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Settlement Offers and Breaking the 'Chain of Causation'

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[Thanks to Laurie Anstis of Boyes Turner, who is standing in for Daniel Barnett. Thanks also to Rad Kohanzad of Atlantic Chambers for preparing this case summary]

Can an employee's refusal to accept an offer of settlement amount to a failure to mitigate her losses?

Yes, says the EAT in Konczac v BAE Systems (Operations) Limited but not on the facts of this case.

The ET held that:

  • the Claimant's medical condition and hence her inability to work were caused by the on-going litigation with the Respondent; and
  • she ought to have accepted a reasonable offer made by the Respondent.

It held that by refusing that offer she failed to mitigate her loss so that no loss of earnings claim persisted beyond that date. Her refusal to accept the offer broke the chain of causation between her dismissal and her losses.

In applying the House of Lords personal injury case of McKew v Holland [1969] 3 AER 1621, the EAT held that, absent a wholly unreasonable refusal to countenance settlement, which on the evidence was not shown in this case, the Claimant was perfectly entitled to pursue her remedy in the ET.

The EAT also endorsed the practice of having a different employment judge deal with the question of whether a party has waived privilege.