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16 August 2012
Employment Appeal Tribunal (EAT)
His Honour Jeffrey Burke QC, Mr I Ezekiel and Mr P M Smith
An offer from a transferee of a business to the transferor's employees which is less favourable than the employees' current terms of employment does not give rise to the ‘duty to mitigate' and so is irrelevant when determining unfair dismissal compensation.
The Claimants were window cleaners employed by a contractor to a local authority. A new contractor was appointed (F & G Cleaners Limited). It was accepted that TUPE transferred the Claimants to F & G. F & G, however, told the Claimants that they could only offer work on a self-employed basis at a lower rate of pay than previously. The Claimants did not accept the offers and did not work for F & G.
A tribunal held that F & G had unfairly dismissed the Claimants. F & G argued that compensation should be reduced because the Claimants had unreasonably refused the offers of further work - ie they had failed to mitigate. The tribunal and EAT held:
- first, the Claimants' refusal was reasonable given that the offers gave them no statutory employment rights, no guarantee of work and a lower rate of pay; and
- in any case, the duty to mitigate only arises after dismissal. The dismissal occurred when the Claimants decided to treat their employment as terminated following the offer of less favourable terms. The duty to mitigate did not therefore arise
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