Industrial Tribunals Northern Ireland Decisions

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Cite as: [2008] NIIT 418_8IT, [2008] NIIT 418_08IT

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THE INDUSTRIAL TRIBUNALS

CASE REF: 418/08

CLAIMANT: Geraldine Allen

RESPONDENTS: 1. Mary Sheerin

2. Fort Lodge Hotel

DECISION ON A PRE-HEARING REVIEW

The decision of the tribunal is that the claimant has a sufficient period of qualifying service to bring a claim for unfair dismissal under the Employment Rights (Northern Ireland) Order 1996.

Constitution of Tribunal:

Chairman (sitting alone): Mr N Kelly

Appearances:

The claimant was represented by Mr Joe Kennedy, BL, instructed by Fahy Corrigan Solicitors.

The respondent was represented by Mr Gary Black of Cooper Wilkinson Solicitors.

The Issue

This is a Pre-Hearing Review before a Chairman sitting alone under Rule 18 of Schedule 1 to the Industrial Tribunals (Constitution Rules of Procedure) Regulations (Northern Ireland) 2005. The issue listed for determination at this Pre-Hearing Review was:

"whether the claimant is disqualified from the right not to be unfairly dismissed by the provisions of Article 140 of the Employment Rights (Northern Ireland) Order 1996 regarding a minimum period of continuous employment".

It was agreed by both parties that the claimant had originally commenced work at the Fort Lodge Hotel on 27 February 2006 as a full-time receptionist. It was also agreed that the claimant's employment with the respondent finally ended on 22 December 2007. The identification of the correct respondent(s) is a matter to be addressed at the substantive hearing.

The respondents' case was that the claimant had left the employment of the respondents on 27 August 2006 to take up another full-time post with Kerry Foods. The respondents had issued a P45 on her leaving their employment on 27 August 2006. The claimant did not work for the respondents "for a few months" and then resumed work with them on a casual basis while retaining her post with Kerry Foods. There were no set hours. The claimant then resumed full-time employment with the respondents on 28 May 2007. At the close of the hearing, the respondent sought to argue only that the period of casual employment which commenced at some point after 27 August 2006 and which ended with the claimant resuming full-time employment on 28 May 2007 was illegal and unenforceable. The respondents argued that it could not therefore form part of a qualifying period of continuous service because the claimant, throughout this period, had asked for and had operated an arrangement whereby her wages were not subject to deductions of tax or national insurance.

The claimant's case was that she had stopped full-time employment with the respondents on 27 August 2006 to take up a full-time post with Kerry Foods but that she had continued to work without any interruption for the respondents on a regular basis. She had a set Saturday night/Sunday morning shift and over the period between 27 August 2006 and 28 May 2007 when she resumed full-time employment with the respondents, she had undertaken an increasing number of hours part-time work for the respondents. Towards the end of that period, she was working on occasion 40 hours for the respondents on a part-time basis in addition to 40 hours work for Kerry Foods. She denied that she had asked for or had entered into any arrangement whereby tax and national insurance would not be deducted from her earnings and argued that she had continuous and qualifying service throughout the period from 27 February 2006 until 22 December 2007.

Relevant Law

Article 140 of the Employment Rights (Northern Ireland) Order 1996 ("the 1996 Order") provides that an employee cannot complain to an Industrial Tribunal of unfair dismissal unless that employee has been continuously employed for a period of not less than one year ending with the effective date of termination.

Chapter III of the 1996 Order deals with the determination of the period of continuous employment.

Article 6(4) provides that:

"a person's employment during any period shall, unless the contrary is shown, be presumed to have been continuous".

Article 8(1) of the 1996 Order provides that:-

"any week during the whole or part of which an employee's relations with his employer are governed by a contract of employment counts in computing the employee's period of employment".

Since 1995, there has been no requirement for a minimum number of hours to be worked in each week before that week can count as part of a period of continuous service. The emphasis now is on looking only at the continuing existence of a contractual relationship for the purposes of Article 8(1) and whether a contractual relationship covers each of the weeks in question. In Colley v Corkindale [1995] ICR 965, an employee working a five and a half hour shift in a public house every alternate Friday was held to have established a sufficient period of continuous service and was allowed to bring an unfair dismissal claim. In Vernon v Event Management Catering Ltd [2007] All ER (D) 129, the Employment Appeal Tribunal stated in reference to the equivalent GB provision, that "In every week that the employee had worked as an employee, for however long, that week should count under Section 212(1)".

The Court of Appeal determined in Hall v Woolston Leisure Ltd [2000] IRLR 378, that the relevant question was whether or not the claimant knew of and actively participated in illegality. In Colen v Cebrian(UK) Ltd [2004] IRLR 210, the Court held that, where irregularity is alleged, the burden of proof is on the party making the allegation to show that the contract had been entered into with the objective of committing an illegal act, or had been performed with that objective.

Findings of Fact

The first relevant factual dispute relates to what happened when the claimant ceased full-time employment with the respondents on 27 August 2006. As indicated above, the respondent's case is that there was a gap of some months before the claimant resumed part-time and casual work with the respondents. The claimant's evidence was that she had continued seamlessly with the respondents on a part-time basis and that there had been no gap in employment.

The respondents could produce no documentary evidence to prove a gap in employment. All staff rotas and clocking in cards had been destroyed and no wages book or other relevant documentation was produced to the Tribunal. Therefore the only evidence on behalf of the respondents was the oral evidence given by Mrs Sheerin.

Mrs Sheerin's evidence was extremely vague and imprecise. She clearly had substantial difficulty in remembering details of events and in particular in remembering dates. For example, in her examination-in-chief she stated that this gap in employment has lasted for "a few months". When pressed in cross-examination to be more precise, her reply was "I just cannot recall". She stated in evidence that the claimant had returned on a part-time basis and that she did not have set hours but almost immediately contradicted herself by stating that the claimant had a regular Saturday night/Sunday morning shift. When pressed to indicate to the tribunal whether the claimant had returned to work on a part-time basis significantly before Christmas 2006 she replied "I just don't have dates in my head". When asked to indicate why she was so definite that there had been a gap in employment after 27 August 2006 when she could not recall any of the details of that gap, she stated that the claimant had been working full-time for Kerry Foods and that she didn't need to work part-time. When offered the opportunity to indicate any other reason that she had for maintaining that there had been a gap in employment at that stage, she was unable to provide any such reason.

Article 6(4) of the 1996 Order provides that there is a statutory presumption of continuity of employment. That statutory presumption is of course capable of rebuttal but the tribunal has not heard any evidence from the respondents which rebuts that presumption. The evidence from Mrs Sheerin was vague and entirely unconvincing. The P45 and the Deductions Working Sheet for the year to 5 April 2007 indicate only that deductions ceased in or around August 2006. Since the respondents' evidence was that they didn't make any deductions in respect of the claimant's part-time employment at any stage during the period between 27 August 2006 and 28 May 2007, the fact that deductions ceased at a particular point does not support the proposition that employment ceased at that point. It is apparent that the respondents did not feel that they were under any particular obligation to make statutory deductions in respect of employment.

The tribunal therefore concludes, applying the statutory presumption of continuity of employment, that the claimant's employment was continuous from the date of her first appointment on a full-time basis on 27 February 2006 up to her eventual termination on 22 December 2007, including the period of part-time employment from 27 August 2006 up to 28 May 2007. The tribunal has heard no evidence of any week falling within that period which breaks the continuity of employment.

Turning to the issue of the possible illegality of the employment contract during the period of part-time service from the end of August 2006 until late May 2007, the respondent's evidence was that the claimant had asked Mrs Sheerin to keep her employment "off the books" and not to pay income tax or national insurance contributions. Mrs Sheerin stated that the claimant had asked her to do this because "she was claiming benefits and it wouldn't be worth her while". The claimant denied this conversation ever took place.

At this point, the tribunal should refer to the unusual arrangements put in place by the respondents to pay all staff. No pay slips were provided. All staff were paid in cash and not by cheque or bank transfer. The cash was given to staff in packets but no details of deductions were given on the face of those packets. Staff were paid a net hourly rate and the respondents, with the assistance of a bookkeeper who operated from his home address, grossed up that net hourly rate and, for most staff, paid income tax and national insurance deductions separately. No weekly or monthly notification of those deductions was ever given by the respondents to employees.

The claimant stated in evidence that her youngest child turned 17 on 19 May 2006 and left school. She ceased claiming family tax credit at that point. She was claiming no other means tested social security benefits. There was therefore no advantage to be gained on the part of the claimant in relation to social security or tax credit in having her earnings from the respondents concealed from the Revenue. Furthermore, throughout the period from 27 August 2006 to 28 May 2007, her net weekly earnings with Kerry Foods were £179.00. It is apparent that the claimant would already have been paying the 22% tax rate in relation to those earnings and it is further apparent that the amount of additional earnings that she was receiving from the respondents or that she could ever reasonably have hoped to receive from the respondents fell far short of the point where her marginal tax rate would have increased to 40%.

The claimant was paid £5 net per hour by the respondents and would have received that amount in any event. The tribunal can see no convincing reason why the claimant would have sought and entered into an arrangement to defraud the Revenue where there would have been no benefit to her. The only beneficiary of such an arrangement, given the peculiar practices put in place by the respondents for paying staff, would have been those respondents. When the deductions in respect of income tax and national insurance contributions were not made, no benefit accrued to the claimant. She still received £5 net per hour.

Furthermore, the claimant states and the tribunal accepts, that she did not examine her P60s and that, without pay slips, she was unaware that income tax and national insurance were not being deducted from her earnings during her part time employment with the respondents in the same way as they had been deducted before 27 August 2006 and were deducted after 28 May 2007.

Having considered the evidence and having applied the burden of proof as determined in Colen v Cebrian (UK) Ltd, the tribunal therefore concludes that the claimant did not either know of or actively participate in the illegality in which the respondents accept that they indulged in defrauding the Revenue. The claimant is therefore not precluded from relying on the period of service when the respondents failed to make statutory deductions.

Decision

The tribunal concludes that the claimant was in a continuous contractual relationship with the respondents from 27 February 2006 until 22 December 2007 and that she is not disqualified from enforcing her contract of employment in an unfair dismissal claim because of illegality.

Chairman:

Date and place of hearing: 2 July 2008, at Belfast

Date decision recorded in register and issued to parties: