1. There are two appeals in this matter, both parties having appealed against the Employment Tribunal's Judgment on remedy. For ease of reference I will refer to the parties as the Claimant and the Respondent as they were before the Employment Tribunal below.

1. The appeals relate to a Judgment of the Exeter Employment Tribunal under the chairmanship of Employment Judge Griffiths, sitting with members on 11 July 2012, and sent with Reasons to the parties on 16 July 2012. The parties were represented by the same Counsel as now appear before me.

1. The Claimant's original claim was one of unfair dismissal relating to her dismissal by the Respondent with effect from 1 February 2011. There had been a Liability Hearing before the Employment Tribunal in February 2012, and the Judgment in the Claimant's favour in that regard had been sent to the parties at the end of that month. The hearing before the Tribunal on 11 July 2012 was in relation to remedy only.

1. The Employment Tribunal awarded £49,288 as compensation for unfair dismissal. That comprised £600 for a basic award with the compensatory award constituting the remainder, which included loss of earnings, loss of statutory right and pension loss. After the Remedy Judgment had been sent to the parties, both applied for a review. A Review Hearing took place on 28 November 2012 before the same Employment Tribunal, which confirmed the earlier Judgment albeit providing more detailed reasons for its conclusions.

1. Although both the appeals before me relate to the initial Judgment on remedy (neither party sought to put in a further Notice of Appeal in respect of the Review Judgment), both have referred to the broader Reasons provided at the review stage and have agreed it is permissible for me to have regard to that fuller Judgment when assessing the merits of the appeals.

1. The Claimant commenced her employment with the Respondent on 2 November 2009 in a newly created position as Deputy Director of Dillington House, which I understand to be a former stately home, conference centre and venue in Somerset. Ultimately, however, there was a redundancy situation, which resulted in the Claimant's dismissal with effect from 1 February 2011.

1. Prior to working for the Respondent, the Claimant had had a variety of positions in her career, many of which had been part-time. She had, however, relocated from London to Somerset to take up this position with the Respondent. Her evidence was that, being then in her 50s, she saw this as a permanent long-term position, something of which she had been reassured by the Respondent, albeit that the continuation of its involvement at Dillington House was under review given its own financial constraints.

1. When working for the Respondent, the Claimant's remuneration package included a final salary pension scheme, which the Tribunal found was particularly valuable to her. When that employment terminated the Claimant looked for alternative work and found a part-time position with Artslink, which started on 13 February 2012. That, however, left her with a continuing loss and no final salary pension scheme, albeit that the Employment Tribunal found that she might still have freelance and/or self-employed opportunities open to her.

1. In its original Judgment on Remedy, the Tribunal set out its conclusions in fairly summary form. The Claimant's effective date of termination was 1 February 2011. She took reasonable steps to mitigate her loss. She accepted an alternative part-time role on 13 February 2012. That did not fully mitigate her income loss. She did not take further steps to mitigate after that date.

1. The Claimant's remuneration package with the Respondent had included a final salary pension scheme. Having regard to Chapter 4 of the pension loss guidelines, Compensation for Loss of Pension Rights, 3rd edition, the Tribunal concluded, applying paragraph 4.14(a) thereof, that the substantial loss approach was the correct way of approaching the Claimant's pension loss. In calculating that loss, however, the Tribunal concluded that, having regard to the Claimant's own employment history and the Respondent's financial situation, it was very unlikely that the Claimant's employment with the Respondent would have continued until her retirement aged 65 and it assessed the appropriate withdrawal factor at 60%.

1. The parties' applications for review raise largely the same issues as raised in their respective appeals. On the Review Hearing, the Tribunal confirmed its finding that the Claimant had taken reasonable steps to mitigate its loss and its conclusion that "...the chain of causation for any continued shortfall in her income [from 13 February 2012] had been broken".

1. On the pension loss withdrawal factor, the Employment Tribunal had regard both to the Claimant's evidence regarding her relocation to Somerset to take up what she had seen as a long-term role with the Respondent, and also to the significant cuts that the Respondent was undergoing and the fact that its involvement in Dillington House was under review:

"Putting all those factors into the mix, we assess the withdrawal factor of 60% to be just and equitable."

1. On the question of grossing up, the Employment Tribunal concluded:

"We accept that it is proper to gross up monetary awards in contractual claims, such as wrongful dismissal, where the sums being paid relate to remuneration. However, in cases of unfair dismissal, the award can include elements of compensation, which is not pay, and not, therefore, subject to the need to gross up. The revenue treatment of compensation is, by extra statutory concession, that the first £30,000 is tax free; the balance is taxable at the claimant's marginal rate. That seems to us to be the correct approach in the circumstances, and, therefore such part of the compensatory award of this tribunal as exceeds £30,000 will be properly subject to tax at the claimant's marginal rate."

1. The Tribunal further stated that it had corrected the mathematical errors in its earlier Judgment. There is, however, no amendment to the earlier Judgment that I have seen and no revised schedule setting out the corrected calculation or demonstrating how the Tribunal approached the issue of grossing up (if, indeed, it did) as discussed at paragraph 8 of its Review Judgment.

1. As for the points raised by the Respondent, the Tribunal rejected what it saw as the Respondent's attempt to re-open the evidence on the Claimant's mitigation of loss. On the correct approach to pension loss, the Tribunal noted that it was common ground that, under section 123 of the Employment Rights Act 1996, the overriding principle was that of justice and equity. The pension guidance had no statutory force and was just that, guidance. The pension guidance itself stressed the need to take account of the particular facts of each case. Doing that, and taking into account the Claimant's view of her job with the Respondent as long-term, with a particularly valuable final pension scheme, which she had been prepared to relocate to obtain (and see more generally the Tribunal's findings, as set out at paragraph 10b of the Review Judgment) the Tribunal concluded that justice and equity would be best served in this case by applying the substantial loss approach to the question of assessing compensation for pension loss.

1. The Claimant's appeal raises four heads of challenge. First concerning the Tribunal's failure to gross up the award to the extent that it exceeded £30,000. Second, in respect of the Tribunal's finding in relation to the Claimant's claim for losses continuing after 13 February 2012, when she obtained her job with Artslink. Third, the Claimant challenged the Tribunal's findings in relation to the withdrawal factor in respect of pension loss. Fourth, she again raised the arithmetical error in the calculations.

1. For its part the Respondent's appeal was essentially twofold. First, it contended that the Tribunal erred in adopting the substantial loss approach to assessing the Claimant's pension loss. That was either an error of approach or perverse given the Tribunal's findings of fact. Second, it argued that the Tribunal reached a perverse conclusion in failing to find that the Claimant had failed to mitigate her losses during 2011, i.e in the first year of her unemployment and before she obtained the job at Artslink.

1. Both appeals concern the application of the statutory test for the compensatory award for unfair dismissal as set out in section 123 of the Employment Rights Act 1996, which provides relevantly as follows:

"...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 in consequence of the dismissal insofar as that loss is attributable to action taken by the employer.

...

(4) In ascertaining the loss referred to in subsection (1) the Tribunal shall apply the same rule concerning the duty of a person to mitigate his loss as applied to damages recoverable under the common law of England and Wales...."

1. The approach to be adopted in the assessment of compensation pursuant to section 123 has been described as a threefold one, see the Judgment of the EAT in Simrad Ltd v Scott [1997] IRLR 147 (albeit dealing with the earlier legislative provision; there is no difference of substance). First, the Tribunal has to undertake a factual quantification of the losses claimed. Second, it has to assess the extent to which any or all of those losses are attributable to the dismissal or action taken by the employer; that is to look to see whether there is a direct and natural link between the losses claimed and the conduct of the employer in dismissing. Third, in all the circumstances, taking into account its conclusions reached on the first and second questions, the Tribunal must ask what award would be just and equitable.

1. In considering the question of mitigation in the light of this approach, the EAT in Simrad went on as follows (see paragraph 6 of the Judgment):

"While the facts relating to a question of mitigation will frequently bear upon the question of causative link, mitigation is essentially an equitable plea to be judged in the context of reasonableness at common law and thus on not too fine a balance. Accordingly the issue of mitigation will feature in the application of the third test rather than the second..."

1. The need to be careful not to confuse a break in the chain of causation with the question of mitigation is also highlighted by the learned editors of McGregor on Damages, 18th edition, paragraph 7-018:

"… [T]he matter can no doubt be put in this way in terms of causation, but it does not tell us very much. What must be ascertained is whether the claimant has or has not acted, or failed to act, reasonably. This, as we have seen, is a question of fact and one that is capable of resolution by examination of the circumstances of the particular case. Adding causation into the mix gives no assistance. There is indeed a danger here, as elsewhere, of using causation as a disguise for the real ground of a decision."

1. On the question of the duty to mitigate, whilst the duty is that of the Claimant, where one party seeks to allege that the other has failed to mitigate a loss, then the burden of proof is on the party making that allegation, that is, the Respondent (see per Roskill LJ in Bessenden Properties Ltd v Corness [1974] IRLR 338 CA).

1. When assessing the amount of deduction for a Claimant's failure to mitigate her loss, a Tribunal should decide when the employee would have found work and take into account any income which the Tribunal then considers she would have received from that other source, see the EAT's guidance in Gardiner-Hill v Raymond Berger Technics Ltd [1982] IRLR 498 and also in Savage v Saxena [1998] ICR 357.

1. On the question of pension loss, the Tribunal here had regard to the guidelines on Compensation for Loss of Pension Rights, 3rd edition. It would, however, not be an error of law not to follow the guidelines, Greenhoff v Barnsley MBC [2006] ICR 1514. The guidelines relevantly identify two different approaches the assessment of pension loss: a simplified approach and a substantial loss approach. It was common ground before me that, just as no error of law would arise if there was a failure to follow the guidelines, it would not be an error of law of itself to follow one approach rather than another.

The Claimant's Appeal

1. The first ground of appeal related to the question of grossing up. It was common ground that this had been a live issue before the Employment Tribunal and the Respondent did not seek to dispute that, in order to achieve an award that was "just and equitable", grossing up would be required to the extent that the award exceeded £30,000. In its Skeleton Argument, however, the Respondent contended that any initial oversight in this regard on the part of the Tribunal was rectified on the review. For her part, the Claimant argued that, although the Tribunal's reasoning on review demonstrated that it accepted that it was appropriate to gross up the award (see paragraph 8), it had failed to then revise the calculation to take that into account.

1. The second challenge by the Claimant related to the Tribunal's approach to the question of mitigation and the limitation of her losses to the date when she obtained an alternative part-time role with Artslink on 13 February 2012. Having taken up that role, the Employment Tribunal found that the Claimant had not attempted to seek further employment and on that basis did not award her further compensation from that date. It expressed its reasoning for this approach in its Judgment on review as follows:

"We found, therefore, that the chain of causation for any continued shortfall in her income had been broken and that the respondent should no longer be liable for any losses occurring after that date."

1. The Claimant observed that neither side had argued that the new employment amounted to a break in the chain of causation. If the Tribunal's reasoning was solely based on causation, it was unfair as there had been no opportunity for the Claimant to address the point. Properly analysed, however, the Claimant did not feel that that was what the Tribunal had meant to find. It would have inconsistent with its finding later on that the Claimant was of an age when she was unlikely to find other alternative permanent employment; it was hard to see how that finding was compatible with a conclusion that the Claimant's taking a job which partly mitigated her losses had amounted to a break in the chain of causation. If in reality, this was a finding as to the adequacy of mitigation, then the Claimant contended that the Tribunal had at no stage made a finding that she had acted unreasonably in failing to apply for other employment. In any event, the Tribunal had asked the wrong question. As laid down by the EAT in Gardiner-Hill (see paragraph 12), the Tribunal needed to identify what steps should have been taken, the date on which those steps would have produced an alternative income, and then reduce the amount of compensation by the amount of the alternative income which would thus have been earned.

1. In response, the Respondent objected to this point being taken, contending that there had been no challenge to the Tribunal's finding of a break in the chain of causation and it was not enough for the Claimant to rely on a challenge to its finding on the question of mitigation of loss. The Respondent further contended that this was a finding of fact that could not be overturned on appeal. Although neither side had sought to characterise the situation as a break in the chain of causation, that had been a permissible finding for the Tribunal given the three-stage approach it was required to undertake under section 123 Employment Rights Act: i.e causation was plainly an issue before it. In any event, the Respondent would refer back to the Claimant's employment history, which was predominantly one of working part-time. The Claimant had also failed to apply for suitable alternative employment with the Respondent. The facts supported the Tribunal's apparent conclusion: if not a break in the chain of causation, the Claimant had failed to take reasonable steps to mitigate her loss.

1. The Claimant's third ground of appeal sought to challenge the Tribunal's finding of a 60% withdrawal factor in respect of pension loss. The Claimant contended that the Tribunal had thereby failed to have sufficient regard to the circumstances in which she had taken up her position with the Respondent, in particular her uncontested evidence that she had regarded this as a long-term appointment when she took it up in her 50s and had relocated to do so. As for the Respondent's evidence as to the potential uncertain future for this part of its organisation, account also needed to be taken of the possibility of a transfer or sale of the business and the Tribunal had apparently ignored this relevant factor.

1. In response, the Respondent contended that this was a permissible finding of fact on the part of the Employment Tribunal. The challenge was really one of perversity, but the finding was not susceptible to challenge on appeal.

1. Finally, in respect of the fourth ground of the Claimant's appeal, both parties accepted that there had been an arithmetical error in the Tribunal's original calculation. That had also been accepted by the Tribunal at the Review Hearing, but the Claimant objected that there had been no correction as a result, so the actual error of calculation remained.

The Respondent's Appeal

1. For its part the Respondent first sought to challenge the Tribunal's approach to the award of continuing pension loss. Whilst accepting that the Tribunal was not bound to follow the guidelines or adopt any particular approach, the Respondent made the point that the reason for the approach adopted by the Tribunal was not explained and was inconsistent with the Tribunal's finding as to a break in the chain of causation in terms of remuneration, alternatively, inconsistent with its finding that - from the date of taking up her new job - the Claimant had not established that she had taken reasonable steps to mitigate her loss.

1. If a break in the chain of causation, the Respondent should not continue to be held liable, see the Court of Appeal's Judgment in Aegon UK Corp Services Ltd v Roberts [2009] IRLR 1042. If a question of mitigation of loss - and the Claimant had failed to establish that he had continued to take reasonable steps to mitigate her loss - the question arose as to why the Respondent should be held liable for a continuing pension loss award.

1. That finding also did not sit consistently with the finding that there was a 60% likelihood that the Claimant would have withdrawn from the pension scheme in any event.

1. In response, the Claimant submitted that there was no error of law in a Tribunal failing to follow the pension loss guidance or in seeking to use one approach rather than another. Moreover there was no error of law in a Tribunal's awarding pension loss for a longer period than loss of earnings (see Bentwood Bros (Manchester) Ltd v Shepherd . The Aegon case had to be seen on its facts. It did not lay down any more general point.

1. On its second ground, the Respondent sought to take issue more generally with the Tribunal's finding that the Claimant had taken reasonable steps to mitigate her loss prior to obtaining her position with Artslink. If the Employment Tribunal had found that the Respondent had not discharged the burden of proof upon it to show that the Claimant had not taken reasonable steps to mitigate her loss, it should have said so. The Respondent was entitled to understand whether the Employment Tribunal had indeed so found and, if so, why. In answer to that second ground of appeal, the Claimant submitted that this was an attempt to overturn a finding of fact. The burden had been on the Respondent. There had been a great deal of evidence before the Employment Tribunal on the question of mitigation, much of which had been put to the Claimant in cross-examination and she had answered the points. The Employment Tribunal was entitled to simply state its conclusion in this regard. That was a conclusion of fact not law.