Industrial Tribunals Northern Ireland Decisions

 
THE INDUSTRIAL TRIBUNALS

CASE REF: 14/05

CLAIMANT: Anthony William Hunte

RESPONDENT: David Cauldwell t/a The Lobster Pot (Strangford) Ltd

DECISION

At the outset of the hearing the claimant stated to the tribunal that he wished to withdraw his complaint of unfair dismissal. That complaint was accordingly struck out without objection on the part of the respondent. The unanimous decision of the tribunal in regard to the remaining issues for determination is, firstly, that the proper respondent is, The Lobster Pot (Strangford) Ltd. Secondly, the claimant's complaints, save for that of paid annual leave, are not made out and these complaints are dismissed by the tribunal, without further order. Thirdly, the tribunal finds the claimant's complaint that he had not had any paid annual leave nor been re-imbursed for leave not taken is made out, and the tribunal orders the respondent to pay to the claimant the sum of £666.67 compensation in lieu of untaken leave.

Constitution of Tribunal:

Chairman: Mr J V Leonard

Members: Mr Johnston

Mr McKeown

Appearances:

The claimant appeared and represented himself.

The respondent was represented by Mr David Cauldwell of the respondent company.

REASONS

1. The claimant presented an originating application to the tribunal on 16 December 2004 in which he claimed 'unfair dismissal, refusing to pay entitlements'. In the application he complained of the following:-

"I have had no notice for my termination of employment".

"I have had deductions taken from my pay cheque without prior agreement".

"I have never received an itemised pay slip in all the time I worked at the Lobster Pot, Strangford".

"I have been unfairly dismissed".

"I have not received a written statement of reasons for dismissal".

"I have not had any paid annual leave nor have I been re-imbursed for leave not taken".

"I am now concerned that my tax and NI contributions are up-to-date as I am not sure if the Lobster Pot, Strangford, have taken care of this as they said they would".

The respondent, in its response, resisted the complaints and stated that the correct respondent was a limited company, the Lobster Pot (Strangford) Ltd. In the response it was contended that the claimant was not an employee of that company.

THE ISSUES

2. By Order dated 22 March 2005 a chairman of tribunals determined that the correct title of the respondent (who had been named in the originating application as David Cauldwell as a sole named respondent) was properly "David Cauldwell t/a The Lobster Pot (Strangford) Ltd", subject to any further determination by this tribunal. The tribunal had to determine whether or not that was the proper respondent. Furthermore, as a matter of primary finding, the tribunal had to determine if the claimant was or was not an employee of the respondent, or, in the alternative, a worker. At the outset of the hearing the claimant stated to the tribunal that he wished to withdraw his complaint of unfair dismissal. That complaint was accordingly struck out without objection on the part of the respondent at the outset of the hearing and therefore did not require to be further determined by the tribunal. The tribunal's jurisdiction in respect of the majority of the remaining complaints was dependent upon the claimant being an employee of the respondent. With regard to the remainder, the jurisdiction was dependent upon the claimant being a "worker" (as defined below). Therefore the tribunal proceeded to hear evidence and determine facts and then to reach a determination on that issue, as a preliminary issue, prior to dealing with any further findings and determinations in this case as might thereafter have been necessary.
3. The tribunal heard oral evidence from the claimant and from a Mr McBride on behalf of the claimant and from Mr Cauldwell and Mr Lynott on behalf of the respondent. The tribunal also examined such documents as were presented in evidence by the parties. On foot of the evidence before it, the tribunal made the following findings of fact on the balance of probabilities. Insofar as there was any conflict in evidence between the parties, the tribunal preferred the evidence giving rise to the findings of fact determined, as set out below:-
4. .1 The claimant was a qualified chef of some experience. At the material time he was aged 46 years. He had earlier worked in Portugal for some time and then he had been resident in Northern Ireland for approximately fourteen years. He had occupied approximately nine posts of employment in different establishments in Northern Ireland during that time. The claimant had latterly been employed as a chef at the La Mon House Restaurant. He had been so employed for approximately one and a half years when in June 2004 he received a telephone call from Mr David Cauldwell, a director of the Lobster Pot (Strangford) Ltd, inviting the claimant to attend a meeting.
5. .2 The claimant duly met with Mr Cauldwell on 20 June 2004. There was a significant conflict in the oral evidence heard by the tribunal between the claimant and Mr Cauldwell as to what precisely was discussed at that 20 June 2004 meeting and specifically any contract terms that might have been orally agreed on that occasion. The tribunal shall firstly deal with its reason generally for preferring the evidence of Mr Cauldwell to that of the claimant in the determination of the facts.
6. .3 The tribunal in these proceedings generally preferred the evidence of Mr Cauldwell to that of Mr Hunte as it found the evidence to be more consistent whereas the evidence of Mr Hunte was, on occasions, contradictory and inconsistent. Certain matters of alleged fact indicated on the first day of the proceedings by Mr Cauldwell to be such were subsequently corroborated by documentation, and indeed by some later concessions made by Mr Hunte in his testimony to the tribunal, whereas a number of matters contended by Mr Hunte to be fact were subsequently proved not to be correct. To give perhaps one illustration of this, the claimant had contended that his wages were at all times paid in cash by the respondent and this was the case in respect of all employees. From examination of his bank statements provided by the claimant on the second day of the hearing, the tribunal observed that all payments of money by the respondent company to the claimant were lodged in the claimant's bank account and described therein as being cheque lodgements. There were also inconsistencies in regard to evidence which the tribunal heard from a witness called on behalf of the claimant in support of his case, a Mr McBride. Again, the tribunal found Mr McBride's evidence to be rather unsatisfactory in a number of respects and accordingly did not attach significant weight to certain aspects of that evidence.
7. .4 Returning to the issue of what was discussed and any contractual agreement reached between Mr Cauldwell (acting in the capacity mentioned below) and the claimant on 20 June 2004, from the evidence the tribunal examined the nature and the terms of any agreement. The tribunal then proceeded to consider whether any of the terms were inherently inconsistent with a contract of employment and, further, whether there might have been a contract of service or a contract for services. There were certainly contractual terms orally discussed and agreed on that date; there was certainly some meeting of minds. The best that could be said about the contract terms agreed was that it was agreed that a sum of £400.00 per week would be paid by the respondent company to the claimant, in respect of which the claimant agreed personally to provide work and services to the respondent company. It was agreed that the claimant would be accorded the title or description 'head chef'. However, it appears that definite contractual hours were not agreed and the tribunal had scant information regarding any other terms. In these discussions Mr Cauldwell was at all times acting in his capacity as a director of the Lobster Pot (Strangford) Ltd.
8. .5 In terms of background information at the time, the respondent company had acquired the business of a restaurant known as "the Lobster Pot" a short time before the events that concern the tribunal. There was a significant fire at the premises in respect of which steps were being taken to re-instate the premises and to get the business up and running again. There was a chef engaged by the business, a Mr Lynott, whose evidence the tribunal heard. Mr Lynott was in post from the start of July 2004, a short time before the claimant's involvement with the business. The tribunal accepted Mr Lynott's evidence that he was responsible for about 90% of the 'hands on' cooking in the restaurant and also for a certain amount of direction regarding the menus, but the claimant was largely responsible for arranging menus and for carrying out a supervisory function; the claimant did not work anything like the lengthy hours which were apparently worked by Mr Lynott.
9. .6 Mr Cauldwell contended that the claimant was taken on as a chef-consultant for a fixed term of six months expiring at the end of December 2004 in order to assist in getting the restaurant business up and running again in the aftermath of the fire, whereas the claimant contended that he had been engaged as an employee of the business at a nett wage, after tax and national insurance deductions, of £400.00 per week. He claimed that his engagement was not for a fixed term but one of unlimited duration. The tribunal will return to these contentions below in setting out its determination of the facts.
10. .7 At the commencement of the engagement, the claimant indicated to Mr Cauldwell that he had a number of other minor catering engagements which he wished to attend to or to conclude, which had been pre-arranged by the claimant in a personal capacity. Mr Cauldwell had no difficulty in allowing the claimant the facility to attend to these in his own time and also in using the Lobster Pot's facilities. However, leaving these pre-arranged and seemingly minor matters to one side, the claimant did not run any other business in tandem with his engagement by the Lobster Pot. It is certainly the case that the claimant did not run, in his own right and as a business or profession, a catering service or business undertaking, whether as a consultant or otherwise, which contracted services to the respondent company as a customer or client. In the main, the claimant worked every day in the Lobster Pot. In so doing, he was generally under the direction and to an extent under the control of Mr Cauldwell and there were certainly some aspects of the relationship which had similar characteristics to, and were not inconsistent with, those encountered in a contract of service.
11. .8 Despite the claimant and his witness Mr McBride contending that that was not the case, the tribunal is satisfied that the respondent company operated a computerised payroll system throughout the material time, which system generated itemised wages advice slips for employees, of whom there were approximately 30, both full time and part time, in the year 2004. The respondent company also engaged the services of an employment consultancy firm to deal with human resources issues. All persons listed as employees were thus provided with written contracts of employment. Of significance as far as the tribunal was concerned was the fact that the claimant was the sole person engaged with the business who had neither a written contract of employment nor did he receive his remuneration accompanied by an itemised wages advice slip. There were no deductions from the remuneration paid to the claimant for tax and National Insurance. The respondent company treated the claimant as though he were a self-employed person from the point of view of payroll and there was certainly no other employee of the business dealt with in that fashion. The tribunal did not accept the suggestion made by the claimant that other employees had complained about not receiving wages slips, for instance, Mr Lynott. The tribunal noted that Mr Lynott was adamant in his evidence that he did indeed receive wages slips. If the claimant, as he contended, did regard himself as an employee, at no stage did the claimant ever query the fact that he did not receive wages advice slips and that he had not received a written contract of employment, in contrast to the (other) employees of the business.
12. .9 On Sunday 12 December 2004, the claimant had attended the business and at approximately 8.00 pm it seems that there was some type of dispute or altercation between the claimant and the restaurant manager. That resulted in the claimant telephoning Mr Cauldwell, the latter being at home that evening and ill. Again, there was a conflict in the evidence between Mr Cauldwell and the claimant as to what was discussed. The tribunal prefers the evidence of Mr Cauldwell. The claimant became agitated in the course of the telephone conversation with Mr Cauldwell. The cause of that agitation arose from an altercation that the claimant had had with the manager which related to the claimant's not achieving what were regarded by the manager as the proper business results in the function which had been entrusted to him. Mr Cauldwell regarded what he saw as the claimant's six-month contract shortly about to come to an end. Thus when the claimant stated to Mr Cauldwell that the manager had told the claimant that he was going to be 'sacked', Mr Cauldwell interpreted that as being really of no significance contractually, as the contract was due to expire in any event at the end of December 2004. However Mr Cauldwell did not accept that the respondent had indeed terminated the contract on 12 December 2004 but rather contended that the claimant had "walked out" after having an altercation with the manager. He maintained that any restaurant would have been very unwise to "sack" a senior person such as the claimant shortly before Christmas when the contract was due to determine in any event at the end of December. Therefore Mr Cauldwell regarded the contract as being breached by the claimant. However he regarded the breach as being of little practical significance (that is to say purely in contract terms and leaving aside the matter of inconvenience to the respondent). Thus he did not contact the claimant to discuss matters further, nor indeed did the claimant contact Mr Cauldwell. The claimant then instituted these proceedings by way of the originating application above-mentioned.
13. .10 The tribunal did not need to determine any further findings of fact to reach a determination of these proceedings.

THE APPLICABLE LAW

14. The claimant's remaining complaints, the complaint of unfair dismissal having been withdrawn and dismissed, were:

(1) Receiving no notice of termination of employment.

Article 118 of the Employment Rights (Northern Ireland) Order 1996 provides that the notice required to be given by an employer to terminate the contract of employment of a person who has been continuously employed for one month or more is not less than one week's notice for each year of continuous employment if his period of continuous employment is two years or more but less than twelve years. Under Article 3 of the Industrial Tribunals Extension of Jurisdiction (Northern Ireland) Order 1994, an employee may bring proceedings before an industrial tribunal for damages or any other sum (other than in relation to personal injuries) if the claim is within the jurisdiction of the Industrial Tribunals (Northern Ireland) Order 1996 and one which a Court in Northern Ireland would have jurisdiction to decide and the claim arises or is outstanding on the termination of the employee's employment. To avail of this the person must be an employee and the contract of employment must be terminated.

(2) Having unauthorised deductions taken from wages.

In Article 3 of the Employment Rights (Northern Ireland) Order 1996, a "worker" is defined as meaning: "...an individual who has entered into or works under (or, where the employment has ceased, worked under) – (a) a contract of employment, or (b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual ".

Article 45 (1) of the Employment Rights (Northern Ireland) Order 1996 provides that: "An employer shall not make a deduction from wages of a worker employed by him unless – (a) the deduction is required or authorised to be made by virtue of a statutory provision or a relevant provision of the worker's contract, or (b) the worker has previously signified in writing his agreement or consent to the making of the deduction".

Article 45(3) of the Employment Rights (Northern Ireland) Order 1996 provides that: "Where the total amount of wages paid on any occasion by an employer to a worker employed by him is less than the total amount of the wages properly payable by him to the worker on that occasion (after deductions), the amount of the deficiency shall be treated for the purposes of this Part as a deduction made by the employer from the worker's wages on that occasion".

The Court of Appeal in England in the case of Delaney –v- Staples (t/a De Montfort Recruitment) [1991] ICR 331, held that there was no valid distinction to be drawn between a deduction from a sum due, and non-payment of that sum, as far as the relevant statutory provision was concerned.

Article 59 of the Employment Rights (Northern Ireland) Order 1996 provides that the definition of "wages", in relation to a worker, means: "... any sums payable to the worker in connection with his employment including - (a) any fee, bonus, commission, holiday pay or other emolument referable to his employment, whether payable under his contract or otherwise...", subject to certain statutory exceptions which do not apply to the facts of this case.

(3) Not receiving itemised wages slip whilst working for the respondent.

Article 40 of the Employment Rights (Northern Ireland) Order 1996 provides that an employee has the right to be given by his employer a written itemised pay statement. To avail of this right the person must be an employee of the employer.

(4) Not receiving a written statement of reasons for dismissal.

Article 124 of the Employment Rights (Northern Ireland) Order 1996 provides that an employee has under certain circumstances the right to be provided by his employer with a written statement giving particulars of the reasons for the employee's dismissal. To avail of this right the person must be an employee of the employer.

(5) Not receiving any paid annual leave nor being reimbursed for leave not taken.

In Regulation 2 of the Working Time Regulations (Northern Ireland) 1998, a "worker" is defined as meaning: "...an individual who has entered into or works under (or, where the employment has ceased, worked under) – (a) a contract of employment, or (b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual ".

Regulation 13 of the Working Time Regulations (Northern Ireland) 1998 provides, subject to certain conditions, for a worker being entitled to a period of four weeks annual leave in any leave year.

Regulation 14 of the Working Time Regulations (Northern Ireland) 1998 provides that where the proportion of leave taken by the worker is less than the proportion of the leave year which has expired, his employer shall make him a payment in lieu of leave. That payment is calculated in accordance with Regulation 14 (3).

(6) Employer not making tax and National Insurance contributions.

If an employer was obliged to deduct such contributions and had deducted such contributions from wages, yet not paid these to the appropriate authorities, that would constitute an unlawful deduction from wages as mentioned above.

The tribunal shall further below refer to some authorities in determination of the issues.

THE TRIBUNAL'S DETERMINATION

15. The tribunal has commented above as to the basis upon which it has reached determinations of fact when faced with the regrettable but significant conflicts of evidence in this case. On the basis of the facts determined, the tribunal considered firstly the issue of the correct respondent. Mr Cauldwell was at all times acting in his capacity as a director of the Lobster Pot (Strangford) Ltd. Any contract was not with Mr Cauldwell personally but rather with that company. Accordingly, the tribunal determines that the correct respondent is The Lobster Pot, (Strangford) Ltd.
16. In respect of the issue of whether or not there existed a contract for services or a contract of service between the respondent and the claimant, the tribunal examined the facts and considered the material issues in the case emerging from any findings of fact. The tribunal is quite satisfied that there was a contract entered into between the claimant and the respondent company (represented by Mr Cauldwell) on 20 June 2004. That contract was an engagement of the claimant to provide a supervisory or overseeing function in order to assist in the reconstruction of the Lobster Pot's business following the fire. In that contract, at its most basic, the claimant personally agreed to provide his services to the respondent to meet the designation, 'head chef'. Mr Cauldwell had stated to the tribunal that at all times Mr Cauldwell recognised the relationship to be that the claimant would perform such functions as an independent agent, or "consultant" as he put it, not as an employee. For that the claimant would be paid a weekly fee of £400.00.
17. However, as mentioned, it certainly is the case that the claimant did not run, in his own right, a catering service or business undertaking, whether as a consultant or otherwise, which contracted services to the respondent company as a customer or client. The claimant moved to the respondent following a succession of engagements as nothing other than an employee, latterly with the La Mon House Restaurant. The claimant therefore did not respond to Mr Cauldwell's invitation to a meeting on 20 June 2004 as being an invitation from a potential client or customer, the Lobster Pot, of a business undertaking run by the claimant in his own right to provide services.
18. No endeavour was ever made by the respondent to provide a written contract of employment to the claimant in the standard form provided to all employees of the business; no statutory deductions were ever made from the weekly sum paid to the claimant for National Insurance or PAYE tax. The claimant was not entered on the computerised payroll system and in that regard was treated quite differently from any persons regarded by the business as being employees.
19. There was already a chef who had been engaged a short time before the claimant as an employee, a Mr Lynott. From Mr Lynott's evidence the tribunal is certain that there could not have been two employed chefs operating side by side and carrying out similar functions in this business. The claimant's function was quite distinct from that performed by Mr Lynott. Mr Lynott very much adopted a 'hands on' approach with his food preparation. Mr Lynott was responsible for 90% of the food production, whereas the claimant's quite distinct function was to devise menus and to use his considerable breadth of experience in order to assist the business in getting up and running again. Mr Cauldwell's stance in his evidence to the tribunal was consistent in that he was certain that the contract as agreed was for a six-month term and was not an open-ended arrangement. In terms of the nature of the arrangement, there was certainly a degree of direction and control exercised by Mr Cauldwell in respect of the claimant's activities. Control is one of the "badges" of a contract of service (see Ready Mixed Concrete South East Limited v Minister of Pensions and National insurance [1968] 2 QB 497 approved by the Court of Appeal in England in Nethermere (St. Neots) Limited v Gardiner [1984] I.C.R. 612).
20. Before proceeding further, the tribunal had considered whether or not there was possibly a failure to have a meeting of minds or common consensus as to what constituted the fundamental nature of the contract. The tribunal had considered if it was possible that the claimant's understanding of what had been agreed and that of Mr Cauldwell were so fundamentally different on the essential issue of whether or not this was a contract of service or a contract for services that there was absent from the arrangement essential elements required to formulate a contract. However, the tribunal feels that the nature of the contract would have been entirely clear to the claimant from the outset and certainly at the earliest stage, and that any understanding could only have been further reinforced as time went on, that his relationship with the respondent was fundamentally different to that of any other full or indeed part time persons designated by the business as employees. The tribunal cannot accept that this fundamental difference was entirely lost on the claimant. Furthermore, it must be said that the tribunal sees no evidence that the contact which began as it did then, as it were, 'grew into' a contract of some other kind.
21. The tribunal is mindful of the onus of proof that must rest with the claimant in any such case as this. It is up to the claimant to satisfy the tribunal that there was a contract of service, otherwise of employment, to avail of certain of the statutory rights mentioned above. Although the issue of the nature of the contract is one of law, the application of the established tests to determine that issue is dependant so much upon a finding and assessment of the relevant facts and the precise quality to be attributed to them that the primary question is one of fact and degree (see O'Kelly and others v Trusthouse Forte Plc [1983] IRLR 369 and, further, Carmichael and another v National Power Plc [2000] 43 HL, and [1998] 301 CA). The tribunal accordingly considered all of the evidence relating to the discernible elements of the contract. There was, to a degree, a measure of control and some agreement personally to perform services in return for remuneration; there was some basic element of mutuality of obligation. However, set in the balance against that was the method of payment of remuneration, the treatment of that with reference to PAYE and National Insurance, the lack of any written terms afforded to the claimant, notwithstanding that these were without exception issued to all other employees, and other factors such as there being no provision for notice nor expressly for holidays or holiday pay. The most telling factor however to the tribunal was what the tribunal could conclude was the intention of the parties as might be deduced from any evidence available.
22. From this the tribunal must inevitably conclude from the evidence and the determined facts that the claimant has failed to discharge that burden of proof in this case. That being so, the tribunal determines unanimously that there was not in existence a contract of service, otherwise a contract of employment, between the claimant and the respondent company in respect of the engagement of the claimant by the respondent. For the tribunal to have jurisdiction in this case in respect of the remaining heads of claim, save for the claim in regard to, firstly, unlawful wages deductions and, secondly, not receiving any paid annual leave nor being reimbursed for leave not taken, there must be such a contract of employment.
23. In regard to the claims for wages deductions and not receiving any paid annual leave nor being reimbursed for leave not taken, the claimant had to satisfy the tribunal that he was a "worker" as defined above, and that the respondent's business was not a client or customer of any profession or business undertaking carried on by the claimant. To qualify as a "worker" the claimant had to be party to a contract with the respondent whereby the claimant undertook as an individual to do or perform personally any work or services for the respondent as the other party to the contract. Looking at the facts of the contractual relationship, the tribunal determines that the respondent certainly was not a client or customer of a profession or business undertaking carried on by the claimant, but rather that the claimant had entered into a contract with the respondent whereby the claimant undertook to perform personally particular work and services for the respondent. As such the claimant falls within the definition of a "worker".
24. The date of termination of the contract appears to have been Sunday 12 December 2004. The weekly sum of £400.00 was paid to the claimant on each Friday. The evidence of the claimant was not sufficient for the tribunal to determine if on termination of the contract any money for the final week of the contract was due and owing to the claimant. Therefore save for the claim in respect of paid annual leave, the tribunal is unable on the facts to find any sum due by the respondent to the claimant.
25. However, as the claimant has satisfied the tribunal that he was a worker as defined in Regulation 2 of the Working Time Regulations (Northern Ireland) 1998, there ought properly to have been provided to the claimant by the respondent annual leave with pay under the Working Time Regulations. The claimant maintained that he received no leave with pay. The respondent's witnesses in their evidence did not dispute that contention and the tribunal finds that to be the case. The tribunal, taking the duration of the contract as being for the purposes of calculation under Regulation 14 (3) of the said Regulations, five months (and therefore five twelfth's of the leave year), determines that the sum of £666.67 is due and owing to the claimant by the respondent in regard to wages due for untaken leave as:

£400.00 x 4 weeks annual leave = £1600 / 12 x 5 = £666.67

26. As, save for the foregoing, the tribunal has unanimously determined that there are no other complaints made out, the other complaints made by the claimant are dismissed by the tribunal, without further order, and the tribunal orders the respondent to pay to the claimant the sum of £666.67 compensation in lieu of untaken leave.

This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.

Chairman:

Date and place of hearing: 9 February & 27 March 2006, Belfast.

Date decision recorded in register and issued to parties: