What if the new employer offers self-employed terms to the new workforce?
An employee who is automatically unfairly dismissed is not in breach of the duty to mitigate his or her losses by turning down an offer to work on self-employed terms:
A local authority put its window-cleaning contract out for re-tender, and the bid was won by F&G Cleaners Limited (F&G). Its bid was the cheapest because it had no directly employed window cleaners. After winning the contract, F&G refused to employ the outgoing contractor’s staff, denying that TUPE applied. Instead, it offered them “self-employed” “CIS” contract terms, which they rejected. The dismissals were automatically unfair because the cleaners were dismissed as a result of the transfer.
F&G suggested that the cleaners should receive no compensation for future lost income because their refusal of self-employed terms was a failure to mitigate their losses. This argument was rejected by the EAT, who pointed out: firstly, that the self-employed terms were inferior to direct employment, as they meant a loss of job security, PAYE taxation and expenses, and secondly, that the duty to mitigate losses is only triggered once a dismissal has taken place. Since these claimants turned down offers of self-employment before being dismissed from their employment with F&G, no duty to mitigate had been triggered.
F&G Cleaners Limited v Saddington [2012] UKEAT/140/11/JQT