Temporary pause

Cowen v Rentokil Initial Facility Services (UK) Ltd (t/a Initial Transport Services)

The law says that employees are entitled to compensation if they are unfairly dismissed. In Cowen v Rentokil Initial Facility Services (UK) Ltd (t/a Initial Transport Services)(IDS 854), the Employment Appeal Tribunal (EAT) confirmed that employers may still be liable to pay compensation if their employee gets a replacement job that turns out to be temporary.

Basic facts

Mr Cowen was made redundant from his job at Rentokil on 6 October 2006. He brought a claim of unfair dismissal on the basis that the company had failed to adequately consult with him, that he had been unfairly selected and that it did not try to find him suitable alternative employment.

Tribunal decision

The tribunal agreed he had been unfairly dismissed but refused to make an order for re-engagement because he had refused an offer (during “without prejudice” negotiations for the settlement of the claim) by Rentokil of a different job on a higher salary. By the time of the tribunal hearing, the post had been filled and the tribunal decided that the offer “mitigated his loss in relation to any right of re-engagement.”

The next issue to decide was compensation. Mr Cowen found a new job on 23 October 2006 on a higher salary than his old job, but was dismissed after the end of the probationary period in January 2007 (five months before the tribunal hearing). The tribunal decided he had mitigated his financial loss from 23 October 2006 and could not recover any compensation for the period following his second dismissal in January as the later dismissal was “not a relevant factor”.

Grounds of appeal

Mr Cowen appealed, saying that the tribunal should have ignored the fact that he had been offered another job by Rentokil as it was made during “without prejudice” negotiations. He also argued that it was unjust for the tribunal to decide he could only claim financial loss up to 23 October and not for the period following his second dismissal.

EAT decision

The EAT agreed that the tribunal should not have taken into account the company’s offer of another job in May 2007 as it was part of “without prejudice” negotiations. Although the company tried to argue that it was entitled to waive the privilege unilaterally as it had made the job offer, the EAT said that the waiver must be consensual.

It accepted, however, that if Mr Cowen had waived his right (as the employer argued), the tribunal would have been entitled to take the documentation concerning the negotiations into account. As it was not clear whether that was the case, the EAT remitted the issue to the tribunal to make “further findings of fact.”

As to the issue of mitigation, the EAT relied on the Court of Appeal decision in Dench v Flynn and partners which said that the loss flowing from a dismissal does not automatically comes to an end once permanent employment is obtained. In Cowen v Rentokil the tribunal confirmed that it was therefore “wrong to conclude in every case that the taking of new employment necessarily broke the chain of causation”.

The EAT said it was obvious that, in this case, when Mr Cowen took the new job, it might only last for the probationary period. As a result, the period of time for which he could claim compensation continued after the new job came to an end.

However, it stressed that did not mean that when a job only lasted a short time that causation would necessarily be broken. “It depends on all the circumstances. The reason why the employee lost the second job may have a bearing on the question. If it is for culpable misconduct, for example, one can readily see how that might break the chain of causation … But there is no evidence or suggestion that that was the situation here.”