Industrial Tribunals Northern Ireland Decisions

THE INDUSTRIAL TRIBUNALS

 

CASE REF: 729/11

 

CLAIMANT: Patrick McKenna

 

RESPONDENTS: 1.  Michael McNeill

2.  MDC Tiles & Bathrooms Ltd

 

 

DECISION

 

The Decision of the Industrial Tribunal is:-

 

(i) that the claimant was employed by MDC Tiles & Bathrooms Ltd and accordingly the first named respondent is dismissed from the proceedings;

 

(ii) the claimant’s employment was terminated without notice by the second named respondent due to a downturn of work and accordingly the claimant is entitled to monies in respect of redundancy pay.  The claimant is also entitled to the sum of £309.96 in respect of holiday leave accrued but not availed of in his last year of employment.  The counter claim of the second named respondent is dismissed.  The second named respondent is ordered to pay to the claimant the sum of £782.46.

 

 

Constitution of the Tribunal

 

Chairman (sitting alone): Ms M Sheehan

 

 

Appearances:

 

The claimant appeared on his own behalf.  

 

Mr Michael McNeill, as director in MDC Tiles & Bathrooms Ltd appeared on behalf of the respondents.

 

 

The Issues

 

1. The main issues for the tribunal to decide were: (a) who was the claimant’s employer at the effective date of termination of employment; (b) what was the effective date of termination of employment; (c) was the claimant eligible for redundancy payment; (d) the amount of any redundancy payment due; and (e) was the claimant entitled to monies in lieu of holiday leave accrued and outstanding on the date of termination.  The tribunal also had to determine the respondent’s claim for £367.69 in respect of monies allegedly owed to the company by the claimant at the termination of his employment.  The claimant had made no claim for unfair dismissal  –  despite the lack of adherence by the second named respondent to the statutory dismissal procedures.  The claimant confirmed at the outset of the hearing that he did not wish to make any application to the tribunal to consider same.

The Facts

 

2. The tribunal considered the claim form and the response filed by the second named respondent. There was also oral evidence given by the claimant and Mr Michael McNeill, the first named respondent and a director of the second named respondent.  A bundle of documents was produced at the hearing by the claimant and the respondents.  The documents ranged from an unsigned and undated statement of main terms and conditions and various pieces of correspondence between the parties including the notice of intention from the claimant to the second named respondent to claim a redundancy payment.  The response submitted from the second named respondent dated 11 April 2011 signed by Michael McNeill on behalf of MDC Tiles & Bathrooms Ltd with the Office of the Industrial Tribunals and Fair Employment Tribunal accepted a redundancy payment was still outstanding in the sum of £315.00 and holiday pay of £309.96.  The respondent stated at paragraph 5.2 of the response they were prepared to pay Mr McKenna a total sum of £624.96.  On the morning of the hearing it was indicated that no monies had been paid by the second named respondent to the claimant.  On the basis of the evidence received we make the following findings of fact.

 

3. The claimant when employed initially on 1 August 2007 at MDC Tiles & Bathrooms Ltd, the second named respondent, was aged 54 years of age.  The first named respondent was never the employer of the claimant but was in effect the managing director of the second named respondent.  The claimant was employed as a store man/delivery man.  The claimant was employed at an hourly rate of pay and it became clear in evidence that in the last year of his employment he was being paid at an hourly gross rate of £7.00 per hour.  The claimant’s normal contractual hours were 37.5 hours per week but due to a downturn of work in the last months of 2009 the claimant at times was working variable hours.  The response filed by the second named respondent stated that “on average for the complete calendar year he worked 18.4 hours per week  –  equating to £114.80 per week, £22.96 per day”.

 

4. The copy of the written statement of terms and conditions of employment provided at hearing by the second named respondent was undated, unsigned and had no indication upon it as to the date of its creation.  The holiday entitlement specified in the document asserts that the claimant was entitled to 24 days annual leave.  Clause 8 of the document addresses termination of employment – and states two periods of notice  –  four weeks (salaried staff) or one week (other staff) will be given by the second named respondent.  The claimant disputes that he was ever given a written statement of main terms and conditions of employment.

 

5. The claimant was given no notice in writing that his employment was being terminated.  At one stage in the claimant’s employment with the second named respondent there were 9 to 10 employees.  A number of those employees had their employment with the second named respondent terminated before December 2010.  A conversation took place at the second named respondent’s Christmas dinner when the claimant was told by the first named respondent that there was “not much work on”.  The claimant was advised that they would “give him a ring if work available”.  As a result of this conversation the claimant signed on for Job seeker’s allowance from early January 2010.  He registered as available for “part time” employment.  The claimant received £60.00 a week.

 

6. The claimant heard nothing from the second named respondent post 1 January 2010.  No written communication was issued to him confirming the situation.  While the respondent claimed they had terminated the employment of the claimant from 1 January 2010, they produced no evidence at hearing that supported this contention.  No P45 was available to be viewed.  The first named respondent accepted that the P60, for the financial year 09/10, produced to the tribunal contained no amount of money paid in respect of redundancy owing to the claimant.

 

7. Throughout 2010 the claimant was awaiting full payment from the second named respondent of monies that were accepted as due and owing in respect of back pay accrued which had not been discharged prior to January 2010.  The claimant received the first part payment in respect of these outstanding wages in late October 2010.  This led to correspondence passing between the parties from the 3 November 2010 until February 2011.  The claimant wrote in his first letter in November that he now believed he had been made redundant in December 2009 and sought a payment in respect of redundancy.  In the respondent’s response dated 10 November 2010 they referred to further payments of back pay to be made in November and December 2010.  The respondent advised the claimant that “there is no payment due for holidays not taken.  The time limit for making a claim for holiday pay is three months from end of employment”.  The respondent in the same letter referred to the claimant being made redundant on the 1 January 2010 and that the “time limit for claiming redundancy payment is six months from end of employment”.

 

8. The claimant wrote to the second named respondent on 16 November 2010, querying why no P45 had been sent to him.  Further he advised that he regarded the end of his employment occurring on 27 August 2010 when the Social Security Agency put him “on to JSA full time”.  JSA referred to Job Seekers allowance.  No response was received to this letter and the claimant wrote again on 5 January 2011.  The response received from the second named respondent dated 20 January 2011 referred to a P45 issuing but did not state the date it issued.  No copy was enclosed for the claimant’s attention.  The letter from the second named respondent also enclosed an alleged bill for damages to the property of a customer who had withheld monies from the second named respondent.

 

9. The claimant responded by letter dated 2 February 2011 claiming redundancy in the sum of £315 and 34 days holiday at £52.50 a day.  The alleged damage to the customer’s wall was stated to be “an entirely separate issue which can be discussed at a later date”.

 

10. The second named respondent produced at hearing a document on their headed notepaper referring to “Mr Mark Sweeney - outstanding bill of damages of £367.69 in vat caused to the above property Pat McKenna”.  However the first named respondent agreed in evidence that he had no knowledge as to whether the alleged damage to the property had been repaired or the cost of the aforesaid repair.  It was conceded at hearing the amount detailed in the document produced at hearing was in effect the debt owed to the second named respondent by Mr Sweeney who had withheld that sum of money from the second named respondent.  It was accepted by the first named respondent that the claimant had never agreed that he owed this money to the second named respondent.

 

11. The second named respondent did not have at the hearing any salary details for the claimant other than the P60 for the year ending 5 April 2010.  The claimant had one pay advice – dated 9 October 2009 which showed taxable pay to date as £3,150, the weekly net pay for that week gross and net of £105.00.  It also recorded that the holidays taken as 0 and holidays left as 34.

 

12. The claimant submitted his claim to the Office of Industrial Tribunals and Fair Employment Tribunal on 8 March 2011.  In the claim form the claimant disclosed that he had claimed job seekers “part time” from January 2010.  The claimant had literacy issues and relied heavily on a representative of the Citizens Advice Bureau to complete the correspondence and the claim form on his behalf.

 

 

The Relevant Law and Decision

 

13. An employee has a right to payment of a redundancy payment under Article 170 of the 1996 Order if he is dismissed by the employer by reason of redundancy.  Under Article 174 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”.

 

14. The legislation in relation to the right to a redundancy payment is to be found in Articles 170 to 181 of the Employment Rights (Northern Ireland) Order 1996 (“the 1996 Order”).  Article 180 defines the “relevant date” for the provisions of the 1996 Order relating to redundancy payments and in relation to an employee whose contract of employment is terminated without notice, as in this case, means the “date on which the termination takes effect”.

 

15. Article 197 of the 1996 Order sets out how the amount of the redundancy payment shall be calculated.

 

16. Article 199 of the 1996 Order states

 

(1) “An employee does not have any right to a redundancy payment unless before the period of six months beginning with the relevant date –

 

(a) the payment has been agreed and paid,

(b) the employee has made a claim for the payment by notice in writing given to the employer,

 

(c) a question as to the employee’s right to, or the amount of, the payment has been referred to an industrial tribunal, or

 

(d) a complaint relating to his dismissal has been presented by the employee under Article 145.

 

(2) An employee is not deprived of his right to a redundancy payment by paragraph (1) if, during the period of six months immediately following the period mention in that paragraph the employee –

 

(a) makes a claim for the payment by notice in writing given to the employer,

 

(b) refers to an industrial tribunal a question as to his right to, or the amount of, the payment, or

 

(c) presents a complaint relating to his dismissal under Article 145,

 

and it appears to the tribunal to be just and equitable that the employee should receive a redundancy payment.

 

(3) In determining under paragraph (2) whether it is just and equitable that an employee should receive a redundancy payment an industrial tribunal shall have regard to –

 

(a) the reason shown by the employee for his failure to take any such step as is referred to in paragraph (2) within the period mentioned in paragraph (1), and

 

(b) all the other relevant circumstances”.

 

17. Article 198 (2) of the 1996 Order provides that in a reference to the industrial tribunal as to the right of an employee to a redundancy payment or the amount of same “an employee who has been dismissed by his employer shall, unless the contrary is proved, be presumed to have been so dismissed by reason of redundancy”.

 

18. The relevant legislation, where there is no contractual documentation in relation to holiday entitlement, is found in the Working Time Regulations Northern Ireland 1998 as amended.  The Working Time Regulations (Northern Ireland) 1998 as amended provide under Regulation 13A for a worker to have minimum leave in a year of 5.6 weeks from 1 April 2008, and for the purposes of the regulations that the worker’s leave year begins, where there are no applicable provisions of a relevant agreement, if the worker’s employment began after 23 November 1998, on the date on which that employment began and each subsequent anniversary of that date.

 

19. Under Regulation 14(2) of the 1998 Regulations where the proportion of leave taken by the worker is less than the proportion of the leave year which has expired, his employer shall make him a payment in lieu of leave in accordance with paragraph (3) therein which sets out a formula to be used in the absence of provision in a relevant agreement.  Where holiday entitlement has accrued prior to dismissal an employee is entitled to pay in lieu of the holidays where they have been unable to avail of the holiday prior to the last date of their employment.  The payment is calculated in accordance with Regulation 30.

 

20. Under Article 118B of the 1996 Order an employer is required to give minimum notice to terminate the contract of employment of a person of not less than one weeks’ notice for each year of continuous employment if his period of continuous employment is two years or more but less than 12 years.  Article 118 (3) provides that this specific article does not prevent either party accepting a payment in lieu of notice.  Article 121 (4) ensures that any payment made by an employer to an employee in respect of holiday pay amongst other specific payments “shall be taken into account” as if it were remuneration paid in respect of a notice period.

 

21. As the respondent gave no notice of termination, the date of termination is governed by Article 180 (2) (b) of the Employment Rights (Northern Ireland) Order 1996 and is the date the “termination takes effect”.  The date on which an employee receives his P45 from his employers has nothing whatsoever to do with the date on which employment terminates - London Borough of Newham  v  Ward [1985] IRLR 509.  The effective date of termination of a contract of employment cannot be earlier that the date on which an employee receives knowledge that he is being dismissed  –  McMaster  v  Manchester Airport plc [1998] IRLR 112.  Where dismissal is communicated to an employee in a letter the contract of employment does not terminate until the employee has actually read the letter or had a reasonable opportunity to read it  –  Brown  v Southall & Knight [1980] IRLR 130.

 

22. Under the Industrial Tribunal Extension of Jurisdiction Order (Northern Ireland) 1994 an employee may bring a claim for damages for breach of his contract of employment or for a sum due under that contract or any other contract connected with his employment before an Industrial Tribunal if the claim arises out of or is outstanding on termination of his employment.

 

 

Applying the Law to Facts Found

 

23. The tribunal is satisfied that the essential issue in this case is the date the claimant’s employment was terminated.  It is clear from all the evidence that the first named respondent was never the employer of the claimant but was the managing director of the second named respondent who did employ the claimant.  The tribunal heard conflicting evidence as to whether the claimant received a written statement of terms and conditions of employment.  The copy of the document provided at hearing by the second named respondent was undated, unsigned and had no indication upon it as to the date of its creation.  The holiday entitlement specified in the document did not comply with the current legal obligations imposed by legislation on an employer.  The document produced at hearing asserts that the claimant was entitled to 24 days annual leave  – while the legal obligation since April 2009 requires annual paid leave to be 28 days.  Clause 8 of the document addresses termination of employment  –  and states two periods of notice  –  four weeks (salaried staff) or one week (other staff) will be given by the second named respondent.  Again this clause did not comply with the minimum legal requirements contained in the Employment Rights (Northern Ireland) Order 1996 (hereinafter referred to as the 1996 Order).  Having heard evidence from both the claimant and the first named respondent the tribunal was not satisfied on the balance of probabilities that the claimant was given a written statement of main terms and conditions of employment at any time during the course of his employment.

24. The tribunal noted there had been a downturn in business throughout the latter part of 2009 in particular.  The claimant like other employees had been on reduced hours. Accordingly the tribunal was satisfied that there was a redundancy situation in the business of the second named respondent by late 2009 and throughout 2010.  However the second named respondent had ignored their legal obligation under Article 200 of the 1996 Order to give a written statement in writing to the claimant indicating how the redundancy payment due to him was calculated.  This is a criminal offence when an employer fails to do so without reasonable excuse.  No excuse was proffered at hearing for the respondent’s failure.  The tribunal noted there was no sum of money included in the P60 for the financial year ending on the 5 April 2010 representing the monies due as redundancy to the claimant.  The wording used by the respondents at the Christmas dinner was not unambiguous and could well have been interpreted as a “lay off” from work.  The fact the respondents did not provide a copy of the alleged P45 issued to the claimant either in their response to correspondence received from the claimant in November 2010 or at hearing was relevant.  The respondents explained its absence that they had mislaid their copy and the Inland Revenue had advised they could not issue “a duplicate”.  The tribunal could not understand however why no request had been made to the Inland Revenue for a photocopy of the document if same had been issued as alleged.  In all the circumstances the tribunal concluded that on the balance of probabilities no P45 was issued to the claimant as alleged by the respondents and therefore the date of effective termination of the claimant’s employment fell to be determined by the tribunal.

 

25. The effective date of termination of a contract of employment cannot be earlier than the date on which an employee receives knowledge that he is being dismissed  –  McMaster  v  Manchester Airport plc [1998] IRLR 112.  The tribunal thought it relevant that the claimant had made a number of phone calls with the respondent regarding outstanding wages and at no time was the matter of his unpaid redundancy payment referred to  –  as evidenced by the lack of any reference in the compliment slip sent late October 2010.  In all the circumstances of this case and taking into account the case law detailed above the tribunal determined that the effective date of termination of the claimant’s employment occurred when the claimant concluded that the respondents had no intention of offering him any further work and registered himself as available for full time employment with the Social Services Agency on 27 August 2010.  The tribunal determined that the date of effective termination for the claimant’s employment is the 27 August 2010.

 

26. The claimant submitted a claim for payment of the redundancy payment to his employer, the second named respondent on the 3 November 2010, thereby satisfying the requirements of Article 199 (1) (b) of the 1996 Order.  Alternatively should the tribunal be wrong in their conclusion that the termination of the claimant’s employment took effect on the 27 August 2010 and instead took effect on the 1 January 2010 as alleged by the respondents, the tribunal has determined the claimant is not deprived of his right to a redundancy payment as the claimant made a claim for payment in accordance with the time specified in Article 199 (2) (a) of the 1996 Order.  It also appears to the tribunal that it is just and equitable that the claimant should receive a redundancy payment as it is manifestly clear to the tribunal the reasons for the claimant’s failure to comply with the legal requirements in Article 199 (1) of the 1996 Order is mainly due to the actions of the respondents and their obfuscation and failure to comply with their legal obligations.  In those circumstances it would be inequitable to allow them to profit from same.

27. The claimant produced at hearing a pay slip which indicated that he had taken no holidays in that year  –  and had 34 days holidays due and owing.  However as the tribunal has concluded that there was no contractual documentation provided to the claimant and no verbal terms or discussions regarding holiday entitlement the matter of the claimant’s claim for outstanding holiday pay on the termination of his employment fell to be determined in accordance with the Working Time Regulations (Northern Ireland) 1998 as amended.  It is clear that the entitlement increased to 28 days from 1 April 2009 and it accrues for those working part time on a pro rata basis.  There can be no carrying over of annual leave under these regulations.  The tribunal noted that the claimant asserted he had a normal working week of 37.5 hours per week in his claim form.  At hearing it was not in dispute that in the latter part of 2009 the claimant’s working hours had been reduced due to the downturn in business.  The second named respondent in their response indicated that “on average for the complete year he worked 16.4 hours per week and was paid £7 per hour = £114.80 per week - £22.96 per day.  His leave entitlement for this year was 13.5 days x £22.96 = £309.96 due for 2009 -10 year”.  The tribunal can see no reason not to accept this calculation as the claimant was unable at hearing to dispute same.  Accordingly the tribunal finds on the balance of probabilities that the claimant is owed the sum of £309.96 in respect of holiday leave accrued but not availed of at the time of the termination of his employment.

 

28. The claimant indicated in his claim form that he had been dismissed without notice and no payment had been tendered in respect of same.  That was not disputed in the response filed by the respondents.  The claimant was entitled under the 1996 Order to notice in respect of the termination of his employment or could with agreement of his employer accept pay in lieu of same.  The claimant was employed with the second named respondent from the 1 August 2007 and his employment terminated with effect on the 27 August 2010.  This gave the claimant 3 complete years of service.  However if the respondent had given notice as they should have done at the Christmas dinner in 2009 the claimant would have been entitled to two weeks notice or a payment in lieu of same.  In the circumstances however in this case as there was no contractual agreement about payment in lieu of notice the tribunal has determined that the period in which the tribunal has awarded pay in respect of holiday leave accrued prior to termination of employment subsumes any period of notice to which the claimant was entitled.

 

29. The respondent had included in their response form a counter claim under Article 3 of the Industrial Tribunal Extension of Jurisdiction Order (Northern Ireland) 1994.  The counter claim was for an amount of £367.69 owing to the second named respondent allegedly by the claimant as a result of an alleged breach of contract by the employee.  Having heard the evidence of both the claimant and the first named respondent on this matter the tribunal has concluded that the claimant is in no way responsible in law for the sum of £367.69 as that sum represents a debt owed to the second named respondent on foot of an invoice tendered in respect of works done by the second named respondent.  It is also clear to the tribunal that the alleged breach of contract related to the manner in which he had performed his duties at the premises of the client.  As the respondents had no written contractual terms with the claimant providing them with an entitlement to deduct such monies from pay owed to the employee, the claim fails at this stage.  In fact the respondents did not know if any repair had actually been carried out by the client.  Had there been a written contractual term imposing a duty of care on the employee and granting a right to the employer to recover such damages incurred if that duty was breached, it is unlikely in the circumstances presented at this hearing where the value of any repairs was unknown at the date of hearing that the claim would succeed.  The claimant cannot be held responsible in law for a debt which the second named respondent chose not to pursue against their client.  In those circumstances the tribunal determined that the counterclaim by the second named respondent should be dismissed.

 

 

Award

 

30. The tribunal orders that the first named respondent be dismissed from these proceedings as he was not the employer of the claimant at any time during the claimant’s employment in particular at the relevant date of termination of that employment.

 

31. The tribunal considered Articles 17 to 20 and Articles 197 of the Employment Rights (Northern Ireland) Order 1996.  There was no break in the claimant’s continuity of employment with the second named respondent. In light of the tribunal’s finding as to the effective date of termination of the claimant’s employment, the claimant has three complete years of service, commencing when he was aged 54 years.  This entitles the claimant to one and a half week’s gross pay for each year of service.  The claimant is entitled to a redundancy payment, subject to the relevant statutory maximum weekly wage.  As the claimant had been on variable rates of pay due to the variable hours he worked the claimant is entitled to a payment calculated in respect of the last 12 weeks pay in accordance with Article 18 to 25 of the 1996 Order.  The documentation presented to the tribunal was limited in nature but included the figures in the respondent’s response, the P60 for the financial year ending 5 April 2010 as well as one pay slip in October 2009.  The respondent indicated in their response that the average working week for the claimant was a payment of £114.80.  The payment on the pay slip for 9 October 2009 was £105.00.  The P60 indicated that no tax had been paid by the claimant in that tax year and the total pay received was £3,874.50.  It was clear to the tribunal this figure reflected pay received from the 6 April 2009 until late December 2009.  The tribunal noted in their response the second named respondent indicated “a sum of £315.00 for redundancy pay” would be paid. That clearly is not based on the sum of £114.80 reflecting a “week’s wages”.  By December 2009 the claimant would have been entitled to a sum reflecting 3 weeks wages calculated in accordance with Article 18 to 25 of the 1996 Order.  The figure included in the respondent’s response reflects a week’s wages as £105.00.  The tribunal note that the sum of £3874.50 divided by 36 weeks gives a weekly wage of £107.63.  The same total sum divided by 37 weeks gives a weekly wage of £104.72.  Where no remuneration has been paid in the twelve week period prior to that date on which notice would have been given as required by contract  –  Article 22 (5) and (6) of the 1996 Order  -  then account is to be taken of remuneration in earlier weeks so as to bring up to twelve the number of weeks of which account is taken.  The respondents did not bring to the hearing the relevant documents which could have established the exact payments made by the second named respondent in respect of the last twelve weeks the claimant had been paid by them for his work.  The tribunal considered that in respect of average pay the respondents’ figure was not out of proportion with the amount stated for the 37 weeks or so in that taxable year from 6 April 2009 to the end of December 2009 and the one pay slip presented at hearing.  Accordingly the tribunal determined that the claimant’s wages for the purposes of Article 197 of the 1996 Order was £105.00.  Accordingly the claimant is entitled to an amount representing four and a half weeks gross pay which was £105.00 gross amounting to £472.50.

32. The second named respondent is also ordered to pay the sum of £309.96 in respect of the sum due under the Working Time Regulations (Northern Ireland) 1998 as amended.  Accordingly the total sum the second named respondent is ordered to pay to the claimant amounts to £782.46.

 

33. The Employment Protection (Recoupment of Job Seeker’s Allowance and Income Support) Regulations (Northern Ireland) 1996 do not apply to this decision.

 

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

 

 

 

 

 

 

 

Chairman:

 

 

Date and place of hearing: 24 May 2011, Belfast.

 

 

Date decision recorded in the register and issued to the parties: