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Industrial Tribunals Northern Ireland Decisions
You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> McMinn v Sheryl Dillon~ Leanne Loney an... [2010] NIIT 01182_10IT (24 March 2011)
URL: http://www.bailii.org/nie/cases/NIIT/2011/01182_10IT.html
Cite as: [2010] NIIT 1182_10IT, [2010] NIIT 01182_10IT
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THE INDUSTRIAL TRIBUNALS
CASE REF: 1182/10
1787/10
CLAIMANT: Shauna McMinn
RESPONDENTS: 1. Sheryl Dillon
2. Sheryl Dillon, Leanne Loney and Leanne Lyons
t/a Gloss Hair
DECISION
The unanimous decision of the tribunal is that the claimant’s claims of unfair dismissal and sex discrimination are dismissed. The claimant is entitled from the second respondent to a redundancy payment of £458.00, and compensation of £916.00 because of the failure to provide written particulars of her main terms and conditions.
Constitution of Tribunal:
Chairman: Mr Brian Greene
Members: Mrs Margaret Gregg
Mr Bill Irwin
Appearances:
The claimant was represented by Mr Michael O’Brien, of counsel, instructed by Gordon Bell and Sons Solicitors.
The respondents were represented by Mr Michael Ford, of counsel, instructed by Paul Ferris and Company Solicitors.
Sources of Evidence
1. The tribunal heard evidence from the claimant. For the respondents the tribunal heard from Leanne Loney, Leanne Lyons and Sheryl Dillon. The tribunal also received four bundles of agreed documents amounting to some 87 pages, one photograph and two written submissions amounting to 35 pages.
The Claim and Defence
2. The claimant claimed unfair dismissal, discrimination on the grounds of sex, failure to make a redundancy payment, unauthorised deduction of wages, breach of the Working Time Regulations, failure to pay statutory maternity pay, failure to pay holiday pay, failure to provide written terms and conditions of employment and failure to provide payslips. The respondents disputed the claimant’s claims in their entirety. The second respondent accepted the claimant was entitled to a redundancy payment but it had set that entitlement off against excessive holiday leave taken by the claimant.
The Issues
3. The following issues arise;-
(1) whether the claimant was unfairly dismissed;
(2) whether the claimant suffered discrimination on the grounds of her pregnancy;
(3) whether the second respondent failed to make a redundancy payment to the claimant;
(4) whether the claimant suffered an unauthorised deduction of wages;
(5) whether the claimant suffered a breach of the Working Time Regulations;
(6) whether the second respondent failed to pay to the claimant statutory maternity pay;
(7) whether the second respondent failed to pay to the claimant holiday pay to which she was entitled;
(8) whether the second respondent failed to provide to the claimant written terms and conditions of her employment; and whether the second respondent failed to provide payslips to the claimant;
(9) if any of the above claims are sustained what is the appropriate remedy.
Findings of Fact
4. (1) The claimant was born on 6 September 1986. She was employed by the second respondent from 17 March 2006 until 21 January 2010 at premises at 50 Newry Street, Banbridge as a full-time senior hair stylist. She worked 30 hours per week earning £229.00 per week gross and £200.50 per week nett.
(2) The second respondent is a partnership which formerly ran Gloss Hair salon. All three partners worked at the premises though none was an employee. Each partner had her own clients. After paying a contribution of £250-£300 per week they retained the balance of monies earned from their respective clients.
(3) The second respondent did not provide the claimant with written terms and conditions of her employment. Neither did it provide her with payslips. Shortly after she started work with the second respondent she ceased to receive payslips although payslips had been prepared but were not issued for safety reasons i.e. lest they be left lying around the business.
(4) The second respondent had five employees, the claimant, another senior hair stylist, Gemma Keary, two students and a receptionist.
(5) The claimant became pregnant in late August 2009. She informed the second respondent and arranged with the second respondent that she would work as close as possible to the due date and would take three to four months maternity leave thereafter. The baby was due on 29 April 2010.
(6) In November 2009 the parties discussed the financial difficulties of the business. They considered the business was not financially viable and they had to consider ceasing to trade.
(7) In early December 2009 the second respondent called a meeting of all employees. The partners discussed with the employees the financial difficulties facing the business. Discussions were had about the possibility of redundancies. The closure of the business was seen as inevitable and it was agreed the last day of trading would be 21 January 2010.
It is not clear that there were financial difficulties as the accounts produced did not record the income of the three partners who worked in the business but not as employees. It seems that their income may have brought the business into profit.
For family reasons Gemma Keary left in November 2009.
(8) By reason of outstanding appointments the business continued to trade until
6 February 2010.
(9) From 21 January 2010 until 6 February 2010 the claimant rented a chair from Gloss Hair at £150.00 per week payable to the partnership. The claimant received monies from the work she had done each week. When Gloss Hair ceased to trade the claimant rented a chair from another hairdressing salon in Banbridge, Flawless, until the opening of the first respondent’s new premises on 2 March 2010.
(10) After the closure of the second respondent’s business on 6 February 2010 the first respondent, a member of the second respondent partnership continued to operate as a hairdresser from her home. She employed the two students and had use of some of the equipment from the second respondent’s salon and provided hairdressing services to former customers of the second respondent.
(11) On 2 March 2010 the first respondent opened up a new hairdressing salon as a sole trader in premises at 23 Bridge Street, Banbridge not far from the former premises of the second respondent. The name of the new business was Gloss. The first respondent told the claimant that she could not afford to have her work with her as a senior stylist. She continued to employ the two students and subsequently hired a new full-time senior hair stylist at the same cost to the business as the claimant. The first respondent retained the phone number of the second respondent business. There was similarity with the new business card and vouchers used by the first respondent with those formerly used by the second respondent.
At the invitation of the first respondent the claimant rented a chair in the new salon from the first respondent for two weeks at a cost of £250.00 per week. This arrangement ended following an animated discussion between the claimant, her husband and brother and the first respondent in relation to the rent being charged to the claimant for the use of the chair in the new salon.
(12) Prior to working at the first respondent’s new premises the claimant had ordered materials and products worth approximately £1,300.00 from the second respondent’s L’Oréal representative. The claimant did not have an account with L’Oréal but wished to open one. The L’Oréal representative elected to charge the second respondent business for the materials and products obtained by the claimant and the business paid the amount due of £1,300.00. When this was brought to the attention of the second respondent no objection was raised. It was agreed that the claimant would repay the money but no amount or period for repayment was settled. She was to pay it back when she could afford it.
(13) Before the second respondent’s business ceased trading the partners and the claimant let it be known to their respective customers from where they would continue to provide hairdressing services after the cessation of trading of the second respondent.
(14) The second respondent asserts that the claimant was dismissed by reason of redundancy. It also denies each of the claimant’s other claims and denies she was not provided with payslips.
(15) When the second respondent business ceased trading on 21 January 2010 the partners and the claimant shared out the stock and materials.
(16) Prior to the second respondent ceasing trading there were differences between the three partners. This was caused by Leanne Loney and Leanne Lyons reducing the hours they worked in the business following the births of their respective children in 2007. Leanne Lyons and Leanne Loney wanted out of the partnership and Sheryl Dillon did not.
(17) The claimant contends that in failing to transfer her to the new business she suffered less favourable treatment for a pregnancy related reason. Similarly she contends that the second respondent’s failure to pay statutory maternity payment was a detriment amounting to discrimination.
(18) The second respondent involved the police in the attempt to recover monies it had paid to L’Oréal for materials obtained by the claimant. This followed phone-calls to the claimant from two of the partners, Leanne Loney and Leanne Lyons. This began shortly after the claimant lodged her claim form with the Office of the Industrial Tribunals.
On 2 June 2010 the second respondent’s solicitor wrote to the claimant stating that the second respondent regarded her conduct, in relation to obtaining products and materials, as theft and demanded payment within five days or the police would be involved. The police visited the claimant at her home on 19 June 2010 and interviewed her under caution on 24 June 2010.
The money has been repaid in full to the second respondent.
(19) The claimant challenges that there were financial difficulties in the second respondent business which justified a redundancy.
(20) By letter of 28 July 2010 Her Majesty’s Revenue and Customs decided that the claimant was not entitled to statutory maternity pay from the second respondent. The tribunal was advised that since then that maternity pay has been paid or repaid in full to the claimant.
(21) The second
respondent accepts that the claimant was entitled to redundancy payment.
(22) The claimant in the 2009 leave year got two weeks leave in excess of her entitlement, owing to her wedding. This was agreed to be taken out of her wages initially and then out of her leave for 2010. However, because she was made redundant on 21 January 2010 this arrangement could not be effected.
The Law
5. (1) An employer shall provide to an employee a written statement of particulars of employment (Article 33(1) The Employment Rights (Northern Ireland) Order 1996).
(2) An employee has the right to be given an itemised pay statement (Article 40(1) The Employment Rights (Northern Ireland) Order 1996).
(3) Where an employer has failed to provide an itemised pay statement the tribunal shall make a declaration to that effect (Article 44(3) The Employment Rights (Northern Ireland) Order 1996).
(4) Where an employer has failed to provide a written statement of employment particulars a tribunal shall make a minimum award of either two weeks’ gross pay, or if in all the circumstances it considers it just and equitable to do so, four weeks’ gross pay (Article 27(2) and (3) The Employment (Northern Ireland) Order 2003).
(5) This does not apply if there are exceptional circumstances which would make an award of or increase unjust or inequitable (Article 27(5) The Employment (Northern Ireland) Order 2003).
(6) An employer shall not make a deduction from an employee’s wages unless the deduction is authorised by statue or the contract of employment or the employee has previously signalled, in writing, his consent to the making of the deduction (Article 45 The Employment Rights (Northern Ireland) Order 1996).
(7) An employee is to be taken as having been dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to the fact that the employer has ceased or intends to cease to carry on the business for the purposes for which the employee was employed by him or to carry on that business in the place where the employee was so employed or the requirement has ceased or diminished or is expected to cease or diminish for employers to carry out work of a particular time or for employees to carry out work of a particular kind in the place where the employee was employed by the employer (Article 174 The Employment Rights (Northern Ireland) Order 1996).
(8) An employer shall pay a redundancy payment to an employee dismissed by him by reason of redundancy (Article 170 The Employment Rights (Northern Ireland) Order 1996).
(9) Where an employee’s employment is terminated during a leave year the employee is entitled to a payment in lieu of whatever portion of his holiday leave that has accrued by the date of termination (Regulation 14 Working Time Regulations (Northern Ireland) 1998).
(10) In order to show that the dismissal is not unfair it is for the employer to show the reason for the dismissal and that it was one of the statutory grounds that can justify a dismissal (Article 130(1) and (2) The Employment Rights (Northern Ireland) Order 1996).
(11) Where an employer has shown that the reason for the dismissal is one of the statutory grounds capable of rendering a dismissal not unfair, whether the dismissal is fair or not depends on whether in all the circumstances (including the size and administrative resources of the employer undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee (Article 130(4) The Employment Rights (Northern Ireland) Order 1996).
(12) An employee dismissed shall be regarded as unfairly dismissed if the reason or principle reason for the dismissal relates to pregnancy, childbirth or maternity (Article 131(1), (2) and (3) The Employment Rights (Northern Ireland) Order 1996).
(13) A person discriminates against a woman if during the woman’s protected period and on the grounds of the woman’s pregnancy the person treats her less favourably. The protected period runs from when the woman becomes pregnant to the end of her period of ordinary maternity leave or when she returns to work, whichever is earlier, or at the end of the period of additional maternity leave or when she returns to work after pregnancy, or whichever is earlier (Article 5A Sex Discrimination (Northern Ireland) Order 1976).
(14) A transfer of undertakings shall not operate so as to terminate the contract of employment (Regulation 4 Transfer of Undertaking (Protection of Employment) Regulations 2006).
(15) To be subject to a relevant transfer of undertaking the employee must have been employed by the transferor immediately before the transfer or would have been so employed had he not been dismissed by reason of the transfer (Regulation 4(3) Transfer of Undertakings (Protection of Employment) Regulations 2006).
(16) Where before a relevant transfer an employee is dismissed the employee shall be treated as unfairly dismissed for the purposes of the 1996 Order if the reason for the dismissal was the transfer or a reason connected with the transfer, that is not an economic, technical or organisational reason entailing changes to the workforce (Regulation 7 Transfer of Undertakings (Protection of Employment) Regulations 2006).
(17) A relevant transfer is where there is a transfer of an economic entity which retains its identity (Regulation 3 Transfer of Undertakings (Protection of Employment) Regulations 2006).
(18) Economic entity means an organised grouping of resources which has the objective of pursuing an economic activity (Regulation 3(2) Transfer of Undertakings (Protection of Employment) Regulations 2006).
(19) A relevant transfer may be effected by a series of two or more transactions and may take place whether or not any property is transferred from transferor or transferee (Regulation 3(6) Transfer of Undertakings (Protection of Employment) Regulations 2006).
(20) Cheesman v R Brewer Contracts Limited [2001] IRLR Page 144 provides guidance on factors to be considered to determine whether there has been a transfer of undertaking.
(21) Subject to certain exceptions, a set-off may be maintained where the claims to be set off against each other exist between the same parties and in the same right. (Halsbury’s Laws of England 4th Edition, Volume 42, paragraph 438).
(22) The right of an employer to make certain deductions from his employee’s wages is governed by the contract between them and sometimes by usage, and is controlled by statute (Halsbury’s Laws of England, 4th Edition, Volume 42, paragraph 468).
(23) The rule that the debts must accrue in the same right is strictly applied (Halsbury’s Laws of England, 4th Edition, Volume 42, paragraph 458).
(24) An employer may bring proceedings for the recovery of a sum that arises or is outstanding on the termination of the employment of the employee and the employee has brought a claim in an industrial tribunal (Rule 4, Industrial Tribunals Extension of Jurisdiction Order (Northern Ireland) 1994).
Application of the Law and Findings of Facts of the Issues
6. (1) The second respondent dismissed the claimant on 21 January 2010.
(2) The parties had agreed in early December 2009 not to continue with the partnership and to close the business on 21 January 2010.
(3) The first respondent opened a new business at 23 Bridge Street, Banbridge on 2 March 2010. The new business was called Gloss, the former business having been known as Gloss Hair and Beauty. The first respondent retained the phone number used by the second respondent business. The vouchers and cards used by the first respondent showed the name Gloss Hair on it and were similar to those used by the second respondent. The first respondent retained the two trainee students in her new business and the first respondent worked in both businesses.
(4) Applying the guidance set out in the case of Cheesman v R Brewer Contracts Limited, in considering whether there has been a relevant transfer, the following factors emerge;-
(a) the business of hairdressing was resumed or continued;
(b) a number of the same persons worked in the new business ie the first respondent and the two trainee students;
(c) a number of the same customers attended the first respondent, ie, the customers of Sheryl Dillon and the trainees;
(d) the name of the first respondent business was similar to that of the old;
(e) the same phone number was used by the first respondent business;
(f) the vouchers and cards used by the first respondent business were similar to that used by the second respondent;
(g) some assets were transferred to the first respondent business from the second respondent when the first respondent worked from her home. There had not been any evaluation of the intangible assets;
(h) there was no written contractual relationship between the second respondent and the first respondent or even oral agreements.
Having regard to the various factors set out above the tribunal concludes that there was a transfer of undertaking from the second respondent to the first respondent. This transfer seems to have happened in two stages. The first stage being that the hairdressing service, some of the customers, the two trainee members of staff and some of the equipment after 21 January 2010 moved to the first respondent’s home where the business was carried out. And then a second move happened on 2 March when the first respondent occupied the new premises where she provided the same hairdressing services to many of the same customers providing the work herself and employing the two trainees.
(5) There has not been any dispute, quite properly in the tribunal’s view, that the hairdressing business constituted an economic entity for the purposes of the Transfer of Undertaking Regulations.
(6) The date of the transfer was 6 February 2010.
(7) As the claimant was no longer employed by the second respondent on
6 February 2010 the claimant cannot be said to have been dismissed by reason of the transfer on that date.
(8) There was not any evidence to show that the claimant had been dismissed for a reason connected with the transfer. The claimant was dismissed by reason of the second respondent’s decision to cease trading which decision had been effectively made in or about November or December 2009.
(9) The claimant’s dismissal was by reason of her redundancy. The second respondent had decided to cease to trade. It is not material whether that decision was by reason of financial difficulties or because the partners decided to cease to trade as they were no longer interested in pursuing the business as a partnership. Whilst the tribunal is conscious that there are question marks about the second respondent’s contention that the decision was made by reason of financial difficulties alone it seems to the tribunal that this really does not prevent a redundancy situation arising.
(10) Redundancy is a potentially fair reason for a dismissal. The only other matter in connection with this that the tribunal has to consider is whether the second respondent acted fairly or unfairly in treating this as a reason to dismiss the claimant.
(11) The tribunal is satisfied that the second respondent did not act unfairly in making the claimant redundant. In so concluding the tribunal had regard to the following matters;-
(a) There is a question mark as to whether the business was, in an objective sense, in financial difficulties in that it appears not all income earned by the partnership appeared in the accounts.
(b) It is easy to understand how two of the partners Leanne Loney and Leanne Lyons, whose work commitment to the partnership had diminished and therefore the money earned by them had decreased yet their financial commitment to the partnership had remained unchanged, regarded the continuation of the business as not a good economic proposition for themselves.
(c) It is agreed by both parties that there was a divergence of opinion between Sheryl Dillon and the other two partners in the second respondent business as to whether the business should continue. The claimant suggested there was some disagreement among the partners. That disagreement and intention not to continue with the partnership is a valid reason whereby a partnership can come to an end and in those circumstances the partnership clearly intends to cease trading and thus that can be a valid reason for a redundancy situation arising.
(12) As already indicated there is no evidence before the tribunal that in November or December, when the second respondent decided to cease to trade, that the decision was in anyway coloured by the pregnancy of the claimant. Hence the claimant’s claim for unfair dismissal by reason of her pregnancy must fail.
(13) The claimant was made redundant and she is entitled to a redundancy payment which the parties have agreed at £458.00 for two weeks. The second respondent purports to set this entitlement off against excess holidays taken by the claimant. This is not permissible. As the contract between the claimant and the second respondent does not authorise such a step and the redundancy payment and the holiday leave do not concern the same right. Accordingly the second respondent is required to pay to the claimant £458.00 redundancy payment.
(14) The second respondent will have to use another legal mechanism to recover the value of the excess holidays taken by the claimant.
(15) The parties were agreed that the claimant is owed one day’s holiday for the portion of the leave year already passed which it measures at £50.13. However the parties agreed that the excess leave given to the claimant in 2009 would be taken out of her leave in 2010. She is therefore not entitled to recover this amount. This in turn reduces the excess leave taken by one day.
(16) The claimant was not provided with written particulars of her contract at any stage in the course of her employment with the second respondent. As no reason was advanced for so doing the tribunal thinks it appropriate to award the claimant four weeks gross pay which it measures at £916.00.
(17) The claimant was not provided with her payslips and the tribunal makes a declaration to that effect.
(18) As there has not been in the tribunal’s view a transfer of the claimant’s contract of employment from the second respondent to the first respondent and as a redundancy was by reason of the business ceasing to trade and nothing to do with the claimant’s pregnancy there is no basis for the claim for sex discrimination and accordingly that aspect of the claimant’s claim is dismissed.
(19) In the light of the decision by HMRC that the second respondent was not obliged to pay to the claimant her statutory maternity pay then that also cannot be an aspect of a sex discrimination claim. The tribunal understands however that that money has been since repaid or paid in full to the claimant.
7. This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.
Chairman:
Date and place of hearing: 17 and 18 November, 21 December 2010, Belfast.
Date decision recorded in register and issued to parties: