Industrial Tribunals Northern Ireland Decisions

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Cite as: [2009] NIIT 5197_9IT, [2009] NIIT 5197_09IT

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THE INDUSTRIAL TRIBUNALS

CASE REF: 05197/09IT

CLAIMANT: Laszlo Pal Tamasi

RESPONDENT: Morgan Transport and Distribution Ltd

DECISION

The unanimous decision of the tribunal is that compensation in the sum of £2084.05 is awarded to the claimant being (1) £49.58 in respect of an unauthorised deduction from his wages in the week represented by the pay slip dated 19 December 2008, (2) £714.47 in respect of annual leave and (3) £1320 in respect of the respondent’s failure to provide a written statement of particulars of employment.

Constitution of Tribunal:

Chairman: Mr N Kelly

Members: Mrs S Doran

Mr P McKenna

The claimant appeared in person and was assisted by an interpreter.

The respondent was represented by Mr Killian Morgan, a director of the respondent company and a non-practising solicitor.

Facts not in dispute

(1) The claimant is a Hungarian national. He started work for the respondent on 4 July 2008 as a HGV driver. His duties involved transporting loads to and from England and Scotland.

(2) The respondent is a road haulage operator, which, at all relevant times, employed approximately 60 drivers including approximately 20 Hungarian nationals. It also employed a Hungarian interpreter.

(3) For the first two weeks of his employment, the claimant was paired with an experienced Hungarian driver to familiarise himself with the routes, the ferries and the respondent’s paper work and procedures. He was paid £150.31 for each of those first two weeks.

(4) On the third week of his employment he was provided with a vehicle and commenced travelling back and forth to England and Scotland.

(5) The claimant was never provided with a written statement of terms and conditions.

The issues

(6) The issues for the tribunal to determine were;-

(i) Whether there had been unauthorised deductions from wages in that the hourly rate paid to the claimant fell below the national minimum wage?

(ii) Whether there had been other unauthorised deductions, namely shortfalls in his pay during certain weeks?

(iii) Whether the claimant was entitled to payment for annual leave?

(iv) Whether the respondent had failed to provide a written statement of particulars of employment?

(v) Whether the claimant was entitled to notice pay or pay in lieu of notice?

PAID ANNUAL LEAVE

Respondent’s Evidence

(7) Mr Darryl Morgan, director of the respondent company stated in evidence that the Hungarian drivers, on recruitment, were given a choice between a rolled up holiday pay arrangement, with an amount being paid each week in respect of holiday pay or alternatively, the appropriate amount being paid when they were actually on holiday or when they left the company. He stated that all the Hungarian drivers had chosen the rolled up holiday pay option. He stated that the Hungarian drivers often took long holidays and the rolled up holiday pay arrangement therefore suited them. The Hungarian drivers were all casual drivers and it would in any event, he stated, have been difficult to calculate their holiday pay entitlement.

(8) The respondent had originally intended to call only one witness, i.e. Mr Darryl Morgan. In the course of the morning of the hearing, the respondent decided that it needed additional evidence and Mr Laszlo Devics, the respondent’s Hungarian interpreter, was telephoned and asked to give evidence in the afternoon. When he gave evidence, Mr Devics stated that he had never heard of any arrangements where the Hungarian drivers were given a choice about holiday pay.

Claimant’s Evidence

(9) The claimant stated the holiday pay arrangement had never been explained to him. He had not understood, until the day of the hearing, that the letters “hp” on his pay slip referred to holiday pay. He had very little English and relied on such matters being explained to him. None of his Hungarian colleagues had been able to explain the pay system to him.

Decision

(10) The European Court of Justice in Robinson-Steele v RD Retail Services Ltd [2006] IRLR 386 ruled that rolled up holiday pay was unlawful. It stated:

“[Article 7] precludes the payment for annual leave within the meaning of that provision from being made in the form of part payment staggered over the corresponding annual period of work and paid together with the remuneration for work done rather than in the form of a payment in respect of a specified period during which the worker actually takes leave.”

(11) The ECJ determined that in certain circumstances there could be a right of set off. It stated;

“The question is therefore whether payments in respect of minimum annual leave, within the meaning of that provision, already made within the framework of such a regime contrary to the Directive, may be set off against the entitlement to payment for a specific period during which the worker actually takes leave. In that situation, Article 7 of the Directive does not preclude, as a rule, sums additional to remuneration payable for work done which has been paid, transparently and comprehensibly, as holiday pay, from being set off against the payment for specific leave.”

(12) The right of set off has been considered in various cases, most recently in Lyddon v Englefield Brickwork Ltd [2008] IRLR 198. In that case the Employment Appeal Tribunal determined that;

“The fundamental question is whether there is a consensual agreement identifying a specific sum properly attributable to periods of holiday.”

It concluded that, in that particular case;

“It followed that the evidence showed that an agreement had been reached, and the criteria of transparency and clarity were met.”

(13) The tribunal does not accept Mr Darryl Morgan’s evidence that a choice was given to the Hungarian drivers, including the claimant, about holiday pay arrangements. Mr Morgan’s evidence did not make sense in that he was on the one hand saying that normal holiday pay for casual drivers was too difficult to implement and on the other hand, he was saying that it was an option offered to the Hungarian drivers. Given Mr Devics’ position as the Hungarian interpreter paid to act as an intermediary between the respondent and the Hungarian drivers, it is significant that he had never heard of such a choice being given. Mr Devics would have had to translate and explain any such arrangement to new Hungarian drivers if such an arrangement had existed. Mr Devics commenced employment with the respondent in January 2008 and the translator who had worked for the respondent at the time of the claimant’s recruitment was not available to give evidence. No oral or documentary evidence was produced by the respondent to support Mr Morgan’s assertion that the claimant had been given a choice about holiday pay or that the rolled up holiday pay arrangement had been explained to him. The tribunal has serious concerns about Mr Darryl Morgan’s credibility and concludes that no choice was given to the claimant and that the holiday pay arrangement had never been properly explained to him.

(14) In any event, rolled up holiday pay is unlawful. The right to set off any rolled up holiday payment against the liability to pay holiday pay under the Working Time Regulations is dependant on the existence of a consensual agreement identifying a specific sum properly attributable to periods of holiday. The tribunal has considered the guidelines set out in the case of Marshall Clay Products Ltd v Caulfield [2003] IRLR 552. The EAT stated;

“We would however take this opportunity to give guidance for the future to employers and indeed trade unions and employees, with regard to rolled up holiday provisions, in order to minimise the risk of any such contractual remuneration not qualifying under regulation 16 (5) -

(a) The rolled up holiday pay must be clearly incorporated into the individual contract of employment, and thus expressly agreed;

(b) The allocation of the percentage or amount of holiday pay must be clearly identified in the contract, and preferably also in the payslips;

(d) Records of holidays taken must be kept;

Reasonably practical steps must be taken to require the workers to take their holidays before the expiry of the relevant holiday year.”

(15) The guidance was reformulated in the case of Smith AJ Morrisroes & Sons Ltd [2005] IRLR 72 in the following manner;

“There must be mutual agreement for genuine payment for holidays representing a true addition to the contractual rate of pay for time worked. The best way of evidencing this is for;

(a) The provision for rolled up holiday pay to be clearly incorporated into the contract of employment;

(b) The percentage or amount allocated to holiday pay (or particulars sufficient to enable it to be calculated) to be identified in the contract and preferably also in the pay slip;

(c) Records to be kept of holidays taken (or of absences from work when holidays can be taken) and for reasonably practicable steps to be taken to ensure that workers take their holidays before the end of the relevant holiday year.”

(16) The tribunal recognises that the practical steps recommended in Marshall Clay and Smith are only guidance. The acid test is whether there was a clear and transparent agreement between the respondent and the claimant in relation to rolled up holiday pay. The tribunal concludes that there was not any such agreement in the present case. The claimant did not speak English. He was therefore heavily reliant on an explanation being provided by his employer. Without such an explanation, the letters “hp” on his pay slip would have meant nothing to him. The respondent had gone to the trouble of producing a driver’s guide in Hungarian which specified the driver’s duties in relation to tachographs, refuelling, loading and unloading etc. It did not however take the relatively simple step of adding to that guide a page containing an explanation of the holiday pay arrangement and other basic terms and conditions of employment.

(17) Mr Darryl Morgan asserted that the other Hungarian drivers understood the arrangement and that they would of necessity have explained that arrangement to the claimant. No other Hungarian drivers were called to give evidence that they either had understood the holiday pay arrangement or had explained that arrangement to the claimant. Since Mr Darryl Morgan and Mr Laszlo Devics each plainly had a different understanding of what arrangements the respondent had in place in relation to holiday pay for their Hungarian drivers, the tribunal is not prepared to assume that the claimant was in some way in a position to understand the arrangement. The tribunal accepts the claimant’s evidence that he was unaware of the meaning of “hp” on his pay slip until the day of the hearing and that he had not understood the rolled up holiday pay arrangement operated by the respondent. The tribunal therefore concludes that the respondent has no right of set off in these circumstances.

(18) The tribunal has concluded that the claimant’s period of employment came to an end during a telephone conversation between the claimant and Mr Devics, shortly after he left Northern Ireland to go to Scotland in late December 2008. The reasoning is set out later in this decision in relation to notice pay. The tribunal was not given the date on which this conversation took place but Mr Devics thought it took place in early January. In the circumstances, the tribunal considers it more likely than not that this would have taken place at the start of January. The tribunal has therefore concluded that employment ceased on 31 December 2008. The net weekly pay figure for the purposes of calculation is the average net weekly pay over his last twelve weeks which is £300.20. The annual entitlement under Regulation 13A(2) of the Working Time Regulations (Northern Ireland) 1998 at the relevant time was 24 days.

(19) 4 July 2008-31 December 2008= 181 days

Rate of Accrual for holiday leave 181/365 x 24 = 11.9 days.

Average daily net pay £60.04

Total 11.9 x £60.04 = £714.47

UNAUTHORISED DEDUCTIONS

(20) This part of the claim was firstly, a claim that the hours worked were such that the effective hourly rate was less than the national minimum wage.

(21) The system operated by the respondent, for determining the pay due to the claimant and to other drivers, was extraordinary. The tribunal attempted with only limited success, to extract a coherent explanation of this system from both Mr Darryl Morgan and Mr Killian Morgan.

Evidence of the Respondent

(22) Mr Darryl Morgan was initially presented to the tribunal as the respondent’s only witness to respond to a claim which specifically and clearly raised issues about the calculation of the claimant’s pay. He commenced his evidence in this respect in a confident manner. The claimant was a casual driver and, at the end of each week, the work of the claimant (and other drivers) was examined and pay was calculated. He stated: “We try to do it as fairly as possible. It would be to do with how far he has travelled- the further he went, the better the pay. It was a fair pay for the work that he did.” He stated in response to a direct question that pay arrangements were the same for local drivers.

(23) Mr Morgan stated that the maximum net weekly pay, for the claimant and for other drivers, was £450, no matter how many driving and non driving hours were worked. However, the claimant could and did earn less than that amount in certain weeks.

(24) At one point, in response to a question for the tribunal, Mr Morgan stated that the claimant would not be paid for non driving hours spent on a ferry or while waiting to be loaded or unloaded. These were “rest periods.” He then seemed to almost immediately resile from this stating that if the claimant had been on the ferry from Larne to Carnryan, non-driving hours would have been be regarded as part of the working day. If a driver went to Glasgow, that would be regarded as a short trip and there would be a “small deduction” from pay, compared to a driver who had travelled to London. He mentioned a figure of £25.

(25) The tribunal pressed Mr Morgan further, hoping for some clear explanation of how pay was calculated. It seemed that his evidence was that £450 per week was the maximum net weekly pay for the claimant, whether he worked 45 hours or 65 hours. This is in itself a remarkable arrangement. Drivers, particularly those in casual employment, are not in control of their working hours. They may have no real choice over the routes given to them, and are subject to ferry timetables, traffic delays and delays in loading and unloading. A pay system which does not reimburse overtime when a driver works extra hours but deducts pay when fewer hours are worked seems to be a particularly one-sided arrangement. However the basis on which deductions were made from the maximum weekly wage remained shrouded in mystery.

(26) At a late stage in his evidence, Mr Darryl Morgan decided that questions in relation to driver’s wages should be directed elsewhere. Since he was, at that stage, the respondent’s only witness, in response to a claim which clearly and specifically raised matters in relation to the calculation of the claimant’s wages, that was problematic. His explanation that he had thought “pretty much the only issue was holiday pay” does not appear credible to this tribunal.

(27) He stated that Mr Michael McLernon, the managing director, was the correct person to answer these questions. Mr McLernon was contacted by Mr Killian Morgan over the lunch break and Mr Killian Morgan then informed the tribunal that Mr McLernon was unable to assist the tribunal. The explanation from Mr McLernon, related by Mr Killian Morgan, after a warning from the tribunal about the value of hearsay evidence, was that there was a daily rate of £135. This was not a daily rate in respect of 24 hours. The tribunal was given no hint as to what alternative meaning could be given to a “day.” The maximum weekly wage was reached when 3.31 daily units were achieved. Work beyond that point was unpaid. When Mr Killian Morgan was asked by the tribunal to explain how the claimant’s driving and non driving hours translated into daily units, and how distance was a factor, he replied that this was a difficult calculation which was only made by a particular employee of the respondent. Sadly, that employee was not available to give evidence. So a pay system then, which could not be explained by two directors or by the managing director of the respondent company over the course of an entire day and which may well be understood by only one person who was not called to give evidence.

Claimant’s Evidence

(28) The claimant was unable to produce details of the hours that he had worked in each of the weeks during which he had been employed by the respondent. He had not kept records. He stated that while his driving hours were limited by the tachograph regulations, he would regularly have worked long non driving hours.

Decision

(29) The tribunal was provided with the wage slips for each of the weeks’ worked by the claimant. They did not disclose the number of hours worked in any week. Without that evidence, from either party, the tribunal is not in the position to determine whether the claimant’s hourly rate at any point fell below the national minimum wage. This part of the claim therefore fails.

(30) The second part of the claim in relation to unauthorised deductions related to two specific weeks which were represented in the pay slips for the 12 December 2008 and the 19 December 2008.

Claimant’s Evidence

(31) The claimant’s evidence was that he had worked the same hours in these two weeks and that his net pay for the week represented by the wage slip for the 12 December 2008 was £450.09. His net pay for the week represented by the pay slip for the 19 December 2008 was £400.51. He stated that he could not understand how his pay differed from one week to the other.

Respondent’s Evidence

(32) Mr Killian Morgan, cross examining the claimant, put it to him that all the drivers had taken a wage cut at that particular time and that this was the reason for the reduction in his wages in the 19 December 2008 payslip. The claimant’s response was that he was not aware of that. Mr Darryl Morgan, in his evidence, was asked by Mr Killian Morgan to explain the position in relation to the two weeks in December 2008. He stated that at that time the respondent had looked at its business in general and had imposed a wages cut across the board. This was for everyone. He described this in some detail indicating that all the drivers would have been spoken to by management, to explain the position. He himself had spoken to a number of drivers personally and the individual who was then working as the Hungarian interpreter would have spoken to the claimant. He confirmed that there was no written notification given to employees and no written record of any consent given by the employees to the wage cut. However he was clear that the claimant had agreed to a reduction in pay of £50. He stated that this was not an easy thing to do, but he had had to do it. This was the reason for the difference in pay between the two weeks.

(33) When the tribunal queried some of this evidence, he stated that the reduction had only been for drivers and not for all employees. The tribunal then asked him to look at the wage slip for the 24 October 2008 which was almost two months before this alleged pay cut which he had just put forward as the only explanation for the reduction in pay pointed out by the claimant. The calculation for that week was in all material respects identical to that for the week represented by the pay slip dated 19 December 2008. Mr Morgan was asked to explain how someone in October could possibly have anticipated the pay cut which he stated was imposed and took effect in respect of the week represented with the pay slip for the 19 December 2008. No explanation was forthcoming. He continued to assert a pay cut had been made and that was the reason for the difference in pay between the two weeks in December 2008.

Decision

(34) The tribunal concludes that the evidence given by Mr Darryl Morgan in this respect is patently untrue. The pay slip dated 19 December 2008 used the same unit amounts as that used for other weeks and there is absolutely no evidence in that pay slip of a pay cut. In addition, his clear and unequivocal evidence that there was a pay cut of £50 per week does not readily translate into a cut in net pay of £49.58. Furthermore there was no mention in the written response of any wage cut.

(35) The explanation put forward by the respondent for the difference in net wages in the two weeks in December does not stand up to scrutiny. The tribunal concluded that the explanation was concocted at the last minute, and with little thought, to respond to the claimant’s oral evidence about those two weeks. The claimant’s evidence that he had worked the same hours during those two weeks and worked a full week in each of those two weeks was entirely uncontradicted by the respondent. The tribunal therefore concludes that the claimant was underpaid in respect of the second week in the sum of £49.58 and awards that sum.

WRITTEN STATEMENT OF PARTICULARS OF EMPLOYMENT

(36) The respondent accepts that at no stage in the employment of the claimant did it attempt to provide written particulars of employment as required by Article 33 of the Employment Rights (Northern Ireland) Order 1996. However, even after a day of evidence, the tribunal is not in a position to determine all the particulars which ought to have been included in such a statement, for the purposes of Article 44 of the 1996 Order.

(37) The tribunal did consider the possibility of continuing the hearing on another day to allow for further evidence to be called in relation to this point and also in relation to the claim in respect of the minimum wage. However, the tribunal did not believe that the quality of evidence would necessarily improve on a second day and did not see any point in calling the claimant back from Scotland at considerable additional expense and inconvenience. The written statement would be of no practical benefit to the claimant at this stage and the potential loss in relation to the minimum wage claim, if further evidence was produced, would be minimal.

The tribunal has considered the guidance in Harvey A431-460 and concludes that attempting to determine all but the most basic particulars of employment in this case would be a pointless exercise in invention, charitable inference and wishful thinking. The tribunal therefore does not intend to determine those particulars.

(38) Under Article 27 of the Employment (Northern Ireland) Order 2003, the tribunal has power to impose a financial penalty in certain circumstances. Firstly, the proceedings brought by the claimant must fall within the jurisdictions listed in Schedule 4 to the 2003 Order. That Schedule includes claims in respect of unauthorised deduction from wages, breach of contract, and claims under the Working Time Regulations. That requirement is therefore satisfied in the present case.

(39) Article 27(3) of the 2003 Order provides;

“(3) If in the case of proceedings to which this Article applies-

(a) The Industrial Tribunal makes an award to the employee in respect of the claim to which the proceedings relate and

(b) When the proceedings were begun, the employer was in breach of his duty to the employee under Article 33 (1) or 36 (1) of the Employment Rights Order,

the Tribunal shall, subject to paragraph (5), increase the award by the minimum amount and may if it considers just and equitable in all the circumstances increase the award by the higher amount instead.

(40) The minimum amount referred to in the 2003 Order is an amount equal to two weeks pay and the higher amount is an amount equal to four weeks pay. The amount of a weeks pay is to be calculated in accordance with Chapter IV of Part I of the Employment Rights Order and is subject to the cap imposed in Article 23 of that Order which in respect of this period was £330 per week.

(41) The tribunal finds that the conduct of the respondent in this respect was particularly blameworthy because the claimant was unable to speak English and there was therefore a heavy onus on the respondent to ensure that the claimant understood the terms and conditions on which he was being employed. The respondent failed to do so. It is entirely unsatisfactory for an employer to treat migrant workers in this fashion. The respondent had, at its disposal, the services of a Hungarian interpreter, and could easily have made the terms and conditions of service available to the claimant in a manner which could have been readily understood. However, the respondent didn’t even attempt to provide a written statement of employment particulars in English. The tribunal therefore concludes that it would be just and equitable in all the circumstances to increase the award by the higher amount i.e. by an amount equal to the four weeks pay, subject to the maximum amount of £330 per week. There are no exceptional circumstances which, for the purposes of Article 27(5), would make such an award unjust or inequitable. The tribunal therefore awards an additional award of £1320 in this respect.

NOTICE PAY

Claimant’s Evidence

(42) The claimant’s evidence was that he had gone to Scotland over Christmas in 2008 and while there, had faxed back to the respondent time sheets that indicated that he was taking annual leave for a period of days. He spoke to Mr Devics, the respondent’s interpreter, on the telephone and asked Mr Devics if the respondent was expecting him back. The answer was that the respondent was not expecting him back. He then sought and secured, after a period of some weeks, other employment.

Respondent’s Evidence

(43) Mr Devics stated that the telephone conversation took place in early January. He was quite clear that he had told the claimant that there was no work available for him at the moment as there were people standing around the yard with nothing to do. He was equally clear that he had not said anything to the claimant which would have led the claimant to believe that his employment had been terminated.

Decision

(44) Mr Devics impressed this tribunal as a truthful witness with a clear memory of the relevant facts. On the balance of probabilities, the tribunal therefore concludes the telephone conversation was as described by Mr Devics and that the claimant had not been dismissed in the course of that telephone call. He may well have misunderstood the implications of what was being said but the tribunal concludes that there was no dismissal and therefore the respondent was under no obligation to give notice or to provide pay in lieu of notice. The claim therefore fails in this respect.

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

Chairman:

Date and place of hearing: 15 September 2009, Belfast.

Date decision recorded in register and issued to parties: