Industrial Tribunals Northern Ireland Decisions

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Cite as: [2010] NIIT 584_10IT

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THE INDUSTRIAL TRIBUNALS

CASE REF: 584/10

CLAIMANT: Steven McCurdy

RESPONDENT: Uel Hogg t/a G A Hogg and Sons

DECISION

The unanimous decision of the tribunal is that the claimant was unfairly dismissed by the respondent and the tribunal orders the respondent to pay to the claimant compensation in the sum of £778.00.

Constitution of Tribunal:

Chairman: Mr J V Leonard

Members: Mr E Grant

Mrs M Gregg

Appearances:

The claimant was represented by Mr K White, Barrister-at-Law, instructed by Ferguson & Co, Solicitors.

Mr Uel Hogg, the respondent, appeared and represented himself, assisted by Ms Thomasina O’Kane.

REASONS

1. The tribunal heard oral evidence from Mr Uel Hogg, the proprietor of the respondent business and from the claimant, Mr McCurdy, and also from Ms Diane Stinson. The tribunal also received into evidence a bundle of documents and also some individual documents consisting of bank statements, child tax credit documentation, copy invoicing, copy correspondence and copy accounts in respect of the respondent business. The tribunal also had the benefit of oral submissions from or on behalf of the respective parties.

THE ISSUE

2. The claimant made a claim to the tribunal by claim dated 13 March 2010, received by the Office of Tribunals on 23 March 2010, in which the claimant claimed unfair dismissal. By response thereto dated 9 April 2010, the respondent confirmed that the claimant had been an employee and had been dismissed, it being contended that the claimant had been fairly dismissed on grounds of redundancy. Accordingly, the tribunal had to determine the claimant’s claim and, if that was
to be determined well-founded, the matter of appropriate remedy. At the conclusion of the hearing the tribunal also had to determine an application on the part of the respondent for a preparation-time order.

THE TRIBUNAL’S FINDINGS OF FACT

3. In consequence of the oral and documentary evidence before it, the tribunal on the balance of probabilities determined the following material facts:-

3.1 The firm of G A Hogg and Sons is a long-established family business having been in existence for some 40 years and being a car dealership based in Kilrea, County Londonderry. Mr Uel Hogg is now the sole proprietor of the business and thus the proper respondent in this case is “Mr Uel Hogg t/a G A Hogg and Son”, and the tribunal determines accordingly.

3.2 The claimant commenced employment with the respondent upon some (undetermined) date in February 2007 in the capacity of a car mechanic. There was no written statement of terms and conditions of employment ever provided. The oral agreement reached at the time of engagement was that the claimant would work for five days each week and that he would receive a gross weekly wage of £330.00 and a nett wage after deductions of £266.95.

3.3 The tribunal heard much evidence concerning the precise nature of the respondent’s business and of the work conducted by that business. In short, the business principally concerned the purchase (often at auction in England) of used motor vehicles and the preparation of these vehicles for resale in the retail motor trade. Part of that business involved servicing and mechanical repairs and also repairing damage to bodywork and generally rendering the vehicles in a proper state of preparation and finish for retail sale. The respondent Mr Hogg informed the tribunal that he tended to aim his vehicle selection towards the “upper end” of the car market; for that reason the state of preparation and presentation of the vehicles was of considerable importance and commercial significance. Goodwill and good customer relations maintenance was also an important factor in this long-established business.

3.4 It was not in contention that there was a general downturn in the motor trade and in the volume of business conducted by motor traders in the years 2008 and 2009. This had an adverse effect on the respondent’s trading figures. This fact was indeed borne out by the accounts details submitted in evidence, although the tribunal did note particular submissions on the part of the claimant’s representative regarding the accounts and stock levels represented therein, which will be mentioned further below. In any event, the respondent took cognisance of the adverse trading figures and looked at how the business could be better conducted in an endeavour to retain the level of profit that had been previously maintained.

3.5 In terms of job function and tasks, it was explained to the tribunal, and the tribunal accepts as a matter of fact, that the job of carrying out motor bodywork repairs and paint spraying of vehicles was quite a distinct job function to that carried out by a motor mechanic. The tribunal accepts that the claimant did not have the necessary skills and experience to carry out the range of bodywork repairs and paint spraying of vehicles but, rather, that the claimant was a skilled and competent motor mechanic. It was somewhat in contention the degree to which the claimant assisted the person responsible for the bodywork repairs and paint spraying in the business. That person indeed was not an employee of the respondent but was a self-employed bodywork operative, named Liam Hardy. The tribunal accepts the respondent’s evidence that the claimant’s input into the bodywork functions was negligible and was confined to associated mechanical operations, for example attaching and detaching bumpers and spoilers to and from motor vehicles. Certainly the claimant did not have the necessary skills and qualifications to conduct the function, for example, of a panel-beater or bodywork operative. In July 2009 the respondent arranged to erect a shed at the work premises in order to provide a facility consisting of two attached rooms in which the bodywork could be conducted by Liam Hardy. One room was for bodywork preparation and the other room was for a paint spraying. The respondent’s intention was to endeavour to increase the amount of bodywork conducted on behalf of the business and thus to increase profits.

3.6 The claimant conducted work on his own behalf as a car mechanic in his free time at weekends and in the evenings. The respondent was fully aware of that and appears to have accepted that outside work with little difficulty. The business had two motor mechanics, one being the claimant and the other being an employee named Owen Steele, who at the material time had either just concluded or was just about to conclude the period of his apprenticeship with the respondent as a motor mechanic.

3.7 An issue of contention in the case was the reason underlying the claimant’s commencing working a two-day week, which the claimant did from the end of October 2009 and onwards. For his part, the claimant contended that he had been requested by the respondent to work a two-day week. Although he was annoyed, he stated that he acquiesced in that request. In contrast, the respondent stated that the claimant had himself requested to work a two-day week. This was so for the reason that the claimant was endeavouring to get his own business operational at this time and he required the time and accommodation to do that. Whatever the cause, the tribunal does not accept from the evidence that the change in employment status, by this alteration to working a two-day week, occurred, as it were, “under protest” on the claimant’s part. The evidence is that the oral contract was amended by mutual agreement and thereafter the claimant worked for the respondent for two days per week in place of the five days that had been the earlier arrangement. The wages were agreed to be adjusted accordingly pro-rata. That latter arrangement continued until the termination of employment, the weekly wage in regard to this being £132.00 gross and £130.33 nett each week paid to the claimant.

3.8 Because of the rather problematical financial state of the business, the respondent informally mentioned to the employees that there might have to be redundancies made. There was never anything committed to writing and there was certainly no formal warning or consultation process ever engaged in by the respondent. The respondent had in his own mind, it would seem, some manner of selection process. This appears to have included the selection criterion of length of service. The post selected as potentially redundant was that of car mechanic. The tribunal heard a detailed and convincing explanation from the respondent as to why the post of car mechanic had become potentially redundant.

3.9 Having selected the post, the respondent then had to determine whether or not to dismiss the mechanic, Owen Steele, who it appears had been with the business for some six years, or the claimant, whose period of employment was two years in duration. It is worthy of mention that the business also employed a General Manager, Kevin Wallace, who conducted the function of motor salesman and who deputised for Mr Hogg when the latter was absent from the business. The post occupied by Kevin Wallace was not in the reckoning for redundancy.

3.10 Although the respondent tended to downplay this in the course of evidence, it certainly appears to have been the case that there was some degree of dissatisfaction on the respondent’s part with the claimant’s general attitude to his work. Whilst never formally warned or taken to task about this, the respondent personally appears to have regarded the claimant as being unwilling to work to full capacity, especially so since he began to work the two-day week. There also was an issue raised in evidence regarding customer complaints apparently stemming from inadequate workmanship. The respondent however denied that he had taken the view that the claimant was solely and personally responsible for the subject matter of any of these complaints, as opposed to the responsibility being that of both mechanics jointly, the claimant and Owen Steele. Certainly there is no evidence that the respondent expressly singled out the claimant for personal criticism in that regard.

3.11 Prior to any redundancy being effected, on account of the slack working requirements, the respondent endeavoured to keep the employees busy by engaging them in any work which occurred, including ground work, tidying up the yard, and indeed spreading stones on a driveway. The tribunal also heard evidence about the respondent's endeavours to secure alternative employment for the claimant and part of that evidence was in contention. Having noted the full extent of the evidence in this regard, the tribunal finds that the respondent did engage in conversations with other motor dealers in an endeavour to find additional work for the claimant as a motor mechanic. In turn, these dealers contacted the claimant to discuss possible employment but the claimant did not follow up these offers, for whatever reason. For example, the proprietor of a business, Hardy Brothers Car Sales, was approached by the respondent in early December 2009 and indicated that his business had a potential position for a car mechanic. The claimant was advised of the opportunity but did not take up the possibility of employment. A similar situation prevailed in respect of a sister of Kevin Wallace who was connected with a motor sales company and who indicated the possibility of another post with a company for which she worked called Petersens.

3.12 The respondent made a decision to dismiss the claimant on account of what he regarded as being a redundancy situation. On 16 December 2009 the respondent spoke with the claimant and he gave the claimant two weeks’ verbal notice of termination of employment. The employment duly came to an end on 31 December 2009. There was in existence a written agreement permitting deduction of monies owed by the claimant to the respondent. The claimant’s final wages included a sum in respect of redundancy pay with monies owing deducted. The nett payment was £340.00. That was composed of two weeks’ redundancy pay at £330.00 per week less money owing to the respondent of £323.61, the resultant sum of £336.39, made up to a round £340.00, being paid to the claimant. Notwithstanding the lesser weekly wage being earned at that time, the respondent based the computation of redundancy pay upon the full wage that had been earned earlier in the employment, being £330.00 as opposed to £132.00 per week.

3.13 In the months both before and after the termination of employment, the claimant continued to conduct his own car servicing and repairs business. The tribunal inspected some documentation in regard to that including invoicing. It has to be said that some of the claimant’s evidence in respect of the income earned from the conduct of his own business was properly to be treated with circumspection. The tribunal found the claimant’s evidence in that regard to be unsatisfactory, lacking inherently in credibility and very probably incomplete in giving the full picture of any commercial activities engaged in. The total income computed from totalling the copy invoices produced in evidence by the claimant to the tribunal amounted to £3,052.00. However, that invoicing only covered the period from 1 May 2010 to 7 July 2010. The dismissal had been on 31 December 2009 and the last date of tribunal hearing was 3 August 2010. The claimant did not keep proper written-up books of account (or if he did these were not produced to the tribunal in evidence) and the claimant did not give any evidence of the existence of any such business records when questioned about this by the tribunal or account in evidence for any trading outside the foregoing period from 1 May to 7 July 2010. If one examines the earnings in that period, amounting to £3,052.00, in the absence of any credible explanation as to the fact of no trading possibly existing before and since the period in question, there is certainly an issue as to potential earnings throughout the full period from the date of termination until the date of the hearing and beyond, in respect of the claimant’s self-employment. Accordingly, the tribunal experienced considerable difficulty properly in endeavouring to assess any actual loss sustained by the claimant contended to have been flowing from the dismissal when, set against any possible loss, one considers any corresponding income earned by the claimant throughout the appropriate period.

3.14 If the claimant had kept proper written-up books of account and been in a position to produce to the tribunal clear and comprehensive records of any income and expenditure earned and incurred from his own business in self-employment, both before and after the termination of employment, the tribunal’s task would have been relatively simple. It is noted that the claimant’s oral evidence to the tribunal was that he worked approximately 16 hours each week in conducting his own business. It is remarkable that there is no evidence of income (other than the foregoing) in respect of this level of work from the claimant’s own figures contained in the documentation produced, regardless of any other period, and thus the tribunal does not accept that the claimant had been forthright and candid in respect of his actual income earned from self-employment. It has to be remembered that it is the claimant’s responsibility to prove loss and the tribunal in this case has experienced a significant evidential deficiency and inherent lack of credibility on the claimant’s part in that regard. After dismissal, the claimant did not apply for Jobseekers’ Allowance. He did give evidence that he had contacted a number of motor dealerships to seek employment but the claimant’s evidence is this regard was vague, uncorroborated by witness or documentary evidence, and generally unsatisfactory. The claimant appears to have concentrated upon self-employment in his own trade as a motor mechanic, which appears to have been the chosen manner of endeavouring to mitigate loss.

3.15 After dismissal of the claimant, the respondent did engage a new employee named “Tomas” (whose second named is unknown to the tribunal), who was a Polish National. Notwithstanding some dispute about the start date, the tribunal accepts the respondent's evidence that this employee started at the end of February 2010. This person was not a qualified mechanic but he had some experience in the motor industry in his native country. His function was to carry out a number of tasks including assisting Liam Hardy with bodywork tasks. The respondent's evidence, which the tribunal accepts as being credible, was that Tomas had arrived at the business in February 2010 looking for employment and that he had been given a start at work, based on the perception that Tomas was a willing person who could turn his hand to a number of different tasks. He was certainly not a skilled and experienced mechanic and his function was to assist the other employees in whatever tasks were appropriate, including bodywork.

3.16 The tribunal did not need to determine any other material findings of fact for the purpose of reaching its decision.

THE APPLICABLE LAW

4. In relation to redundancy, Article 170 of the Employment Rights (Northern Ireland) Order 1996 (“the 1996 Order”) provides that an employer shall pay a redundancy payment to any employee in the event that the employee is dismissed by the employer by reason of redundancy. Circumstances in which an employee who is dismissed shall be taken to be dismissed by reason of redundancy are set forth in Article 174 of the 1996 Order. This provides as follows: “For the purposes of this Order an employee who is dismissed shall be taken to be dismissed by reason 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 197 of the 1996 Order sets out how the amount of the redundancy payment should be calculated with reference to length of service and age of the employee.

5. In respect of the law of unfair dismissal the 1996 Order provides at Article 126 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 under the provisions of Article 130 (1) (a) to show the reason (or, if more than one, the principal reason) for the dismissal, and, under Article 130 (1) (b), that it is either a specified reason as set out in Article 130 (2) or some other substantial reason of a kind such as to justify the dismissal. The specified (potentially fair) reasons for dismissal that are set out in Article 130 (2) include redundancy. If a tribunal makes a finding of unfair dismissal, and an order for re-engagement or reinstatement is inapplicable, a tribunal may make an order for compensation, including both a basic award and a compensatory award. For the compensatory award under Article 157, the award is such amount as the tribunal considers just and equitable, having regard to the loss sustained by the complainant in consequence of a dismissal, insofar as that loss is attributable to action taken by the employer.

6. The Employment (Northern Ireland) Order 2003 ("the 2003 Order") includes provisions, respectively, under Article 17(1) to (4), in relation to non-completion of statutory procedure (the dismissal and disciplinary procedures) and adjustment of awards by industrial tribunals and, under Article 23, in relation to procedural fairness in unfair dismissal. If it appears to the industrial tribunal that the claim to which the proceedings relates concerns a matter to which one of the statutory procedures applies, the statutory procedure was not completed before the proceedings were begun, and the non-completion of the statutory procedure was wholly or mainly attributable to failure by the employer to comply with a requirement of the procedure, the tribunal shall normally increase any award which it makes to the employee by 10 per cent and may, if it considers it just and equitable in all the circumstances to do so, increase it by a further amount up to 50 per cent. In regard to procedural fairness, the 1996 Order (as amended by the 2003 Order) provides at Article 130A that an employee who is dismissed shall be regarded as unfairly dismissed if one of the procedures set out in Part I of Schedule 1 to the Employment (Northern Ireland) Order 2003 (the dismissal and disciplinary procedures) applies in relation to the dismissal, the procedure has not been completed, and the non-completion of the procedure is wholly or mainly attributable to failure by the employer to comply with its requirements. Schedule 1 to the 2003 Order sets out statutory procedures which must be followed in most circumstances.

THE TRIBUNAL’S DETERMINATION

7. In this case the tribunal has noted the submissions of, or made on behalf of, the respective parties. The tribunal is satisfied that there was potentially a redundancy situation arising from the significant downturn in the respondent’s business at the time of the dismissal of the claimant by the respondent. The tribunal does not accept the submission made on the part of the claimant’s representative that the problems besetting the business were solely attributable to poor financial management and the carrying of an overstock of motor vehicles. The tribunal accepts the respondent’s submission that there was a general redundancy situation meeting the requirements of the statutory provisions mentioned above (as clarified by the House of Lords in Murray and Anor v Foyle Meats Ltd 1999 ICR 827) in that work required to be performed by a skilled motor mechanic had diminished and that the business did not need two mechanics where one such was sufficient. The tribunal also accepts the respondent’s submission that the job of a bodywork operative and that of a motor mechanic are quite distinct functions. The tribunal rejects the submission that the bodywork function ought to have been included in the pool for potential redundancy and that the claimant could have been re-deployed to perform a bodywork function. Thus, the post of motor mechanic was properly to be the subject of a redundancy under these circumstances.

8. However, the method of selection and the warning and consultation process engaged in by the respondent was entirely deficient. The procedure adopted departs from the established principles emerging from a long line of case law authorities providing guidance as to the appropriate and fair procedure to be used in redundancy cases (see for example the cases of Williams & Ors v Compair Maxim Ltd [1982] ICR156 and Mugford v Midland Bank Plc 1997 [IRLR] 208). Furthermore, the procedures adopted to effect the dismissal entirely depart from the statutory procedures which are set forth in the 2003 Order and in the Employment (Northern Ireland) Order 2003 (Dispute Resolution) Regulations (Northern Ireland) 2004 (“the 2004 Regulations”) that were made under the 2003 order. Thus the tribunal is obliged to make a finding of unfair dismissal under Article 130A of the 1996 Order on these latter statutory grounds, even if the dismissal had not been found to be procedurally unfair (which it is by this tribunal) under the pre-2003 Order principles emerging from the cases mentioned above and other authorities. Therefore, procedurally, the dismissal was unfair upon both of these grounds.

9. As the claimant was thus unfairly dismissed by the respondent, turning then to the matter of appropriate compensation, reinstatement was not sought nor would it be practicable and thus monetary compensation only applies in the case. It is of note that the claimant was working a two-day week prior to the termination of employment. Whilst earlier a wage equivalent to five days had been earned, the contract had been amended by mutual agreement, with reduced working time and a consequent wage earned each week. That was so for some time prior to the termination of employment. The tribunal does not accept that this contractual amendment was made under duress nor in anything other than a consensual fashion. The tribunal is obliged to base any calculations on the wage figure prevailing at the time of the termination of employment as that constitutes evidence of the agreed contractual term prevailing at the time. In this regard the provisions of Articles 17 and 18 of the 1996 Order are applicable to the interpretation of what constitutes a week’s pay for the purposes of computation of any award of compensation. A week’s gross pay is therefore £132.00 and nett pay is £130.33 in this case. In respect of compensation for unfair dismissal, the claimant was employed by the respondent for two complete years at the effective date of termination of employment and he was aged 28 years. The respondent is in breach of the provisions of the 2003 Order and under Article 23 of the 2003 Order (Article 154 (1A) of the 1996 Order, as amended) the tribunal is entitled to award four weeks’ pay in regard to the basic award and the tribunal makes such an award in this case. In respect of the compensatory award, the tribunal as is mentioned above has experienced considerable evidential difficulties in attempting to assess the true and proper loss flowing from this dismissal. On top of that, it appears to the tribunal that, had proper procedures been followed, there was a very significant chance that the claimant would have been dismissed in any event. In view of these difficulties, the tribunal does not accept the claimant's representative's submission in respect of loss amounting to some 30 weeks from the effective date of termination. The proof of loss, in a credible way by the adduction of cogent and necessarily comprehensive evidence, is a matter for the claimant. In this respect the tribunal finds the claimant's evidence to be lacking in credibility, incomplete and generally unsatisfactory. The tribunal cannot ground any award of compensation by embarking upon an exercise of engaging in mere speculation as to any actual loss incurred.

10. The tribunal is tasked under Article 157 of the 1996 Order with making any award in such an amount as the tribunal considers just and equitable, having regard to the loss sustained by the complainant in consequence of a dismissal, insofar as that loss is attributable to action taken by the employer. Taking everything into account, the tribunal has noted that the claimant had engaged, and indeed continued to engage, in self-employment immediately upon and after the occurrence of the dismissal. The tribunal, upon grounds of justice and equity, declines to make any compensatory award in this case (save an award for loss of statutory rights). This is so for the reason that the tribunal is of the view that it would not be just or equitable to make a compensatory award under all of the circumstances of the case and for the reason that the tribunal has no idea as to the true extent of the loss, if there were indeed to be any loss, sustained by the claimant as a result of the dismissal. Article 158A of the 1996 Order provides that where an award of compensation for unfair dismissal falls to be increased under Article 17 of the 2003 Order (for non-completion of statutory procedures), the adjustment shall be in the amount awarded under Article152 (1)(b) of the 1996 Order, being the compensatory award, and therefore the adjustment does not apply to the basic award. Thus, no statutory uplift in compensation under the terms of the 2003 Order applies in this case as there is no compensatory award. The tribunal, considering the justice and equity of the matter, deems the award for loss of statutory rights to fall outside the foregoing. Under the circumstances, the tribunal does not give any credit for excess redundancy pay paid to the claimant, taking into account the weekly wage calculation.

11. The Award of Compensation

Basic Award

4 x £132.00 = £528.00

Compensation for loss of statutory rights

The tribunal awards £250.00

Total award of the tribunal (no statutory recoupment) = £778.00

12. Finally, in this case the respondent made an application for a preparation time order, which application can be made on foot of the tribunal’s Rules of Procedure contained in the Industrial Tribunals (Constitution and Rules of Procedure) Regulations (Northern Ireland) 2005. Rule 44 (3) of the said Rules provides that such an order may be made where the tribunal determines that the paying party (in this case the claimant) has in bringing the proceedings, or he or his representative has in conducting the proceedings, acted vexatiously, abusively, disruptively or otherwise unreasonably, or the bringing or conducting of the proceedings by the paying party has been misconceived. Taking account of all the circumstances of the case, the tribunal declines to make such an award for the reason that this has been a case fairly and properly brought by the claimant which has resulted in an appropriate award of compensation to the claimant for unfair dismissal and no conduct falls into the category above specified.

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

Chairman:

Date and place of hearing: 29 July 2010 and 3 August 2010, Belfast.

Date decision recorded in register and issued to parties: