Employment Update: Re-engagement Mitigation

28 April 2008

Where a dismissed employee rejects offer of alternative post, is this admissible and/or relevant if he seeks re-engagement? When does an employers’ responsibility to compensate for loss caused by unfair dismissal come to an end?

The Tribunal in the case of Cowan v Rentokil Initial Facility Services t/a Initial Transport Services found that a redundancy had been handled unfairly, because there had been inadequate consultation and unfair selection.

The Claimant asked for re-instatement instead of compensation. The Tribunal refused to make a re-instatement order, taking into account the fact that, at one point in the redundancy process, the Claimant had been offered a completely different role at his old salary plus 2.5%, which he had rejected.

The Tribunal went on to consider a compensation order instead. It heard that he had found another, different, job within three weeks of being made redundant and so (taking into account notice money paid to him on termination) had suffered no immediate loss of earnings. However, by the time of the Tribunal hearing, he was unemployed again, having been dismissed from his new post at the end of a probationary period. The Tribunal considered that the original employer's responsibility for loss of earnings stopped at the date that the employee got his new post so awarded him no compensation for ongoing loss of earnings.

He appealed against the refusal to grant re-instatement, saying that his refusal of an alternative post with the original employer was irrelevant and in any event the offer had been made on a 'without prejudice' basis and so should not have been referred to at all by the Tribunal.

The EAT considered that the fact that he had refused an offer of alternative employment would be relevant to deciding whether a reinstatement order was appropriate but only if the offer of such a post had been made openly and not on a 'without prejudice' basis. This issue was remitted to the Tribunal to consider whether it had been made 'without prejudice ' or not.

The Claimant also appealed against the level of compensation awarded and the EAT agreed that the right to claim compensation does not necessarily stop on the date on which the Claimant finds a new job. In some cases it may (e.g. where he is dismissed from the new job for misconduct) but, in this case, where he had taken on a job for which he was not necessarily qualified and for which (as it turned out at the end of his probationary period) he was not suitable, he could then still claim compensation for continuing loss from his old employer.

Points to note:

  • A negotiated settlement is usually a far better conclusion to an employment dispute than a contested Tribunal hearing. This case is a reminder that negotiations may continue even while Tribunal proceedings are on foot and the fact that they are carried on, on a ‘without prejudice’ basis means that neither party can refer to them in Tribunal without the consent of the other, the only exception being sometimes when the issue of costs is considered at the end of a Tribunal hearing.

  • EATdid say that this case was ‘unusual’ in the way it allowed the claim for ongoing loss of earnings, but the decision does give Tribunals the freedom to award compensation in this way in future. It seems that they may be particularly willing to do so where the Claimant has not stayed in a new job long enough to have built up any statutory rights against his or her new employer.

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