F & G Cleaners v Saddington & Ors – unfair dismissal and mitigation of loss in TUPE cases
This case concerns a transfer of a window-cleaning contract (and therefore the employees engaged on that contract) from company A to company B. Company B refused to employ the employees engaged on the contract on their original terms but offered alternative employment prior to their dismissal. The employees refused and claimed that they were unfairly dismissed because of the TUPE transfer. They succeeded but company B appealed on the basis that the Employment Tribunal had failed to adequately consider whether the employees had reasonably refused to accept alternative employment. The Employment Appeal Tribunal rejected the appeal, stating that the Tribunal had 1) had reference to a wide range of circumstances in determining that the refusal was reasonable and 2) that the employees were under no duty to mitigate as the alternative employment had been offered prior to their dismissal.
The facts in F & G Cleaners v Saddington & Ors
Mr Saddington, Mr Oliver and a number of other persons (“the Claimants”) were employed by Actual Support Services Ltd (“Actual”) to provide services on a window-cleaning contract for the London Borough of Redbridge (“Redbridge”). In 2008 Redbridge re-tendered the contract and F & G Cleaners Ltd (“F & G”) successfully tendered for the contract. Actual then supplied information to F & G as to the nature of the terms of employment of its employees. F & G was suspicious of this and believed that Actual were inflating the value of the contracts of employment. It asked for further information from Actual prior to the handover date of 1 August 2008 but none was forthcoming. On 8 August 2008 Mrs Oliver asked F & G about her husband’s employment situation. F & G responded by stating that Mr Oliver had never and did not work for them. However, on 12 August a manager of F & G’s met with the Claimants and discussed alternative employment – ostensibly on the basis of a CIS contract (which would have meant that the Claimants were self-employed) instead of the contracts of employment they had previously worked under. This would have meant a reduction in their daily wage, a change to their working week, and a change to their holiday entitlement. The Claimants refused this offer and subsequently issued a claim in the Employment Tribunal for TUPE-related unfair dismissal.
The Tribunal found that the TUPE transfer of employment was the principal reason for the Claimants’ dismissal and that the Claimants had been automatically unfairly dismissed. F & G appealed on the basis that the Employment Tribunal had erred in not considering whether the Claimants had taken reasonable steps to mitigate their loss.
The law relating to mitigation of loss in TUPE unfair dismissal cases
It is well-established that dismissed employees have a duty to mitigate their loss (by finding new employment). A failure to mitigate loss can occur in the following circumstances:
- If the Claimant unreasonably fails to look for new employment; and/or
- If the Claimant unreasonably refuses an offer of work
We’ll be looking in this post at the second element, the refusal of alternative employment. If the Claimant refuses an offer of work (whether this offer is from their old employer or from a new third party) then their refusal must be reasonable in all the circumstances. What, therefore, affects the reasonableness of a decision to refuse an offer of alternative employment? The Tribunal will consider the following:
- The circumstances in which the offer was made and refused;
- The attitude of the employer;
- The way in which the Claimant had been treated; and
- All the surrounding circumstances
The Employment Appeal Tribunal’s judgment in F & G Cleaners v Saddington & Ors
The Employment Appeal Tribunal (“EAT”) considered that the Claimants had not unreasonably failed to accept an offer of alternative employment from F & G after the TUPE transfer. F & G’s contention was that the Tribunal had erred in deciding that the Claimant’s rejection of the offer was unreasonable as they would have lost their statutory rights. The EAT rejected this argument and found that the Tribunal had had reference to a wider set of considerations in determining that the refusal to accept the offer, including the nature of the contract that they would have been engaged on, the daily wage that they would have received, and their holiday entitlement (among other things). Further, the Claimants had not been dismissed at the time of the offer of the alternative employment (prior to 1 August 2008) and that the Claimants therefore had no duty to mitigate their loss.
Our specialist employment lawyers’ thoughts on F & G Cleaners v Saddington & Ors
This is an interesting case although we’re not quite sure as to why, firstly, this case went all the way to the Employment Tribunal and, further, why F & G insisted on appealing, unless there was some disagreement between the parties as to whether the failure to mitigate was a substantive issue throughout.