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Industrial Tribunals Northern Ireland Decisions
You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> Fulton v Fulton Fine Furnishings Ltd (i... Fulton Fine Furnishings Ltd (i... [2013] NIIT 00519_13IT (28 August 2013)
URL: http://www.bailii.org/nie/cases/NIIT/2013/519_13IT.html
Cite as: [2013] NIIT 00519_13IT, [2013] NIIT 519_13IT
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THE INDUSTRIAL TRIBUNALS
CASE REF: 519/13
547/13
CLAIMANTS: 1. Paul Fulton
2. Ryan Andrew Fulton
RESPONDENT: Fulton Fine Furnishings Ltd (in receivership)
DECISION
(A) In the Paul Fulton case, my decisions are as follows:
(1) The claimant’s notice pay claim is well-founded. I have decided to postpone any remedies hearing of this claimant’s claims in respect of notice pay, for reasons which are set out below.
(2) The claimant’s claim in respect of holiday pay is well-founded and it is ordered that the respondent shall pay the claimant £2,847 in respect of holiday pay.
(3) The claimant’s claim in respect of wages is well-founded and it is ordered that the respondent shall pay to the claimant £3,855, less any statutory sick pay already paid to the claimant in respect of the relevant period.
(B) My decisions in respect of Ryan Fulton’s case are as follows:
(1) The claimant’s notice pay claim is well-founded. I have decided to postpone any remedies hearing of this claimant’s claims in respect of notice pay, for reasons which are set out below.
(2) The claimant’s claim in respect of holiday pay is well-founded and it is ordered that the respondent shall pay the claimant £4,500 in respect of holiday pay.
(3) The claimant’s claim in respect of wages is well-founded and it is ordered that the respondent shall pay to the claimant £6,094, less any statutory sick pay already paid to the claimant in respect of the relevant period.
Constitution of Tribunal:
Chairman (Sitting alone): Mr P Buggy
Appearances:
Mr Paul Fulton was self-represented.
Mr Ryan Fulton was represented by Mr Paul Fulton.
The respondent was represented by Mr Barry Mulqueen, instructed by A&L Goodbody Solicitors.
REASONS
1. The Fultons’ fine furnishings business is famous throughout Northern Ireland. For many years, that business provided a high quality service, to a considerable number of consumers, throughout a large part of Northern Ireland. The business was originally based solely in Lurgan. Then it expanded, so as to operate also out of premises at Boucher Road in Belfast.
2. Although the family regarded the business as a unitary enterprise, it in fact consisted of a partnership (based at Lurgan) and a limited company (the respondent in the present proceedings, which was based at Boucher Road in Belfast, and which is referred to below as “the Company”).
3. The Company
operated mainly for the purpose of managing and operating the Belfast property of the business. Both in Lurgan and at Boucher Road, the
goods which were sold were mainly owned by the partnership.
4. Mr Cyril Fulton was the driving force behind the overall business. The claimants in these proceedings are his sons.
5. The Lurgan partnership consisted of Mr Cyril Fulton, Ms Eithne Fulton (his wife) and their son Ernest Fulton (who held a very small share in the partnership).
6. Mr Cyril Fulton was the sole director of the Company. Mr Cyril Fulton and Ms Eithne Fulton each owned a 25% share in the Company. The other 50% was held by Mr Cyril Fulton and Ms Eithne Fulton in trust for their three sons (Ernest and the two claimants in these proceedings).
7. For several years, the two claimants worked at the Boucher Road premises of the business, on a full-time basis. For the purpose of these proceedings, the respondent accepts that each claimant was an employee of the Company for several years, until December 2012. Each of these two claimants was a senior employee of the Company. All of the senior employees of the Company who were not members of the Fulton family received a written statement of their terms and conditions of employment (referred to below as “a Statement”). Neither of these two claimants was ever provided with a Statement. I conclude that the omission to provide these claimants with Statements was an inadvertent omission, as distinct from being the result of a deliberate decision not to provide a Statement.
8. The Company had issued a Staff Handbook (“the Handbook”). On behalf of both claimants, Mr Paul Fulton asserted that the Handbook never applied to either of them, and he asserted that the Handbook was never drawn to his attention. Mr Ryan Fulton did not give any detailed oral testimony in these proceedings. I am satisfied that the Handbook was never brought to the attention of Paul Fulton at any time during his employment in the Company. I have received no testimony which convinces me that the Handbook was ever drawn to the attention of Ryan Fulton during his period of employment in the Company.
9. It seems to me that, having regard to the wording and detailed provisions of the Handbook, the clear implication is that it is intended to apply to all employees. I am satisfied that nobody ever told these two claimants, or anybody else, that the Handbook was not to apply to these claimants.
10. I conclude that the Handbook did apply to these two claimants, even though nobody ever drew the Handbook to their attention.
11. In many instances, the Handbook does not purport to itself provide the legal framework for the relationship between employees and the Company. Instead, in many instances, the Handbook refers to a relevant employee’s written “Statement” of terms and conditions of employment.
12. Unfortunately, after many years of success, the business got into financial difficulties. The Company went into administrative receivership in the summer of 2012, and the partnership element of the business became the subject of administrative receivership shortly thereafter. Soon after the administrative receivers took over, they were proposing a drastic reduction of the salaries of these two claimants. Soon afterwards, each claimant was certified by his GP as being unfit for work. From 24 August 2012 until 18 December 2012, each claimant was off work, allegedly because of illness. (Stress was the certified cause of that illness). With effect from 18 December 2012, each claimant was dismissed by reason of redundancy. Several members of the Fulton family have an acrimonious relationship with the administrative receivers.
The claims
13. In each of these two cases, the claimant makes claims in respect of notice pay, holiday pay and wages. Originally, each claimant made a claim for redundancy pay in these proceedings also. However, the Redundancy Payment Service (“the RPS”), in its role as the statutory guarantor in respect of certain employment debts, has made payments to each of these claimants in respect of redundancy pay. Accordingly, they are no longer pursuing redundancy pay claims in these proceedings.
Notice pay
14. The parties are agreed that each claimant’s notice pay claim is well-founded.
15. Each claimant has received a payment from the RPS in respect of notice pay. Each such payment was made in the Service’s role as the statutory guarantor in respect of certain employment debts. Each such payment was limited to the weekly maximum prescribed under the statutory guarantee legislation. Accordingly, each claimant’s notice pay claim in these proceedings consists of the amount of the actual loss sustained by that claimant, less the amount of the notice payment already made by the RPS.
16. In my view, there is no pressing need to quantify the amounts (if any) still due to these claimants in respect of notice pay, against the following background and for the following reasons. On the basis of information provided to me by the administrators, it is clear to me there is currently no prospect of either claimant being able to enforce any notice pay award which I might make against the respondent. Accordingly, no useful purpose would be served at present if I were to seek to quantify the amounts of notice pay due to the claimants.
17. Accordingly, I will defer making any determination in respect of the amount notice pay for a period of six months. At the end of that period, each claimant will be written to, and asked whether he wishes to pursue an application for the holding of a remedies hearing in respect of the notice pay claims; or whether, at that point, he wishes to confirm that he does not ask for the scheduling of such a hearing. The claimants are of course free to ask for the holding of a Case Management Discussion regarding notice pay at any time in the meantime, if any significant change of circumstances occurs in the meantime.
Holiday pay
18. Each claimant asserted that his contractual entitlement, based on a five day week, would be 30 days of annual holidays.
19. I noted that each claimant had an entitlement under Working Time Regulations to at least 28 days annual holidays. Accordingly, I suggested that the respondent might wish to accept, on a pragmatic basis, and for these proceedings only, that each claimant was contractually entitled to at least 30 days holidays. The respondent acceded to that suggestion.
20. Each claimant asserted that he had typically worked six whole days per week, as distinct from five whole days per week. On that basis, each claimant asserted that he should receive six-fifths of the annual 30 day holiday pay entitlement. I unreservedly reject that proposition. Neither claimant had any explicit contractual entitlement to 36 days holidays per year. There is no evidence upon which it can credibly be asserted that it was an implied term, in either claimant’s contract, that he would be entitled to 36 days holidays annual leave.
21. I am satisfied that during the last leave year (the leave year during which the claimant’s employment came to an end), each claimant took only four days holidays.
22. The parties were agreed that, if a claimant had only taken four days holidays in the last leave year, then (subject to any “carry-over” entitlement), he was entitled to an award of 16 days gross pay, in respect of holidays, in these proceedings.
23. Against that background, I have decided, in each of these two cases, that the claimant is entitled to 16 days gross pay in respect of holidays.
24. I have so
decided because I am not satisfied that either claimant has had any
carry-over entitlement.
25. Having carefully considered the oral and documentary evidence in this case, I am satisfied that there was no explicit contractual entitlement to carry over (into another leave year) any annual leave which was not taken within the leave year in which it was originally accrued.
26. Having carefully considered the evidence, which I received in relation to the context and operation of the relationship between each claimant and the Company, I am satisfied that there was no implicit contractual entitlement to “carry-over” either.
27. I am satisfied that the provisions of the Handbook in respect of holiday pay accurately described the contractual provisions, in each claimant’s contract of employment, regarding holiday carry-over. According to the Handbook:
“Unused holiday entitlement cannot be carried forward into the next holiday year, unless in exceptional circumstances and agreed in writing by senior management.”
Prior to the commencement of the receivership, no relevant carry-over was ever agreed in writing. After the commencement of the receivership, likewise, no relevant carry-over was ever agreed in writing by the receivers, or by anybody acting with the authority of the receivers. Therefore, each claimant had no entitlement to carry over any untaken holiday leave.
Wages
28. In each case, the wages claim is a claim for wages allegedly due to the claimant in respect of his period of sickness (from 24 August 2012 until 18 December 2012), subject to the deduction of the amount of statutory sick pay actually paid to the claimant in respect of that period.
29. According to the Handbook, the position in relation to sick pay was as follows. First, in the Handbook, the Company confirmed that it would meet its obligations in relation to the provision of statutory sick pay. Secondly, in relation to payments of salary during sickness absence, the Handbook specified the following:
“Your Statement of Main Terms of Employment details the remuneration to which you may be entitled during periods of sickness”.
30. The Handbook itself says nothing else about entitlement to contractual sick pay (sick pay other than statutory sick pay) during any period of sickness.
31. The Statements issued to employees of the business, who did receive Statements, contained the following clauses:
“The following sick pay entitlement will be paid:
1 month at full pay in a sickness year.
The Company reserves the right, on a discretionary basis, depending on the reason for sickness, to pay extended Company Sick Pay for more than the 1 month to any employee”.
32. However, neither of these claimants ever received any Statement.
33. My understanding is that the respondent’s position, in relation to the wages claim of each of these two claimants, is as follows. First, the respondent says that the Handbook applies to the relevant claimant. Secondly, the respondent says that, if a Statement had been provided to the relevant claimant, it would have included a clause along the lines of the clause which has been quoted above.
34. On that basis, the respondent says that the relevant claimant had the following entitlements in relation to sick pay, and no other entitlements. First, the respondent says that the relevant claimant was entitled to statutory sick pay. Secondly, the respondent says that the relevant claimant was entitled to one month’s pay (less the amount of any statutory sick payments made in respect of that one month period).
35. The respondent says that even if each relevant claimant was truly sick (from September until December 2012), he had no entitlement to any non-statutory sick pay, in respect of any period longer than a period of one month, because: (1) The terms of the “discretionary” clause, in the Statements which were provided to other senior employees, shows clearly that the Company had no obligation to make the discretionary payment. (2) The receivers never purported, at any relevant time, to exercise such a power in relation to either of the relevant claimants.
36. On behalf of the Company, Mr Mulqueen also asserted that neither man was really sick during his period of sick leave. I reject that proposition, in each of these two cases. It certainly appears to have been serendipitous that each man became ill, with the same illness, at around the time as his pay was being targeted for reduction, and in circumstances in which there was a very difficult relationship between the new management of the business and himself. However, each claimant’s illness was certified by a GP, throughout in respect of the entire period of alleged illness; I have not received any medical evidence which contradicts any of these certificates.
37. I consider that the applicable legal principles are accurately set out at paragraph 44-47 of Division B1 of “Harvey on Industrial Relations and Employment Law” (“Harvey”).
38. At paragraph 44, Harvey accurately points out the following. First, the question of whether or not payment is for service or for actual work performed is a question which is particularly relevant to the issue of entitlement to sick pay. Secondly, if the true consideration for the employee’s wages is service, then the employee can claim wages if prevented from working through some temporary illness or injury: subject to any express or implied agreement to the contrary, the employer impliedly undertakes to pay for service (so that the employee is, at common law, entitled to sick pay).
39. I am satisfied that, because these two claimants were white-collar workers, they were entitled to wages in return for services (as distinct from being entitled only to wages for actual work performed). Accordingly, the first of the issues specified in the last preceding paragraph must be resolved in favour of each claimant.
40. The second of the issues referred to at paragraph 38 above must now be addressed. In the context of each of these two cases, that second issue is whether or not the relevant claimant’s contract of employment contained an express or implied term that made provision in relation to sick pay, or in relation to the limitation of payments during periods of illness. That second issue was also addressed at paragraph 44 of Division B1 of Harvey.
41. Having stated the law in broadly the terms referred to at paragraph 38 above, paragraph 44 of Division B1 of Harvey continues in the following terms:
“As a matter of reality, it is almost inevitable that there is some agreement about sick pay. Even if there is no scheme in the particular case, there will probably be something to indicate agreement about sick pay: a custom in the trade, or a habitual practice of the particular employer, known to and accepted by the employee. The proper approach is not, therefore, to start with the presumption that sick pay is payable and then ask if the presumption is rebutted. Rather you should, in every case, start with the terms of the contract and endeavour to discern what was agreed between the parties about sick pay. If there is no material from which any agreement can be inferred, then, but only then, it may be possible to rely on the presumption”.
42. It had been suggested in England, at High Court level, that whenever a contract of employment was written and did not make express provision about sick pay, the employee was to be presumed to be entitled to sick pay unless any agreement to the contrary could be inferred; and that the court would not infer any agreement to the contrary unless it could pass the “officious bystander” or “business efficacy” tests for implied terms. However, in Mears v Safecar Security Ltd [1982] IRLR 183, the Court of Appeal disagreed with the view that the “officious bystander” or “business efficacy” tests were tests which had to be “passed” for the purpose of avoiding the relevant implication. Instead, according to the Court of Appeal in Mears, the tribunal should also have regard to the subsequent conduct of the parties in interpreting the agreement: That subsequent conduct could be evidence of what the parties had agreed. (See paragraph 46/B1 of Harvey).
43. I will now apply those principles to the facts of the present case.
44. In the case of each relevant claimant, what, if anything, was implicitly agreed about contractual sick pay between Cyril Fulton and that claimant (his son)? Having considered all the testimony in this case, and in particular the oral testimony of Cyril Fulton and Paul Fulton, I am sure that the correct answer to that question is that nothing was implicitly agreed between them about that matter. Instead, I am sure that the father and his sons expected that familial loyalties and relationships would decide any future question as to whether or not any particular son would be paid, or would not be paid, during any particular period of illness. In other words, I am satisfied that the parties to each relevant contract of employment, at the time of the commencement of the relevant employment relationship, if they were envisaging any period of illness in the future, would have been expecting that family loyalties, rather than contractual minutiae, would have been the determining factor on the question of whether or not the relevant man would get paid, or would not get paid, during periods of sickness.
45. For much the same reason, the actual treatment of Ms Eithne Fulton, when she was ill, in relation to the payment of her salary, (as an alleged employee of the Company), is irrelevant to the question of what was contractually agreed between the Company and each relevant claimant, as part of his contract of employment, at the time when that claimant commenced his period as an employee of the Company.
46. Against that background, the previous practice of the Company, in relation to payments for other employees during periods of sickness, provide no guide as to what, if anything, was implicitly agreed between Cyril Fulton and Paul Fulton whenever Paul Fulton became an employee of the Company, or as to was implicitly agreed between Cyril Fulton and Ryan Fulton at the time when Ryan Fulton’s contract of employment began.
47. I note that the Handbook, at page 6, specifies the following, in relation to any employee to whom the Handbook applies:
“Your statement of Main Terms of Employment details the remuneration to which you may be entitled during periods of sickness”.
48. In my view, that provision in the Handbook implies that applicable employees will not be contractually entitled to sick pay, other than statutory sick pay, except to the extent specified in a Statement. Neither of these claimants received any Statement. Neither can point to any provision in a Statement which provides entitlements to remuneration.
49. Because each relevant claimant had not received a Statement he had no legal entitlement to sick pay remuneration other than statutory sick pay.
50. Against that background, and for those reasons, I have concluded that the terms of each relevant claimant’s contract of employment included a term that he was entitled to remuneration during periods of sickness only to the following extent:
(1) He was entitled to statutory sick pay.
(2) He was entitled to other remuneration only if that remuneration was specified in a Statement.
Interest
51. This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.
Chairman:
Date and place of hearing: 25 and 26 July 2013, Belfast.
Date decision recorded in register and issued to parties: