United Kingdom Employment Appeal Tribunal

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URL: http://www.bailii.org/uk/cases/UKEAT/2012/0140_11_1608.html
Cite as: [2012] UKEAT 0140_11_1608, [2012] UKEAT 140_11_1608

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Appeal No. UKEAT/0140/11/JOJ

EMPLOYMENT APPEAL TRIBUNAL

FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX

At the Tribunal

On 5 March 2012

Judgment handed down on 16 August 2012

Before

HIS HONOUR JEFFREY BURKE QC

MR I EZEKIEL

MR P M SMITH

F & G CLEANERS LTD APPELLANT

(1) MR D SADDINGTON

(2) MR S OLIVER

(3) ACTUAL SUPPORT SERVICES LTD RESPONDENTS

Transcript of Proceedings

JUDGMENT

APPEARANCES

For the Appellant

MR S NEAMAN

(of Counsel)

Instructed by:

Crossland Employment Solicitors

99 Milton Park

Abingdon

OXON

OX14 4RY

For the First Respondent

For the Second Respondent

For the Third Respondent

MR D SADDINGTON

(The Respondent in Person)

MR O ISAACS

(of Counsel)

Instructed by:

Mullis & Peake Solicitors

8-10 Eastern Road

Romford

Essex

RM1 3PJ

MR MARTYN WEST

(Representative)

Peninsula Business Services Ltd

5^th Floor, The Peninsula

2 Cheetham Hill Road

Manchester

M4 4FB

SUMMARY

UNFAIR DISMISSAL – Mitigation of loss

The Claimants worked for Respondent 1 who supplied window cleaning services under contract to a local authority. The contract was subject to a re-tendering process; Respondent 2 was successful and the contract passed to them. R2 refused to accept the Claimants as employees and, instead, made them offers of work on a self-employed basis and on lesser terms. R2 appealed against the Employment Tribunal’s rejection of their case that the Claimants had failed to mitigate the loss caused by their unfair dismissal by refusing to accept the alternative offer.

Held:

1. The ET had not made the error of deciding the mitigation issue solely on the basis that the Claimants would lose their statutory rights if engaged on self-employed terms – which would have been lost once they were dismissed in any event. The ET relied as they were entitled to on all of the differences between the terms of the Claimants’ employment and the inferior terms as offered by R2.

2. In any event at the date of the rejection of the offers, the Claimants had not yet been dismissed; and therefore no duty to mitigate arose: Savoia v Chiltern Farms ([1981] IRLR 65) followed.

HIS HONOUR JEFFREY BURKE QC

The history

1. This is an appeal against one aspect only of a Judgment of the Employment Tribunal, sitting at East London Hearing Centre and presided over by the Resident Employment Judge, Employment Judge Lamb, after a hearing on 21 and 22 January 2010. The Judgment was sent to the parties on 26 August 2010. By that Judgment, the Employment Tribunal found that the Claimants before them, Mr Saddington and Mr Oliver, had been subject to a transfer under the Transfer of Undertakings (Protection of Employment) Regulations (“TUPE”) from their original employer, the First Respondents before the Tribunal, Actual Support Services Ltd (“Actual”) to the Second Respondents, F & G Cleaners Ltd (“F & G”), and that both Claimants had been refused employment on the same terms by F & G and had been automatically unfairly dismissed by F & G, who refused to accept that TUPE applied to the Claimants.

2. The Tribunal awarded compensation against F & G consisting of a basic award, an award for past lost of earnings and an award of future loss of earnings, to both Claimants.

3. At paragraph 71 of the Judgment, the Employment Tribunal rejected F & G’s submission that the Claimants had failed to mitigate their loss by not accepting lesser offers of employment put to them by F & G. HHJ Serota QC, at the sift stage of the Employment Appeal Tribunal’s procedures, rejected the appeal of F & G against that finding; but at a hearing under rule 3(10) of the Employment Appeal Tribunal Rules, Bean J decided that F & G should be allowed to go forward to a full hearing of their appeal on one aspect only of the Employment Tribunal’s Judgment, their decision that the Claimants had not failed to take reasonable steps to mitigate their loss.

4. F & G have been represented before us by Mr Neaman of counsel. Actual, in their formal role as Respondents to the appeal, have been represented by Mr West of Peninsula Business Services Ltd, who has taken a neutral stance. Mr Oliver has been represented by Mr Isaac of counsel. Mr Saddington was unrepresented; but it is common ground that his position is not materially different from that of Mr Oliver.

5. It is necessary, before turning to the rival arguments on the appeal, to set out the Tribunal’s findings of fact, insofar as they are relevant to the mitigation issue. Mr Oliver was employed by Actual as a supervisor window cleaner, working on a contract with the London Borough of Redbridge (“Redbridge”) to do cleaning work on various local authority buildings. Mr Saddington was similarly employed, as a window cleaner.

6. The transfer of undertakings arose as a result of a re-tendering process by Redbridge for the work of cleaning windows in schools, libraries and other public buildings. During the tendering process, information was presented to F & G about the number and the terms and conditions of Actual’s employees engaged in that work. Tenderers, including F & G, were told by Redbridge that TUPE might apply if they were successful in their tender. F & G, the Tribunal found, were suspicious of the details given to them by Actual about their employees and felt that their terms and conditions had been inflated for commercial reasons, no doubt because they knew that TUPE was likely to apply if they won the contract, as they did. Requests for information from F & G as to those terms and conditions continued up to and after the anticipated handover date, 1 August 2008.

7. Although it was submitted on behalf of F & G before the Tribunal that there had been no transfer and that the Claimants had been dismissed by Actual on 31 July 2008, the Tribunal rejected that submission. They found, at paragraphs 24 and 25, that Actual informed both men that they would cease working for Actual on 31 July and that they would thereafter be employed by F & G. Between 1 and 8 August, nothing seems to have happened between the Claimants and F & G but, on 8 August, Mrs Oliver asked F & G about her husband’s employment position. They sent a fax to Mr Oliver in response. It said:

“To whom it may concern,

I have been asked by Mrs Oliver to confirm that Stephen Oliver does not work at F and G Cleaners Ltd and never has done previously. I hope this is satisfactory.”

8. Thereafter, on 12 August, Mr Cheese of F & G met the Claimants. It is clear that they discussed an alternative proposal made by Mr Cheese that the Claimants should work for F & G under “CIS” contracts, i.e. on a self-employed basis.

9. On 13 August, Mr Cheese wrote to Actual, seeking work references in respect of the Claimants and saying:

“We are currently in negotiation with the two window cleaning operatives named above.

We feel that at this moment, we are unable to offer a TUPE based transfer as we consider that the information supplied from Actual was sparse and misleading in certain areas. Clarification still needs to be sought on several issues. This became evident after joint discussions that took place yesterday.

We are hoping to achieve a mutually agreeable decision on a different contract of employment with Mr Saddington and Oliver.”

10. On the next date, 14 August, Mr Cheese wrote to both Claimants in identical terms, he repeated F & G’s assertion that the information given by Actual had been inaccurate and misleading and went on to say:

“We are not in a position to offer a TUPE type contract, due to the errors in information which were communicated to us from Actual services. [...]

However, as discussed, we may be in a position to offer you employment within this company after you return from your holidays at the beginning of September.”

11. The offer made it clear that the “employment” being offered was under the auspices of a CIS contract, which all agree was on a self-employed basis, and subject to a daily paid rate. The employment was said to be subject to review after a month’s trial. The Tribunal set out their findings as to the position which was thus reached at paragraph 32 of their Judgment in these terms:

“It is therefore abundantly clear that the Respondents did not accept the Claimants as their employees and were intent upon agreeing new contracts with them. It was also clear, from the letters dated 14 August to each Claimant, that what was offered was a CIS contract, at a pay rate of £75 per day, on a month’s trial. Mr Cheese explained in his testimony that his communications to Redbridge council were no more than an acceptance that they would abide by TUPE if it applied, but they did not think it applied. He referred to CIS contracts as being mainly construction industry terms, including window cleaning on building sites. He said it was 25 percent of R2’s work. It was put to him that it meant being self-employed, and he replied that it was an advantage to the company in some respects, and the Claimant was in pocket. The company deducted tax at source and sent it to HMRC. Later in his evidence he accepted that his company entered into the contract with Redbridge knowing that the Claimants had been his employees. They were not offered employment as employees because his company operates on a CIS contract basis, because it is beneficial to them by a small profit margin.”

12. The Claimants did not accept the offers of working for F & G on the basis set out in those letters and never worked for F & G, either as employees or otherwise.

13. The Tribunal identified the issues which had to be resolved at paragraph 1 of the Judgment. They were:

“(1) Was there a transfer of undertaking from the First Respondent to the Second Respondent?

(2) Was the Claimant assigned to the organised grouping of resources of employees which was the subject of the transfer?

(3) Was the Claimant dismissed?

(4) Was the dismissal for the sole or principal reason of the transfer; or a reason connected with the transfer which was not an economic, technical or organisational reason entailing changes in the workforce?

(5) Did the First Respondent comply with Regulation 11(2) of the Transfer of Undertakings (Protection of Employment) Regulations 2006. (hereinafter referred to as ‘the Regulations’)

(6) Remedy:

(a) Did the Claimant fail to take reasonable steps to mitigate loss by accepting alternative work from the Second Respondent.

(b) What was the period of service of the Claimant?

(c) If there was a breach of Regulation 11 by the First Respondent, what is the appropriate remedy to be awarded under Regulation 12.”

14. Having directed themselves as to the relevant law, in a manner as to which no criticism is made, they addressed each of those issues in turn. They found that there had been a transfer of the undertaking in respect of the window-cleaning services to Redbridge and that the Claimants were both assigned to the group of employees whose work was the subject of that transfer.

15. They then turned to address the question whether the Claimants had been dismissed and set out their conclusions at paragraphs 59 and 60, as follows:

“59. In each case, the simple fact is that the Claimant was left without employment. Their entitlement under Regulation 4 was to a continuation of their employment by R2 as the transferee. That did not happen, because R2 refused to accept that situation. It is clear that for some considerable time before the transfer, R2 had resisted the notion that the regulations applied at all. Then, faced with two men who expected to be employed, they put to them proposals for a continuation of their working lives which were materially different to the terms and conditions of their employment with R1. The crucial difference was that they were no longer to be employees, but were to be treated as self employed contractors, on CIS terms. Furthermore, since this would be a new working relationship, their previous service would not be carried over, and that would necessarily result in the loss of statutory rights dependent upon service, such as the right not to be unfairly dismissed, even if they could establish that despite the CIS terms, they should be regarded as employees.

60. We therefore conclude that the Claimants were dismissed by R2, by the refusal to continue their employment on the same terms as previously: Regulation 4 applies.”

16. They then found that the transfer was the principal reason for the dismissal and that the Claimants had been automatically unfairly dismissed; see paragraphs 61 and 62.

17. They then addressed the issue as between Actual and F & G as to whether the former had failed to provide to the latter information complying with the requirements of Regulation 11 of the TUPE regulations. They found against F & G on this issue. Their reasons need not be recited for present purposes; but we should refer to their finding at paragraph 68 that the transfer was completed on 3 September 2008 but the contracts (this must have been a reference to the contracts between Redbridge and F & G) were backdated to 1 August 2008.

18. The Tribunal then considered F & G’s case, that, by declining to accept F & G’s offer of work under a CIS contract, the Claimants had failed to mitigate their loss. The Tribunal said, at paragraphs 70 and 71:

“70. We have set out in our findings of fact what was being offered by the Respondents, and why, and why the Claimants refused it.

71. The testimony of Mr Cheese, and the submissions of Miss Bibi, contended that the Claimants unreasonably refused employment with R2. We reject those contentions for the following reasons.

(1) The Claimants had valuable statutory rights arising out of their periods of service with R1. The offer of work from R2 involved giving up those rights, by refusing to accept the application of the Regulations. Instead, they were being offered fresh employment. It would have been open to R2 to employ them for a few months and then dismiss them, and they would have been left without remedy.

(2) They were being employed on CIS terms, and not PAYE terms. That was profitable to R2 but it was a disadvantage, in the long term, for the Claimants.

(3) The duty of a dismissed employee is to take reasonable steps to mitigate his loss. We do not accept that it is reasonable to abandon legal rights, and that is what was involved in accepting the offers from R2. Sadly, it transpired that the Claimants could not find alternative employment, and it would in fact have been financially worthwhile, to a very great extent, for them to have accepted the offers made to them by R2. But they could not know it at the time.”

19. The Tribunal then assessed compensation, awarding compensation to each Claimant on a basis which is not relevant for the purposes of this appeal.

F & G’s submissions

20. Mr Neaman’s submissions on behalf F & G can be summarised as follows:

(1) The Tribunal, at paragraph 71, set out, as the reason for their conclusion that the Claimants had not acted unreasonably in rejecting F & G’s alternative offer, that acceptance of that offer would have involved the Claimants giving up the statutory rights which they had gained or accrued as a result of their employment by Actual.

(2) But the Tribunal, having found that the Claimants were dismissed from 31 July (alternatively on 8 August) and that the offer of alternative work was made by F & G after the dismissal, had found that that the offer was made when the Claimants were already unemployed and had no chance of retrieving their statutory rights, which were in effect destroyed by the dismissal. Any new employment would have therefore left the Claimants without statutory rights, which were in any event only worth £425 in the case of Mr Oliver and £375 in the case of Mr Saddington as compensation (as assessed for loss of those rights was assessed by the Tribunal).

(3) The Tribunal erred in their conclusion that the Claimants acted reasonably in rejecting F & G’s offer; by accepting it, they would not have been abandoning anything which had not already been lost and could not have been regained if they accepted the offer.

(4) The last of the Tribunal’s findings contained an inadmissible error of approach. Even if we were to take the view on the evidence that there were other good reasons why it was not unreasonable for the Claimants to reject the offers made by F & G on 14 August, we must follow the principles set out by the Court of Appeal in Wilson v Post Office [2000] IRLR 834 and Tilson v Alstom Transport [2011] IRLR 169, that only in an extreme case is it possible for an appellate body properly to say that an Employment Tribunal would have inevitably have reached a particular conclusion when in the original case, albeit proceeding upon an incorrect basis, the Employment Tribunal had come to the contrary conclusion.

The Claimants’ submissions

21. (1) The Claimants were not dismissed until after the offer of work was made and when, on the Tribunal’s findings, the transfer was completed.

(2) Therefore, at the time when the alternative offers were made to them by F & G, they were still employees and were not, on authority to which we will come, under any duty to mitigate their loss – which loss had not yet been sustained.

(3) In any event, it was the Claimants’ refusal to accept the offer of different and lesser terms by F & G which was the reason for their dismissal. The Tribunal’s conclusion at paragraph 60 was that the Claimants were dismissed in circumstances described in Regulation 4(9) of the 2006 TUPE Regulations. The Tribunal found that the terms of F & G’s offer were to the material detriment of the Claimants; that detriment consisted of their being self-employed rather than employed, having no guarantee of a full week’s work, being subject to a trial period and earning less money, so they would have been substantially worse off. This was recognised by the Tribunal at paragraph 71.

(4) If the Tribunal’s Judgment is read as a whole, it can be seen that the Employment Tribunal did not base their decision on the mitigation issue solely on the loss of statutory rights, but also on a number of other differences between the Claimants’ terms of employment with Actual and the terms which were offered by F & G.

The relevant law

22. There is no dispute between the parties as to the principles of law which apply when an allegation is made that a Claimant who seeks compensation has unreasonably failed to mitigate his loss. This is not an appeal in which it is necessary to give any form of general guidance as to those principles or to add to the substantial number of authorities on the point. Both counsel agree that the classic statement of principle is to be found in the Judgment of the Court of Appeal in Wilding v British Telecommunications [2002] IRLR 524, in which the employee unsuccessfully challenged the Employment Tribunal’s finding, upheld by the EAT, that he had not acted reasonably in refusing an offer of re-employment made by his employer. At paragraph 37 of his Judgment, with which Brooke LJ agreed, Potter LJ said this:

“As was made clear in the Judgment of the EAT, (at paragraph 64) the various authorities referred to by the Tribunal (see paragraph 22 and 23 above) and Payzu –v- Saunders are apt to establish the following principles which (in a form which I have somewhat recast) were accepted as common ground between the parties. (i) It was the duty of Mr Wilding to act in mitigation of his loss as a reasonable man unaffected by the hope of compensation from BT as his former employer; (ii) the onus was on BT as the wrongdoer to show that Mr Wilding had failed in his duty to mitigate his loss by unreasonably refusing the offer of re-employment; (iii) the test of unreasonableness is an objective one based on the totality of the evidence; (iv) in applying that test, the circumstances in which the offer was made and refused, the attitude of BT, the way in which Mr Wilding had been treated and all the surrounding circumstances should be taken into account; and (v) the court or tribunal deciding the issue must not be too stringent in its expectations of the injured party. I would add under (iv) that the circumstances to be taken into account included the state of mind of Mr Wilding.”

23. At paragraph 50 and 51, he endorsed the relevant part of the Judgment below of the EAT, which was in these terms:

“75. Although we acknowledge that there was the potential in this case for an Employment Tribunal to reach the opposite conclusion on the issue of mitigation, in our Judgment the conclusion they reached was clearly open to the Employment Tribunal and was a 'permissible option' and one that was well within the 'range of decisions' open to the Employment Tribunal.

76. In this context we add that in our Judgment the Employment Tribunal was in a unique position to assess the points made by Mr Wilding as to the conduct of the hearing on liability and as a result of that hearing had heard evidence upon which they could base properly informed decisions on (i) Mr Wilding's evidence as to his perception of the history and his reaction thereto, and (ii) the reasonableness of his decision to refuse the offer of re-employment assessed in the manner set out in paragraph 64 hereof."

24. At paragraph 55, Sedley LJ said:

“In other words, it is not enough for the wrongdoer to show that it would have been reasonable to take the steps he has proposed: he must show that it was unreasonable of the innocent party not to take them. This is a real distinction. It reflects the fact that if there is more than one reasonable response open to the wronged party, the wrongdoer has no right to determine his choice. It is where, and only where, the wrongdoer can show affirmatively that the other party has acted unreasonably in relation to his duty to mitigate that the defence will succeed.”

25. These principles have been regularly followed and applied, most recently in Debique v Ministry of Defence EAT/0075/11, Underhill P (as he then was) presiding. At paragraph 13, the EAT set out the passage from the Judgment of Potter LJ in Wilding, which we have set out above, and said this:

“Although that summary is expressed by reference to the facts before the Court of Appeal, it is nevertheless an authoritative statement of principle as to the proper approach. Sedley LJ delivered a short Judgment valuably clarifying that the essential question is not whether it was reasonable for the employer to make the offer in question, but whether it was unreasonable for the employee to refuse it. At paragraph 55 (p. 1100 A-B) he said:

‘This is a real distinction. It reflects the fact that if there is more than one reasonable response open to the wronged party, the wrongdoer has no right to determine his choice; it is where and only where the wrongdoer can show affirmatively that the other party has acted unreasonably in relation to his duty to mitigate that the defence will succeed.’

That point, though, as we say, important and valuable, is not in any way inconsistent with the overall summary given by Potter LJ.”

26. At paragraph 86, the EAT said:

“We therefore dismiss the appeal against the finding that the Appellant failed to mitigate her loss. The truth is that the question whether her refusal to accept the offers made to her constituted an unreasonable failure to mitigate was quintessential a question of fact for the assessment of the Tribunal, applying well established principles. The Tribunal directed itself correctly and considered the points made by the Appellant fairly and conscientiously. It is not for this Tribunal to second guess its decision.”

27. Three further principles emerge from the authorities put before us (we do not need to go through the authorities in detail); they are:

(1) The fact that the Claimant is in litigation with the employer at the time of the offer does not exclude the possibility of a failure to mitigate – see Wilding and Debique, paragraph 22. This is a factor which Tribunal may consider.

(2) The fact that the alternative employment offered is of a lesser status is another such factor.

(3) No duty to mitigate arises before the Claimant is dismissed; see Savoia v Chiltern Herb Farms [1981] IRLR 65, at paragraph 16 in the Judgment of the EAT presided over by Slynn J; and McAndrew v Prestwick Circuits Ltd [1988] IRLR 514 EAT presided over by Lord Mayfield, at paragraph 21.

Discussion

28. There is no principle that an alternative offer from the same employer, made after dismissal, must be accepted or that it is unreasonable to reject such an offer. Each case depends on its own facts.

29. In this case, the Employment Tribunal found that the Claimants had not unreasonably rejected the alternative offer made to them by F & G. That was a finding of fact.

30. The principal thrust of Mr Neaman’s attack on the Tribunal’s conclusion in this area is directed at the Employment Tribunal’s reliance on the loss of statutory rights which the Claimants would have sustained if they accepted the offer which F & G made to them. It is correct that, once dismissed by F & G, the Claimants would have lost their statutory rights whether they then accepted the offer of work on a CIS basis or not; and if the Tribunal are to be regarded as expressing a view to the contrary, that would have been, in relation to that factor, an error, although an unusual error for an experienced Regional Employment Judge to be found to have made.

31. If the Tribunal had decided the failure to mitigate the issues solely on the basis that acceptance of F & G’s offer would have caused the Claimants to lose their accrued statutory rights, which expression must be taken to have meant their loss of accrued rights to remedies for unfair dismissal, there would have been a strong argument that they had erred and that the mitigation issue should be remitted to the Tribunal for reconsideration (it was agreed that any remission should be to the same constitution of the Tribunal). However, we prefer Mr Isaac’s argument that the Tribunal’s Judgment must be read and considered as a whole and that, if that exercise is carried out, it can be seen that the loss of statutory rights was not in the Tribunal’s view the only reason for the Claimants’ rejection of the F & G offer or for their assessment that it was reasonable to reject the offer.

32. It is helpful to repeat the words of paragraphs 70 and 71 at this part of our Judgment. The Tribunal there said:

“70. We have set out in our findings of fact what was being offered by the Respondents, and why, and why the Claimants refused it.

71. The testimony of Mr Cheese, and the submissions of Miss Bibi, contended that the Claimants unreasonably refused employment with R2. We reject those contentions for the following reasons.

(2) They were being employed on CIS terms, and not PAYE terms. That was profitable to R2 but it was a disadvantage, in the long term, for the Claimants.

33. In our judgment, these words are effective to introduce and were intended by the Tribunal to have the effect of introducing into their consideration of the reasonableness or unreasonableness of the Claimants’ rejection of the alternative offer not only the factor identified in paragraph 71(1) but the other differences between the terms of the Claimants’ employment by Actual, to which terms they were contractually entitled by reason of the TUPE transfer, and the terms in which F & G were offering to retain or offering to engage the Claimants. The former terms are set out in paragraph 26 of the Judgment. They included the Claimants being employees on PAYE; a fixed working week from Monday to Friday, 7.00am to 4.00pm; holiday pay for 16 days plus bank holidays; the fact that probation periods had been completed satisfactorily; and, in Mr Oliver’s case, travel expenses. Mr Oliver was, prior to the transfer, paid on a basis which was the equivalent of £91 per day; Mr Saddington’s gross daily pay was £78 (paragraphs 40 and 51). The offer put forward by F & G, in contrast, proposed self-employment; payment on a daily basis at the lesser rate of £75 a day; no guarantee of a five-day week; and a trial period of one month. The offer letter made no reference to holidays or expenses.

34. In our judgment, the Tribunal must be read as having introduced into their reasons for their decision on the mitigation issue those factors, which, the Tribunal were entitled to find, made the alternative offer to the Claimants substantially less attractive than the terms to which they were in law entitled. All of these factors were disadvantages to the Claimants which would arise if they entered into an agreement to work on the CIS terms offered rather than the PAYE terms which they had been on up to 31 July 2008, which terms by operation of TUPE continued thereafter until dismissal. The Tribunal’s words “They were being employed on CIS terms and not PAYE terms” is a compendious expression, which did not need to set out individually all the differences between two sets of terms; they had been set out earlier in the Tribunal’s Judgment. While paragraph 71(1) is confined to the loss of statutory rights, the relevant paragraphs as a whole do not confine the Tribunal’s decision to the loss of statutory rights. The Tribunal had properly considered all the other factors and plainly had them in mind.

35. It is clear from paragraph 59 that the Tribunal regarded the differences between the Claimants being employed as before and self-employed on the CIS terms offered as crucial. The Tribunal were there considering not only the loss of accrued statutory rights, but the contrast between the terms on which the Claimants had been employed by Actual and the terms which were being offered to them by F & G.

36. We have taken full account of Mr Neaman’s reminder to us that, as a matter of principle, we should not substitute our view of whether it was or was not unreasonable for the Claimants to decline to work for F & G on the CIS terms offered. We have honoured that principle. Our decision on this aspect of the appeal is based not on any such substitution, but on what we regard as the correct analysis, considering the Judgment of the Tribunal as a whole, of the Tribunal’s reasons for finding in the Claimants’ favour on the mitigation issue.

Date of dismissal

37. The principle that no duty to mitigate loss arises until the loss has been sustained and, in dismissal cases, until the employee has been dismissed, is not in doubt. Does that principle have any application in the present case?

38. Although one of the issues nominally before the Tribunal was whether the Claimants had been dismissed, there was, in reality, no doubt that they had. It was submitted on behalf of F & G that they had been dismissed on 31 July by Actual; it was submitted on behalf of Actual that they had been dismissed by F & G; see paragraphs 56 and 57. The Tribunal concluded that the Claimants had been dismissed by F & G; see paragraph 59.

39. The Tribunal did not embark on a detailed analysis of the precise date on which the dismissal occurred; we note that there is no reference within the Judgment to the principle that the duty to mitigate in a dismissal case does not arise until the dismissal has occurred. None of the advocates before us appeared before the Tribunal; and no one was able to tell us whether that principle was mentioned to the Tribunal. We suspect that it was not. Neither Claimant was represented; if the point had been raised, the Tribunal would have referred to it and would have set out expressly when they found the dismissal to have occurred. However, the Claimants having been unrepresented before the Tribunal, Mr Neaman did not object to the raising of the point before us.

40. Between 31 July and 12 August, there was no contact between the Claimants and F & G, save for the fax of 8 August, to which we have referred earlier. On 12 August, Mr Cheese met the Claimants and mentioned a CIS contract; Mr Oliver listened to what was said (see paragraph 29 of the Tribunal’s Judgment (both paragraph 29s)). There is no suggestion in the Tribunal’s narrative that any dismissal occurred on that day. On 13 August, F & G wrote the letter to Actual, to which we have referred earlier, in which they said that they were unable to offer a TUPE-based contract but did not suggest that they had dismissed the Claimants as opposed to intending to try to reach an agreement with them.

41. At paragraph 32, the Tribunal said:

“It is therefore abundantly clear that the Respondents did not accept the Claimants as their employees and were intent upon agreeing new contracts with them.”

42. While F & G were stating their unwillingness to honour the effect of the TUPE regulations and seeking to persuade the Claimants to enter into an agreement on an alternative basis, there is no suggestion that at that point F & G had dismissed the Claimants. The Claimants then rejected the offers. The Tribunal said at paragraph 60:

“60. We therefore conclude that the Claimants were dismissed by R2, by the refusal to continue their employment on the same terms as previously: Regulation 4 applies.”

43. Regulation 4(9) of TUPE provides that:

“Subject to regulation 9, where a relevant transfer involves or would involve a substantial change in working conditions to the material detriment of a person whose contract of employment is or would be transferred under paragraph (1), such an employee may treat the contract of employment as having been terminated, and the employee shall be treated for any purpose as having been dismissed by the employer.”

44. The Tribunal were, therefore, concluding that the transfer to F & G involved a substantial change in working conditions to the material detriment of the Claimants whose contracts of employment were or would have been transferred and that the Claimants were then in a position to treat the contracts of employment as having been terminated, which termination was to be treated as a dismissal by F & G. Such dismissal could not have occurred until after the offer of the conditions which were to the material detriment of the Claimants had been made. Whether the offer was made orally on 12 August or in writing on 14 August (or both), the Tribunal’s findings were such that the offers must have preceded the dismissal pursuant to Regulation 4(9).

45. Mr Neaman accepted that F & G had not sought to appeal the conclusion of the Tribunal set out in paragraph 60. He suggested that Regulation 4(9) came into play when a substantial change in working conditions was sought to be imposed by the transferee, which did not constitute a breach of or an attempt to change the terms of the contract of employment, e.g. where an employee is subject to a mobility clause and was required to move to a workplace which was substantially less congenial; but the words of Regulation 4(9) are not limited in that way. No authority thus restricting the operation of Regulation 4(9) was put before us. There needs to be a method by which an employee who is adversely treated by a transferee under a TUPE transfer can, if a substantial adverse change is sought to be made by the transferee employer, bring the contract of employment to an end, and in any event, the Tribunal’s conclusion on paragraph 60 is not, we repeat, the subject of any appeal.

46. Mr Neaman submitted that he was not seeking to go behind paragraph 60 but that that paragraph was a “red herring”, because the dismissal had occurred before 12 or 14 August. In response to a question from us as to when the Claimants were dismissed, he said at first that they were dismissed on 1 August. He could not rely in support of this on the Claimants’ originating applications, neither of which gave a date for either the beginning or the end of their employment; and he was not able to put before us any act of termination by F & G on that date. Alternatively, Mr Neaman argued that the facts of 8 August constituted a unilateral termination of the Claimants’ employment; but if that was argued before the Tribunal (which we very much doubt), the Tribunal did not so conclude. The Tribunal appear to have treated the history up to the making of the offer to the Claimants as demonstrating that F & G did not want to accept the Claimants as employees; but they did not find that there was anything which constituted dismissal prior to the making of the offers.

47. For these reasons, applying the principle in Savoia v Chiltern Farms to the Tribunal’s conclusions, the offers upon which the allegation of a failure on the part of the Claimant to mitigate their loss were based were made before the Claimants’ contract of employment came to an end; and in law no duty to mitigate arose.

Conclusions

48. For the reasons we have set out, the Tribunal made no error in law in assessing whether it had been shown that the Claimants had unreasonably failed to mitigate their loss; and in any event, on the facts as found, no duty to mitigate arose.

49. We feel bound to say that although policy considerations have played no part in our resolution of this appeal (nor is there any trace of such considerations in the decision of the Tribunal), if it was possible to regard it as unreasonable for an employee, whose contract of employment is transferred pursuant to TUPE to a transferee employer, to reject an offer made by the transferee employer who refuses to acknowledge the effect of TUPE and seeks to engage the employee only on a self-employed basis and on less favourable terms, the protection offered by TUPE might be thought to be in some danger. However, each case must be decided, as this case was, on its own facts.