Mitigation of loss - Contract of Employment

This refers to the fact that where a breach of contract takes place the damaged party is expected to reduce their loss as much as possible. Disputes normally occur when senior managers have a long notice period and have been dismissed. Companies often refuse to pay the employee for the full notice period on the expectation they will (or should) find employment during that period.

This normally arises when excessive notice periods have been granted (often 2-3 years). Notice periods were originally granted to permit the company to replace the individual or to prevent the individual working for a competitor for a reasonable period. Six months is about the maximum it takes to recruit or that the law will allow in terms of constraint. If the notice period is longer then it is granted as some form of protection to the executive concerned. These disputes do not normally get to court, a compromise is normally agreed whereby the company pays a proportion of the notice due.