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Industrial Tribunals Northern Ireland Decisions
You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> McCarron v Caroline Maguire trading as Ne... [2012] NIIT 01656_11IT (25 January 2012)
URL: http://www.bailii.org/nie/cases/NIIT/2012/01656_11IT.html
Cite as: [2012] NIIT 01656_11IT, [2012] NIIT 1656_11IT
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THE INDUSTRIAL TRIBUNALS
CASE REF: 1656/11
CLAIMANT: Marie McCarron
RESPONDENT: Caroline Maguire trading as New Image
DECISION
The unanimous decision of the tribunal is that claimant’s claim of unfair dismissal is dismissed.
Constitution of Tribunal:
Chairman: Ms J Knight
Members: Mrs V Walker
Mrs K McCrudden
Appearances:
The claimant appeared and represented herself. She was accompanied by her husband.
The respondent was represented by Mr N Phillips, Barrister-at-Law, instructed by Worthingtons Solicitors
1. ISSUES TO BE DETERMINED BY THE TRIBUNAL
(a) Was the claimant unfairly dismissed by the respondent? If not;
(b) Did the claimant resign from her employment in circumstances where she was entitled to treat herself as unfairly constructively dismissed by the respondent?; and
(c) Is the contract tainted by illegality so that the claimant is not entitled to seek relief under the unfair dismissal provisions?
2. THE CLAIM AND THE RESPONSE
Mrs McCarron lodged her originating claim with the Office of the Tribunals on 19 July 2011 in which she complained that she had been unfairly constructively dismissed. The basis of the claimant’s claim was that the respondent sought to reduce her rate of pay by one third and told her that she would have to let the claimant go when the claimant refused to accept the changes to her pay. The respondent disputed that the claimant was constructively dismissed or that there had been any definitive changes to the claimant’s terms and conditions of employment. The respondent contended that the claimant resigned when the respondent refused the claimant’s request for more money. At the outset of the Hearing, Counsel for the respondent, indicated that the respondent did not seek to rely on certain paragraphs in the response concerning what had been said to the claimant by the respondent at a meeting which had taken place on 27 April 2011. This involved the removal of a significant part of the respondent’s response. He explained that the response had been drafted by the respondent’s former solicitor and had been submitted to the tribunal office without obtaining the respondent’s approval. The claimant did not object or make the case that any of the matters not now relied upon, were in fact said to her by the respondent.
3. EVIDENCE
The tribunal heard the evidence of the claimant, Mrs Marie McCarron and the respondent, Mrs Caroline Maguire. The respondent’s husband gave evidence about a visit by himself and his father in law with the claimant’s parents. The tribunal also considered documents to which it was referred by the parties. The tribunal found aspects of the evidence of both the claimant and the respondent to be unsatisfactory but on balance preferred the evidence of the claimant, finding it on balance to be more consistent and plausible concerning the events leading to the termination of her employment. The respondent decided not to call her accountant to give evidence in support of her case. The tribunal formed the view that neither the claimant nor the respondent was completely frank in their evidence to the tribunal.
4. FACTS
The tribunal made the following findings of relevant fact:
5. The claimant was employed by the respondent as a hair stylist in New Image salon in Roslea, County Fermanagh from 15 June 2007 until 21 May 2011. At the date of her appointment the claimant, then aged 33 years, was an experienced hairdresser who had previously run her own hairdressing business before she started working for the respondent. The two women were friends as well as work colleagues. Their respective parents were also friends with each other and have continued to socialise together since the commencement of these proceedings. The tribunal were not convinced that the respondent’s father and husband visited the claimant’ parents with the purpose of asking them to exert influence on the claimant to withdraw her complaint to the tribunal.
6. The claimant worked 23 hours per week on Mondays and Thursdays from 9.00 am until 5.00 pm and Saturdays from 9.00 am until 4.00 pm, including a one hour lunch break. The amount of wages paid to the claimant was in dispute. The claimant’s case was that she negotiated with the respondent that she should be paid £90.00 per day, having initially asked for £100 per day, making a weekly net wages total of £270.00. From the outset the claimant agreed to a suggestion by the respondent that she would be paid partly in euros and partly in sterling as the salon accepted both currencies. This suited the claimant because at the time she was living in the Republic of Ireland. The arrangement was that £120 sterling was paid by direct debit into her bank account and the remainder was paid to her in euros - €225 cash in hand each week. The sterling sum increased to £125 per week as from 30 November 2009. This was flatly denied by the respondent who contended that the claimant was not paid any sum in addition to the amount paid by direct debit into her bank account. The tribunal would find it surprising if a person of the claimant’s age and experience and working those hours had agreed to accept £40 per day. The claimant’s evidence was that the respondent told the claimant that she would “look after” tax and national insurance contributions. The claimant did not have written terms and conditions of employment nor was she given any payslips. The claimant told the tribunal that the respondent initially reduced the cash payment by five euros per week when the sterling sum was increased to £125 per week but this was restored when she queried with the respondent why her wages had been “tampered with”.
7. Copies of the P60s produced at the hearing by the respondent made no reference to any euro sums paid to the claimant. The tribunal accepted that the claimant never received the P60s during her employment. The claimant relied upon an undated letter on salon notepaper used to support a loan application in June 2010 to Monaghan Credit Union and which stated that her income is “Three hundred and sixty euros per week” and apparently signed by the respondent. The respondent denied that she was the author of that document or that she had even seen it prior to these proceedings. The tribunal had reservations about this document and did not accept the claimant’s unsupported contention that this sum reflected the exchange rate from euro to sterling in the sum of £270.00. The tribunal did not accept this letter as evidence of the amount of wages paid to the claimant for the purposes of the claimant’s claim.
8. The claimant commenced maternity leave on Thursday, 19 August 2010 and was due to return to work on 21 May 2011. She received statutory maternity pay of £112.50 which was paid directly into her bank account by the respondent. The claimant accepted that this figure is based on a gross weekly wage of £125 per week. The amount of statutory maternity pay paid to an employee is income related. The respondent’s accountant sent a “To Whom It May Concern” letter to the claimant dated 14 January 2011 confirming the amount of statutory maternity pay. The claimant told the tribunal that this letter was never shown to anyone else. The claimant did not query the amount of statutory maternity pay paid to her by the respondent either prior to or at the Hearing. The direct debit payments to the claimant stopped on 6 May 2011 however the respondent made two further payments by cheque to the claimant on 14 and 21 May 2011. The claimant’s case was that she did not receive any additional euro sums from the respondent during this period.
9. The claimant’s bank statements showed that she accumulated the wages and maternity pay paid directly into her bank account by the respondent. The claimant’s case was that she used the euros for living expenses and therefore did not need to make withdrawals from her account. This continued to be the case after she went on maternity leave at which point the claimant had moved in with her in-laws, who she said provided her with financial support so that she did not have to use her maternity pay. It was the respondent’s case that the claimant supplemented her income by carrying out hairdressing from home on her own behalf so that she did not have to dip into her account. The claimant admitted that on one occasion she dealt with a customer whose mother had died and she received calls from customers to her home, asking when she would be returning to work in the respondent’s salon. The tribunal considered the extent of this work was greater than was admitted by the claimant but was not convinced that this was the only other extra source of income and was satisfied on a balance of probabilities that the respondent did pay the claimant extra euro sums in cash to make her weekly wage up to the agreed figure.
10. On 20 April 2011 the claimant called into the salon to say hello to the respondent and with the intention of discussing the date of her return from maternity leave. However a discussion was not possible because a customer was in the salon. It was agreed that the claimant would return on 27 April 2011. The claimant’s evidence was that before she left the salon that day the respondent wrote the figure of “£60” at the top of the open page of the appointments book and said that this was what she proposed to pay her each day when she returned from maternity leave. The respondent denied that there was any discussion about wages on that occasion and pointed out that the figure of £60 was written in the diary above 15 April 2011. Her case was that she regularly wrote figures into the diary as reminders about bills or sums that had to be paid, although she had no recollection what the £60.00 was for.
11. The claimant and respondent met as arranged on 27 April 2011. Both agreed that the conversation was initially friendly but a disagreement arose when the discussion turned to the wages to be paid to the claimant when she returned from maternity leave. Both parties asserted that the other had terminated the claimant’s employment at this meeting. Afterwards the claimant sought advice, confirmed by her telephone records, initially from the CAB, and then the Labour Relations Agency and Equality Commission for Northern Ireland. She was advised to put a complaint in writing to the respondent and she wrote to the respondent on 12 May 2011 raising a grievance as follows:
“On 27th April you informed me that my daily wage would be reduced by a third, when I return from my maternity leave on 21st May.
I rejected these terms as I was happy to return to work on the terms and conditions that I was employed before my maternity leave. When I rejected these terms that were non negotiable, you told me that you would have to let me go.
This action is tantamount to constructive dismissal.”
The respondent did not reply to this letter.
12. The tribunal considered that the actions of the claimant and respondent following this meeting were more consistent with the claimant’s version of events. Accordingly the tribunal is satisfied that the respondent said that she could not afford to pay the claimant more than £60 per day because things were quiet, another salon was opening next door and that clients were not coming in. The claimant said that she would ring around the clients but the respondent insisted that she could not afford to pay her more than £60 a day, she would be lucky to get that and if it were her, she would accept the lower sum. The claimant told the respondent that she could not accept this cut in wages and when asked by the claimant, the respondent confirmed that she was “letting her go”. The respondent agreed to provide her with a letter confirming that she had been “let go” so that she could claim benefits. The tribunal did not find credible the respondent’s evidence that the claimant left when she refused a request by the claimant for more money. The claimant handed back her keys and took her personal belongings with her.
13. The claimant telephoned the respondent on 4 May 2011, she said to ask about the letter and the respondent refused to provide it. The claimant stated that the respondent was “not a bit happy” when she told her that she had been advised by the Citizens’ Advice Bureau that she could not be dismissed while on maternity leave. Following this the claimant raised her grievance with the respondent as referred to above.
14. The claimant has claimed jobseekers’ allowance on 24 May 2011 from the Department of Social and Family Affairs in the Republic of Ireland until the present date. The claimant is expecting another baby in February 2012 and due to health problems related to her pregnancy she was advised by her doctor that she is unfit for work from September 2011. The claimant made two applications for hairdressing jobs in July and August 2011.
15. LAW
Constructive Dismissal
A termination of the contract by the employee will constitute a dismissal within the Employment Rights (NI) Order 1996, if he is entitled to so terminate it because of the employer's conduct. This is colloquially and widely known as a 'constructive dismissal'. The Court of Appeal made clear in Western Excavating (ECC) Ltd v Sharp [1978] IRLR 27, [1978] ICR 221, it is not enough for the employee to leave merely because the employer has acted unreasonably; his conduct must amount to a breach of the contract of employment. It should also be emphasised that a constructive dismissal is not necessarily unfair and a tribunal that makes a finding of constructive dismissal will err in law if it assumes that the dismissal is unfair without making explicit findings on the reason for the dismissal and whether the employer has acted reasonably in all the circumstances (Stephenson & Co (Oxford) Ltd v Austin [1990] ICR 609, EAT).
In order for the employee to be able to claim constructive dismissal, four conditions must be met:
(1) There must be a breach of contract by the employer. This may be either an actual breach or an anticipatory breach.
(2) That breach must be sufficiently important to justify the employee resigning, or else it must be the last in a series of incidents which justify his leaving. Possibly a genuine, albeit erroneous, interpretation of the contract by the employer will not be capable of constituting a repudiation in law.
(3) He must leave in response to the breach and not for some other, unconnected reason.
(4) He must not delay too long in terminating the contract in response to the employer's breach, otherwise he may be deemed to have waived the breach and agreed to vary the contract.
If the employee leaves in circumstances where these conditions are not met, he will be held to have resigned and there will be no dismissal within the meaning of the legislation at all. [Harvey Division D1.3 paragraphs 401-404.]
An anticipatory breach refers to a situation where the employer indicates that he is proposing to break the contract at some point in the future. Per Cumming-Bruce LJ in Harrison v Norwest Holst Group Administration Ltd [1985] IRLR 240, [1985] IRLR 668, CA): ”There has been some actual performance of the contractual obligations but other obligations remain executory. If the employer threatens not to comply in the future with those executory obligations, the employee may at once at his election communicate his acceptance of the repudiation. If he does so the contract is at an end and he is entitled to sue for damages for breach. But if he does not do so, then the situation, for essential purposes, has more in common with the situation which arises in what I call pure anticipatory breach where all performance is still executory than with a case of immediate breach.”
16. ILLEGALITY
Where a contract of employment is tainted with illegality the employment protection rights afforded to an employee under the Employment Rights (NI) Order 1996 may be undermined. However where a contract is ex facie lawful and one party alone is guilty of some illegal purposes, the other being innocent of knowledge thereof, then the innocent party should be able to enforce the contract despite the element of illegality and notwithstanding that the contract is unenforceable at the suit of the guilty party. The test is whether the innocent party honestly did not know of the illegality. He does not have a guilty mind merely because he ought to have known (see Newlands v Simons and Willer (Hairdressers) Ltd [1981] IRLR 359, [1981] ICR 521, EAT). In Wheeler v Quality Deep Ltd (t/a Thai Royale Restaurant) [2004] EWCA Civ 1085, (2004) Times, 30 August an unfair dismissal application was allowed to proceed in spite of under-declaration of earnings by the ex-employer because of the employee's poor grasp of English and even poorer knowledge of the UK tax/NI system.
17. CONCLUSIONS
1. After careful consideration of the facts found, the tribunal concluded on a balance of probabilities that the claimant was paid euros in addition to the sterling amount. The tribunal is further satisfied that there was an anticipatory breach of contract by the respondent when she informed the claimant of her intention to reduce the claimant’s wages upon her return from maternity leave. It is well established that a unilateral reduction to wages is sufficiently serious to justify the resignation of an employee. In the present case the claimant immediately signified her acceptance of the repudiation and the tribunal is satisfied that the conditions set out in Western Excavating v Sharp have been met.
2. However, the tribunal was troubled by what it considered the lack of candour by both the claimant and the respondent in this case. The possibility of illegality of contract was raised by Counsel for the respondent during closing submissions, although the case made by the respondent was that the claimant was not paid any more than the sterling amount. The respondent has not made the correct tax and national insurance deductions in respect of the gross amount of wages paid to the claimant therefore the contract of employment is tainted with illegality and the tribunal is obliged to consider whether the claimant is entitled to pursue her claim under the unfair dismissal provisions contained in the Employment Rights (NI) Order 1996.
3. The claimant presented to the tribunal as being very astute when it came to money matters and on her own evidence did not hesitate to challenge the respondent when a deduction of 5 euros was made from her wages. The tribunal finds it strange that the claimant did not similarly seek to challenge the amount of statutory maternity pay that was being paid to her by the respondent when it is so clearly based on the sterling amount only. The tribunal concludes that the most likely explanation is that the claimant was aware that only the sterling amount was being taken into account for tax and national insurance purposes. The tribunal did not accept the claimant’s evidence when she said she believed that the respondent was paying the necessary tax and national insurance contributions in respect of the entire amount of wages paid to her. In the absence of such honest belief on the part of the claimant, the tribunal concludes that she is debarred from seeking relief under the unfair dismissal provisions.
4. The claimant’s claim is therefore dismissed in its entirety.
Chairman:
Date and place of hearing: 5 December 2011, Belfast.
Date decision recorded in register and issued to parties: