The Employment Appeal Tribunal(EAT)using the Dench principles agreed with the claimant who argued that a tribunal can use its discretion (under s123 Employment Rights Act 1996 "the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained")when deciding not to deduct extra monies earned in the past from the forward compensation. The high unemployment in the claimant's line of work was cited in the ET's using its discretion in the claimant's favour.

The EAT quoted the Court of Appeal in Bentwood Brothers Manchester Ltd v Shepherd [2003]

"This court, like the Appeal Tribunal, will interfere with such(ET) assessments with reluctance, given that the Tribunal as the industrial jury can be expected to make broad brush assessments which reflect the Tribunal's local knowledge and experience."This approach was adopted by the Court of Appeal in Dench v Flynn [1998].

In Whelan and Anor v Richardson [1998] Judge Clark for the EAT said:

" Each case must depend upon its own facts. Industrial tribunals are charged with doing justice between the parties. Compensation is to be assessed in such a way as to compensate the employee, not penalise the employer. Neither party should gain a "windfall." Compensation must be that which is just and equitable. Parliament has thereby granted a discretion to industrial tribunals which ought not to be placed in a straitjacket by too rigid statements of principle handed down by this tribunal in appeal decisions.

(1) The assessment of loss must be judged on the basis of the facts as they appear at the date of the assessment hearing ("the assessment date").

(2) Where the applicant has been unemployed between dismissal and the assessment date then, subject to his duty to mitigate and the operation of the recoupment rules, he will recover his net loss of earnings based on the pre-dismissal rate. Further, the industrial tribunal will consider for how long the loss is likely to continue so as to assess future loss.

(3) where the applicant has secured permanent alternative employment at a lower level of earnings than he received before his unfair dismissal. He will be compensated on the basis of full loss until the date on which he obtained the new employment, and thereafter for partial loss, being the difference between the pre-dismissal earnings and those in the new employment. All figures will be based on net earnings.

(4) Where the applicant takes alternative employment on the basis that it will be for a limited duration, he will not then be precluded from claiming a loss down to the assessment date, or the date on which he secures further permanent employment, whichever is the sooner, giving credit for earnings received from the temporary employment.

(5) As soon as the applicant obtains permanent alternative employment paying the same or more than his pre-dismissal earnings his loss attributable to the action taken by the respondent employer ceases. It cannot be revived if he then loses that employment either through his own action or that of his new employer. Neither can the respondent employer rely on the employee's increased earnings to reduce the loss sustained prior to his taking the new employment. The chain of causation has been broken."

The principle of flexibility, in the interests of deciding what is just and equitable, Morris v Richards [2004] PIQR Q3 [2003] EWCA Civ 232 dealing with an employee who suffered a road traffic accident as a result of negligence by a driver, lost her job, found another job (at Toshiba) and then left that as a result of discrimination.

Schiemann LJ in Morris v Richards [2004] explained that flexibility in the awarding of future compensation depends on who was at fault in a case where an employee lost her job after being injured,found a job and was then left after being discriminated against.

"The fact that she obtained another job and then lost it will not automatically disqualify her from recovering from the tortfeasor damages in respect of the period after the loss of her new job ("the period in issue"). The crucial question is whether, in respect of the period in issue, it is just that she should recover damages from the tortfeasor. If she was at fault in losing her new job then she will have difficulty in recovering for the period in issue. If she was not at fault then in general she will recover.

In Melia v Key Terrain Ltd (1969) No 155B cited in Kemp & Kemp The Quantum of Damages an injured man after an accident decided between two jobs, one paying less but without a night shift, and the other repetitive and having a night shift. The claimant chose the less well paying job and was supported in this by the court. "As between a claimant and a tortfeasor the onus is on the latter to show that the former has unreasonably neglected to mitigate the damages. "

"The standard of reasonable conduct required must take into account that a claimant in such circumstances is not to be unduly pressed at the instance of the tortfeasor. …the claimant's conduct ought not to be weighed in nice scales at the instance of the party which occasioned the difficulty." "Applying those principles it seems to us that there is no requirement on an employment tribunal faced with an employee who presents with mitigated loss to operate a guillotine at any stage."

So there seems to be a pretty broad consensus amongst judges that the ET has wide discretion to act justly when compensating a claimant who has been dismissed through no fault of his own.

The transcript of this case can be found  Here