Industrial Tribunals Northern Ireland Decisions

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Cite as: [2006] NIIT 634_5, [2006] NIIT 634_05

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THE INDUSTRIAL TRIBUNALS

CASE REF: 634/05

666/05

CLAIMANT: Michael Patrick McCann

RESPONDENT: McCann Building Limited

DECISION

The unanimous decision of the tribunal is as follows:-

(i) The correct identity of the respondent is McCann Building Limited, and the named respondent, Mr Alex McCann, is dismissed as a respondent in these proceedings, without further Order.

(ii) The dismissal of the claimant by the respondent was unfair.

(iii) The tribunal Orders the respondent to pay to the claimant the sum of £2,731.04 compensation for unfair dismissal, subject to the Recoupment provisions that apply in the matter.

(iv) The tribunal declines to award costs in favour of the claimant in the matter.

Constitution of Tribunal:

Chairman: Mr J. V. Leonard

Panel Members: Mrs Wright

Mr McCusker

Appearances:-

Mr P. Ferrity, Barrister-at-Law, instructed by Anderson Agnew & Co, Solicitors, appeared for the claimant.

Mr M. McCracken, Barrister-at-Law, instructed by T. S. McAllister & Son Solicitors, appeared for the respondent.

Reasons:

Reasons are given in accordance with rule 30 contained in Schedule 1 to the Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005, reasons having been reserved at the conclusion of the hearing of the matter. The tribunal heard evidence from the claimant and, on behalf of the respondent, from Mr Alex McCann, Mr Archie O'Hagan, Mr Declan Archibald, and Mr Barry McCann. The tribunal also had before it, by agreement, an indexed bundle of documents running to some 154 pages and some further documentation submitted by agreement between the parties in the course of the hearing.

The claimant in his claim form dated 4 April 2005 and received by the Office of the Tribunals on 5 April 2005 claimed, "unfair dismissal, redundancy payment", and he further set out details of his claim against the respondent. The claimant claimed compensation only. In a response to the claimant's claim, the respondent contended that the proper title of the respondent was "McCann Building Limited" and that the respondent named in the claimant's claim, Alex McCann, was a Director of the said limited liability company. It was conceded that the claimant was an employee of McCann Building Limited and contended that the claimant had been made redundant; unfair dismissal was denied. That response was dated 20 April 2005 and was received by the Office of tribunals on 3 May 2005.

THE ISSUES

In consequence of the claimant's claim and the response thereto, the issues for the tribunal to determine were as follows:-

(i) The correct identity of the respondent; and

(ii) whether the dismissal of the claimant by the respondent was fair or unfair; and

(iii) if the dismissal was found to be unfair, the matter of appropriate remedy; and

(iv) an application for costs on the part of the claimant.

THE TRIBUNAL'S FINDINGS OF FACT

On foot of the oral and documentary evidence adduced before it, the tribunal made the following findings of fact material to the issues, on the balance of probabilities:-

(a) The respondent named in these proceedings, Alex McCann, at the relevant time was a Director of a company of limited liability named "McCann Building Limited". At the outset of the hearing, it was indicated to the tribunal on behalf of the claimant that no issue was taken by the claimant in regard to that fact. McCann Building Limited was the employer of the claimant at the material time. The correct respondent to the proceedings is therefore McCann Building Limited and that limited company is hereinafter referred to as, "the respondent", in this decision.

(b) Alex McCann, Director of the respondent, had been personally engaged in the construction industry for about 28 years or so by the year 2005. He had commenced trading under the trading name of "McCann Building" in or about 2001; then a decision was taken to incorporate a limited liability company, the respondent, in 2001. It was about this time that the respondent first employed the claimant. The claimant had confirmed the commencement date of this employment by the respondent as being May 2001 and Alex McCann accepted that as being correct. The claimant was employed as a labourer.

(c) The claimant was provided at no time by the respondent with any written terms and conditions of employment. He was paid an agreed weekly wage and he was engaged in construction work concerning various residential properties, generally in and around the Ballymena area. The respondent was a small family company and engaged a very small workforce. The company concentrated more on groundwork and the site preparation stage of construction, rather than with the erection and the finishing off of constructed buildings. That work included site clearance using digging and earth moving equipment, the digging and pouring of foundations, and the construction of retaining walls and such like.

(d) The respondent worked closely with such general builders as a local builder, Declan Archibald, who constructed and fitted out and finished off properties. As was the custom and practise in these small scale residential developments, much of the work was sub contracted to various small independent contractors. However there appeared to be close cooperation between the various individuals involved who were directing operations in respect of the various stages of construction. In that regard, Alex McCann as Director of the respondent had a close working relationship with Mr Archibald as and when circumstances required.

(e) The respondent had a residential housing development at a particular site named "Mill Hollow", located at Legagrane Road, Cargan, Ballymena, County Antrim. This site was being developed in a number of phases. The first phases had been completed before the time that concerns this tribunal. Then a problem arose in respect of what the tribunal understands to be the final phase of the development, what was known as sites "13, 13a, 14, 14a and 15, Mill Hollow". The problem seems to have been that there was a difficulty regarding planning permission arising as a result of a discrepancy between the site mapping for that final phase and the number of dwellings which were supposed to be constructed on that remaining part of the site.

(f) By letter dated 28 February 2005, the Divisional Planning Office of the Planning Service wrote to the respondent's architects, Bell Architects Limited, in respect of the sites numbered 13, 13a, 14, 14a, 15 Mill Hollow, stating that the Department was further considering the planning application but that further details were required in order to determine the application. The letter further stated that, following a site inspection, it was evident that work had been carried out before permission had been granted. An order was issued that work must stop immediately. Further information and plans were called for. The effect of this "stop notice" was that work had to cease immediately at the Mill Hollow site.

(g) Some weeks before that, probably as the tribunal understands it towards the end of November 2004, the Planning Office had carried out a site visit and inspection at the Mill Hollow site and certain site measurement discrepancies had been noted. The tribunal is not certain as to the exact dealings between the Planning Office and the respondent; there may have been some oral warning issued to either stop the development or some direction made to carry out only restricted works on the site, but the tribunal notes that the respondent appears to have been able to provide some employment and work for any employees both at Mill Hollow and at other sites up to the time of the receipt of the stop notice at the end of February 2005.

(h) In addition to the Mill Hollow site, the respondent also had another site at a Martinstown, some 2 miles distant from the Mill Hollow site. The respondent had already made a roadway into that site and had constructed sub flooring by November or December of 2004. However it seems that no further work could be carried out to the Martinstown site on account of lack of bank funding. All the respondent's funding was apparently "tied up" with the Mill Hollow site. Apart from the forgoing, there was one other building project which concerned the respondent. That related to the construction of a single dwelling house at Newtowncrommelin, County Antrim, on behalf of a brother of Alex McCann named Martin McCann. The main building contractor on that site ("the Newtowncrommelin site") was Mr Archibald.

(i) At the material time which concerns this tribunal, being February and March of 2005, the respondent employed Alex McCann, Archie O'Hagan, Alex McCann's son, Barry McCann, and the claimant. Mr O'Hagan was a general labourer and he was a long standing employee having been employed with the respondent and, prior to that, by Alex McCann when Mr McCann had traded in his own name. Barry McCann, had commenced employment in June 2004. His function, apart from general labouring, was to act as a van driver; he also carried out computer work in respect of the business records.

(j) It was a matter of contention as to the stage construction had reached in respect of the Newtowncrommelin site by February and March of 2005. Alex McCann would have had the tribunal believe that by this time the foundation works only had been completed by the respondent and no further construction work had by that stage been undertaken by Mr Archibald as main contractor. However, the tribunal preferred the evidence of the claimant on this issue. The tribunal accepted from the claimant's evidence that not only had he been engaged in the ground work and in the construction of the foundations for the Newtowncrommelin site but that he had also acted as a general labourer on the construction site, working with Declan Archibald's team of tradesmen on the construction. Indeed the Newtowncrommelin site construction had reached roof level by the stage that the claimant's contract with the respondent was terminated at the end of March 2005.

(k) The claimant was undoubtedly aware of the difficulties regarding planning permission and the reason for work having to cease pending any difficulties being resolved at the Mill Hollow site. However, there was no formal warning given to the claimant of any possible impending redundancy. There was no endeavour ever made by the respondent to engage in any formal consultation with the claimant regarding any possible impending redundancy. In January of 2005 the claimant had been moved from the Mill Hollow site to work on the Newtowncrommelin site.

(l) On Easter Monday, 28 March 2005, the claimant was on leave and was at home. Alex McCann drove into a yard of the claimant's house and reached out of the window of the vehicle he was driving and handed to the claimant what was indeed to be the claimant's final wage packet. The claimant contended that in doing so Alex McCann remarked to the claimant that he was laying him off as his claim had, "buggered things up". It is a fact that the claimant had suffered an industrial injury that had been sustained by him in the course of his work with the respondent some time in 2003. As a result of that the claimant had pursued a personal injury claim against the respondent. The contention that he had spoken these words was strongly denied by Alex McCann. The tribunal shall comment on this further below.

(m) There were discussions at the time between Alex McCann and Mr Archibald that resulted in the respondent's employee, Mr O'Hagan, being offered a job by Mr Archibald as a general labourer. Mr O'Hagan was indeed dismissed by the respondent on 28 March 2005 but he immediately commenced employment with Mr Archibald as a labourer.

(n) Mr Archibald did not personally speak with the claimant at the time of the dismissal nor did he personally offer him any employment. The claimant contended that he had never received any invitation to take up such employment with Mr Archibald, either directly or indirectly. Alex McCann contended in oral evidence that the claimant had indicated to him that the claimant indeed had been offered a job by Mr Archibald but however had declined this offer as he did not wish to work with Mr Archibald. The claimant strenuously denied that to be the case. Having heard and assessed all of the evidence, on balance, the tribunal accepts the claimant's version of things. It is the case that the claimant was at no stage ever made either directly or indirectly an offer of alternative employment by Mr Archibald. If such employment had been offered, the claimant would probably have accepted it and he had no reason to become unemployed and ultimately to take up a job at a lesser wage. The tribunal finds no evidence to support the respondent's suggestion that the claimant did not wish to work with Mr Archibald and chose to become unemployed.

(o) After this dismissal on 28 March 2005, the claimant signed on for Job Seekers Allowance and he was unemployed and was in receipt of Job Seekers Allowance for a period of three weeks. Then the claimant secured employment with a firm called Hetherington's in Dungannon as a painter and decorator. The wages in that employment were substantially less than the wages the claimant had been earning with the respondent. It was agreed between the parties' representatives, and the tribunal accepted, that there was a weekly £76.28 nett pay difference in the wage earned by the claimant before dismissal and the wage earned by the claimant in this alternative employment. However, by the end of December 2005, after a period of 36 weeks from the dismissal date, the claimant was again earning a wage commensurate with that earned by him in employment with the respondent at the time of dismissal. The parties' respective representatives were therefore in agreement that there was no continuing loss on the claimant's part beyond the end of December 2005 and the tribunal accepted that as a fact.

(p) Notwithstanding the dismissal of both Mr O'Hagan and the claimant on the 28 March 2005, Barry McCann was not dismissed by the respondent (nor apparently was Alex McCann). Barry McCann it seems continued to earn his normal wage from the respondent and for that he performed various services both on behalf of the respondent and also by doing general duties around the McCann family home. The respondent also took part in a sponsorship exercise on behalf of a local GAA club, with Barry McCann providing coaching to the club for a period of some weeks around that time.

(q) It seems that once the planning difficulties in respect of the Mill Hollow site were overcome, construction work could then recommence. Mr O'Hagan therefore recommenced employment with the respondent at that time. From the employment tax records seen by the tribunal, Mr O'Hagan appears to have recommenced this employment with the respondent on or about 4 June 2005, working the tribunal believes at the Mill Hollow site.

(r) At the time of the dismissal the claimant was aged 39 years old and had been continuously employed by the respondent for 3 years. His gross weekly pay was £340.00 and his nett weekly pay was £262.00 in this employment. The tribunal did not need to determine any further findings of fact for the purpose of reaching its decision in this case.

THE APPLICABLE LAW

5. In respect of the applicable law, the Employment Rights (Northern Ireland) Order 1996 (hereinafter referred to as "the 1996 Order") provides at Article 126 of the 1996 Order that an employee has the right not to be unfairly dismissed by his employer. Article 130 of the 1996 Order provides for the test of fairness concerning the dismissal by an employer. It is for the employer to show the reason (or, if more than one, the principal reason) for the dismissal, and that it is either a specified reason as set out in Article 130 or some other substantial reason of a kind such as to justify the dismissal. The specified reasons set out in Article 130 [at Article 130(2)(c)] include redundancy. A redundancy is defined in Article 174 of the 1996 Order which Article states:

"174-(1) For the purposes of this Order an employee who is dismissed shall be taken to be dismissed by reasons of redundancy if the dismissal is wholly or mainly attributable to:-

(a) The fact that his employer has ceased or intends to cease - (i) to carry on the business for the purposes of which the employee was employed by him, or (ii) to carry on that business in the place where the employee was so employed, or

(b) The fact that the requirements of that business - (i) for employees to carry out work of a particular kind, or (ii) for employees to carry out work of a particular kind in the place where the employee was employed by the employer, have ceased or diminished or are expected to cease or diminish."

Article 130(4) of the 1996 Order provides that where the employer has shown the reason for dismissal and that it falls within one of the specified categories (or some other substantial reason) the determination of the question whether the dismissal is fair or unfair, having regard to the reason shown by the employer, depends on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and shall be determined in accordance with equity and the substantial merits of the case.

In the application of this statutory guidance, the leading authority remains the case of Iceland Frozen Foods Limited –v- Jones [1982] IRLR 439 which includes the following:-

(i) An industrial tribunal must consider the reasonableness of the employer's conduct, not simply whether they (the members of the industrial tribunal) consider the dismissal fair.

(ii) In many (though not all) cases there is a band of reasonable responses to the employee's conduct within which one employer might reasonably take one view, another quite reasonably take another.

(iii) The function of the industrial tribunal, as an industrial jury, is to determine whether in the particular circumstances of each case the decision to dismiss the employee fell within the band of reasonable responses which a reasonable employer might have adopted.

If a tribunal makes a finding of unfair dismissal, and an order for re-engagement or re-instatement is inapplicable, a tribunal may make an order for compensation including both a basic award, under Article 153 of the 1996 Order, and a compensatory award under Article 157 of the 1996 Order, the compensatory award being such amount as the tribunal considers just and equitable having regard to the loss sustained by the complainant in consequence of the dismissal, insofar as that loss is attributable to action taken by the employer.

THE TRIBUNAL'S DECISION

Having reached its determination in respect of the facts, the tribunal now proceeds to consider the issues in the light of the applicable law.

Firstly, the correct identity of the respondent is McCann Building Limited, and the named respondent, Mr Alex McCann, is dismissed as a respondent in these proceedings, without further Order.

This was a case where the tribunal sees a very small employer, employing at the material time only four persons. Notwithstanding that fact, the respondent took no account whatsoever of some of the very basic and necessary procedures designed and intended to ensure fair dealing between employer and employee. For example, the respondent provided no written terms and conditions of employment to the claimant, nor so the tribunal understands to any other employees. The tribunal does note that it is regrettably relatively common practice in certain sectors of the construction industry for that to be the case. However, that does not provide an excuse to the respondent for failing to put into place what is indeed a very long-standing statutory requirement.

That general lack of regard for proper procedure is also evident to the tribunal in the entire absence of any clear evidence of what could fairly be said to constitute a warning of and consultation with the claimant in respect of the impending potential redundancy situation that arose at the time the planning difficulties caused a stop notice to be placed on the Mill Hollow site. Whilst there was alternative work available at the Newtowncrommelin site, if not before, certainly from early February 2005 onwards, it is also undoubtedly the case that the total amount of work required to be carried out by the respondent at that time had diminished or was expected to diminish, albeit only on a temporary basis until the Mill Hollow planning difficulties were resolved. The tribunal does accept that the suspension of the work at Mill Hollow, although inevitably to be seen as a temporary measure, did not at the time have a definite end date in sight by which the difficulties could be readily anticipated as being resolved.

The work being carried on at the Newtowncrommelin site was being carried out by Mr Declan Archibald as main contractor. The site work and the foundation work (as opposed to any other type of construction work) at that location carried out by the respondent might perhaps have concluded by late February 2005. However it appears to be the case (for the tribunal accepts the claimant's evidence in this regard) that the claimant was still working on that site as a general labourer in conjunction with Mr Archibald's workers and tradesmen and the site had indeed reached roof level by the stage of the claimant's dismissal at the end of March 2005. The tribunal is not sure how the contractual arrangements were worked out between the respondent and Mr Archibald in regard to this ongoing work but it can certainly be said that the work of the respondent or the respondent's employees, including the claimant, does not seem to have ceased at the Newtowncrommelin site at conclusion of the foundation stage.

Notwithstanding the forgoing, on balance and with what it must be said is a certain measure of reservation, the tribunal accepts that the conditions were met for there to be a redundancy situation for the statutory purpose as regards the claimant. Further, on balance, the tribunal does not accept that the claimant's personal injury claim was the determinative cause of the dismissal. The cause of the claimant's dismissal was wholly or mainly attributable to the fact that the respondent's requirements for employees to carry out work of a particular kind, or for employees to carry out work of a particular kind in the place where the claimant was employed, had ceased or diminished or were expected to cease or diminish and that fulfils the requirements of Article 174 of the 1996 Order (see, further, Murray and another v Foyle Meats Limited [1999] IRLR 562 HL).

Whilst redundancy is a potentially fair reason for the dismissal of an employee, the determination of whether or not such a dismissal is fair or unfair depends on the statutory tests that are contained in Article 130 of the 1996 Order. The tribunal has to determine whether the respondent acted reasonably or unreasonably in treating redundancy as a reason for dismissal of the claimant. The law in respect of this is well settled and does not require detailed elaboration in this decision. The relevant considerations were set out by the Employment Appeals Tribunal in England in the case of Williams -v- Compair Maxam Limited [1982] IRLR 83 (and approved by the Northern Ireland Court of Appeal in Robinson -v- Carrickfergus Borough Council [1983] IRLR 122). The principles in Williams are that an employer will seek to give as much warning as possible; the employer will consult with the union; the employer will seek to ensure that selection is made fairly in accordance with agreed and established criteria; and the employer will seek to see whether instead of dismissing an employee he could offer him alternative employment. The importance of these procedural safeguards has been endorsed by the House of Lords in Polkey v A E Dayton Services Ltd [1988] ICR 142.

In order to be satisfied that the dismissal was fair the tribunal would need to be satisfied that the employer felt, with justification, that warning the claimant and engaging in proper consultation would have been utterly futile. It is not a difficult task for the tribunal to reach the conclusion that the claimant was unfairly dismissed, taking all of the foregoing into account. Here, the tribunal looks at the close working relationship between the respondent and Mr Archibald and the fact that, in practical terms, the claimant appears to have been carrying out a general labouring function on the Newtowncrommelin site in close conjunction with Mr Archibald's own tradesmen. It is impossible to say with any degree of certainty what would have been the outcome if the respondent had properly and conscientiously addressed its mind to a fair and proper consultation. It might be, notwithstanding that being done in a full and a fair manner, that there was a good chance that the claimant would have been dismissed in any event. However, the tribunal cannot assess the situation as being one where consultation would have been utterly futile. This is especially so as this is not a situation where, for example, commercial pressures had brought about the entire demise of the respondent's trading operation. What the respondent faced here was indeed quite a serious situation of enforced work suspension on the Mill Hollow site. However this was a temporary suspension of work caused by the planning difficulties; those difficulties were certainly going to be resolved sooner or later. As it turned out, things were back on track again by early June 2005, a delay of only two months.

The tribunal also notes that both Alex McCann and Alex McCann's son, Barry McCann, was kept in employment and were not dismissed on grounds of redundancy. Barry McCann's wages records indicate that he was paid precisely the same wage during the period of suspension of work on the Mill Hollow site as he had been paid prior to that. The redundancies of Mr O'Hagan and of the claimant were therefore selective. However there was no evidence that Alex McCann, as Director of the respondent, in any way addressed his mind to the issue of devising fair selection criteria for redundancy or endeavoured to put into place any system at all. The decision to dismiss was taken by Alex McCann seemingly on a familial basis.

For the forgoing reasons, the tribunal unanimously determines that dismissal of the claimant was unfair and does not fall within the band of reasonable responses of a reasonable employer.

The tribunal now turns its attention to the matter of remedy. The claimant sought compensation only. The claimant was unemployed for a period of 3 weeks after the dismissal date. However, he endeavoured rather quickly to find alternative employment and he was successful in doing so, albeit at a reduced wage. He then continued working at that reduced wage for a period of time. This is a decision on the claimant's part which the tribunal, on the facts, finds to have been a reasonable one. There is certainly no issue here, as far as the tribunal is concerned, of any failure on the part of the claimant properly to mitigate his loss. That situation continued until the end of December 2005. At that point the claimant's wages increased to a level producing the result that there was no continuing loss carried on into the year 2006.

The only further issue for the tribunal to consider before the final computation of loss and the making of the award is the question of what is known as the "Polkey reduction" (see Polkey v A E Dayton Services Ltd mentioned above). The tribunal is permitted to consider whether or not, if fair procedure had been followed by the respondent, there was a significant percentage chance that the claimant would have been dismissed on grounds of redundancy in any event (it should be noted that this is a case were the facts arise before the implementation of the Employment (Northern Ireland) Order 2003, which Order has somewhat altered the position in regard to the foregoing).

Having looked at all the facts of the matter, the tribunal assesses the situation properly as being one where there was a 50% chance that the claimant would have been dismissed by the respondent in any event even if fair and reasonable procedures had been followed in terms of due warning and consultation. In that situation it is permissible for the tribunal to take account of that in terms of an assessment of the proper cause of the total loss sustained by the claimant. For that reason the tribunal therefore intends to apply a 50% reduction to the assessment of the compensatory award in this case.

The tribunal therefore computes the loss resulting from the unfair dismissal of the claimant by the respondent as follows:-

THE BASIC AWARD

The claimant did not receive any redundancy pay from the respondent. At the effective date of termination the statutory maximum sum that could be awarded for a week's pay was £280.00. The appropriate multiplier on foot of Article 153 of the 1996 Order, based on the claimant's age (39 years) and length of service (3 years) is 3.

The basic award is therefore 3 x £280.00 = £840.00

THE COMPENSATORY AWARD

The claimant was unemployed and in receipt of Job Seekers Allowance for a period of 3 weeks after dismissal on the 28 March 2006. He is therefore entitled to 3 weeks' net pay in respect of that. His figure for net pay as at the date of termination was £262.00 per week.

3 x £262 = £786.00

Thereafter, (and by agreement between the parties) the weekly difference between the wage previously earned and the wage earned in the new employment was £76.28. That situation of ongoing loss subsisted for a period of 36 weeks.

36 x £76.28 = £2,746.08

The total compensatory award is therefore £3,532.08, before deductions.

The tribunal awards the sum of £250 for loss of statutory rights.

The reduction in the compensatory award (50%) is £1,891.04.

The total of the (adjusted) compensatory award and the basic award is £2,731.04 and therefore the Tribunal Orders the respondent to pay to the claimant the sum of £2,731.04 in compensation for unfair dismissal, subject to the Recoupment provisions that follow.

RECOUPMENT OF BENEFIT FROM AWARDS

The applicant did receive Social Security Benefits to which the Employment Protection (Recoupment of Job Seekers and Income Support) Regulations (Northern Ireland) 1996 apply. The following recoupment of benefit is therefore applicable in this case:

(a) Monetary Award: £2,731.04

(b) Prescribed Element: £1,766.04

(d) Excess of (a) over (b): £ 965.00

Finally, upon conclusion of the hearing the claimant's representative made an application for costs. The tribunal, having fully considered the costs provisions contained in Schedule 1 to the Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005, determines that this is not an appropriate case in which to make an award of costs.

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

Your attention is drawn to the notice below which forms part of the decision of the tribunal.

Chairman:

Date and place of hearing: 16 - 18 October 2006,Belfast

Date decision recorded in register and issued to parties: