Mitigation of Loss: How Compensation Gets Reduced

Mitigation of loss is the part of an unfair dismissal claim that employees discover too late. Compensation under section 7 of the Unfair Dismissals Acts 1977-2015 is for financial loss attributable to the dismissal, and section 7(2) directs the WRC to have regard to the steps the employee took, or failed to take, to reduce that loss, and to the extent to which the employee’s own conduct contributed to the dismissal. An employee who proves an unfair dismissal and then cannot show a job search can walk away with a fraction of the loss actually suffered.

1. Where the Reductions Come From: Section 7(2)

Section 7(1)(c) allows compensation for financial loss attributable to the dismissal in the amount that is just and equitable having regard to all the circumstances. Section 7(2) then lists what the adjudication officer must have regard to in fixing that amount:

• the extent to which the financial loss was attributable to an act, omission or conduct by or on behalf of the employer;
• the extent to which the financial loss was attributable to an action, omission or conduct by or on behalf of the employee;
• the measures adopted by the employee, or the failure to adopt measures, to mitigate the loss;
• the extent of the employer’s compliance or failure to comply with its own dismissal procedure or with a code of practice on dismissal procedures, which is the Code of Practice on Grievance and Disciplinary Procedures (S.I. 146/2000);
• the extent of the employer’s compliance with section 14, which requires the dismissal procedure to be given to the employee in writing;
• the extent to which the conduct of the employee, by act or omission, contributed to the dismissal.

Three of those six paragraphs cut the award, and two of them, mitigation and contributory conduct, do almost all of the cutting. The employer’s procedural failures weigh the other way, which is why the disciplinary file matters to the money as well as to liability.

2. Mitigation of Loss Means Looking for Work, and Proving It

The Acts require the employee to mitigate loss by seeking work. The WRC reads that as a search that starts promptly after the dismissal, targets comparable work at a comparable level, continues at a steady rate until work is found, and is documented. The duty is one of reasonableness, not perfection: an employee is not obliged to take the first job offered at any level, and a decision to retrain or to pursue a different field can be reasonable if it is explained. What is not accepted is silence. An employee who waits for the internal appeal, then waits for the WRC hearing date, and only then starts applying has handed the employer its strongest argument on quantum. The internal appeal does not pause the duty any more than it pauses the six-month clock on the WRC Deadline Calculator; both run from the date of dismissal.

3. The Job Search Evidence the WRC Expects

Mitigation is proved, not asserted. The employer will say that the employee did not look hard enough, and the only answer to that is a record. Build it from day one:

Written submissions are due 15 working days before the hearing, and the job search record goes in with them. Evidence may be taken on oath, and the employee will be asked about the gaps. A log that shows twenty applications in the first month and nothing in the next three has a problem in months two to four, and the loss claimed for those months is the part at risk.

4. How New Earnings Change the Figure

Loss is the difference between what the employee would have earned and what the employee did earn. Earnings from a new job, agency work or self-employment all count against the loss for the weeks in which they were received. Where the new job pays less, the shortfall is a continuing loss attributable to the dismissal and can be projected forward, within the cap of 104 weeks’ remuneration, or 260 weeks where the dismissal resulted from a protected disclosure. Where the new job pays the same or more, the loss stops on the start date. Where there was no financial loss at all, section 7(1)(c)(ii) limits compensation to four weeks’ remuneration. That rule is the reason a strong case on liability can carry a small figure, and the reason the Unfair Dismissal Compensation Calculator asks for weekly pay in any new job before it runs the section 7 formula. The rest of the arithmetic is in how unfair dismissal compensation is calculated.

5. Contributory Conduct: Section 7(2)(f)

The second deduction has nothing to do with the job search. Section 7(2)(f) directs the WRC to have regard to the extent to which the employee’s conduct, by act or omission, contributed to the dismissal. The typical case is a dismissal that is unfair on procedure and not on substance: the employee did something that warranted a disciplinary response, but the employer skipped the investigation, held the hearing before sharing the evidence, or let the decision-maker hear the appeal. The presumption in section 6(1) means the dismissal is still unfair, and the employer still loses, but the award is reduced to reflect the employee’s share of responsibility. The reduction is fixed by the adjudication officer on the evidence, and it can be heavy where the conduct was serious. Employees who are honest about their own conduct at the first consultation get a realistic figure; employees who are not get a surprise at the hearing. Where the allegation was gross misconduct, the practice page on gross misconduct and summary dismissal explains how proportionality and procedure interact.

6. The Employer’s Side of the Ledger

Section 7(2)(d) and (e) point the other way. The adjudication officer must have regard to the extent to which the employer complied with its own dismissal procedure and with S.I. 146/2000, and to whether it gave the employee the written dismissal procedure that section 14 requires. An employer that cannot produce a written procedure, or that had one and ignored it, has a weaker argument for a large deduction, because the loss is more clearly attributable to its own act. For an employer defending a claim, the lesson is the same in reverse: the way to limit a lost case is a complete procedure record and a focused challenge to the mitigation evidence, not a general complaint that the employee should have found work sooner. Our employer page covers that preparation.

7. What Does Not Help

There is no compensation for stress or injury to feelings, so a difficult period after the dismissal does not add to the figure, and it does not excuse a gap in the job search unless the employee was genuinely unavailable for work and can show it. Waiting for the outcome of the internal appeal, or for the employer to respond to a solicitor’s letter, does not pause the duty. Nor does an expectation of reinstatement: an employee who seeks the job back must still look for work in the meantime, because the WRC may award compensation instead, and the choice between the orders is explained in reinstatement, re-engagement or compensation.

8. A Routine From the First Week

• Open the job search log on the day you are told, and date every entry;
• Register with agencies and job sites that week, and keep the confirmation emails;
• Apply for comparable roles at a steady rate, and keep every reply;
• Write down the reason for declining any offer, on the day;
• Keep the payslips from the old job, to fix a week’s remuneration, and from the new one, to fix the loss;
• Be candid with your solicitor about your own conduct, so the section 7(2)(f) argument is met before the hearing rather than at it.

The practice page on unfair dismissal claims explains how the firm builds the quantum case alongside the liability case from the first consultation.