant is a single parent is a matter which may be taken into account in considering whether the efforts taken to mitigate his or her loss were reasonable
It is reasonable for an applicant to undertake a training course to enhance his or her employment prospects as a means of mitigation, and
It is not unreasonable for an applicant to refuse re-employment in circumstances where the employment relationship has broken down.