THE INDUSTRIAL TRIBUNALS

CASE REF:	  500/14

CLAIMANT:		Arturas Zelvys	

RESPONDENT:	Patrick Treanor, t/a Treanor Contract Furniture	

DECISION 

The unanimous decision of the tribunal is that although the claimant was automatically unfairly dismissed he is not entitled to any compensation for the reasons set out in the conclusion section of this decision.  The claimant’s claims relating to notice pay and holiday pay are dismissed.  It is recorded that the respondent agreed to pay the claimant the sum of £12.41 in respect of its failure to provide wage slips, together with a cheque for a further sum of €800.

Constitution of Tribunal:

Employment Judge:	Employment Judge Crothers

Members:	Mr E Miller
	Dr C Ackah

Appearances:

The claimant was present and represented himself.

The respondent was represented by Mr T Sheridan, of Peninsula Business Services Ltd.

TITLE OF RESPONDENT

1.	The title of the respondent was amended to that shown above.

THE CLAIM

2.	The claimant claimed that he had been unfairly dismissed by the respondent.  He also claimed that he was owed amounts in relation to notice pay, holiday pay and in respect of the respondent’s failure to provide itemised pay statements.

THE ISSUES

3.	The issues before the tribunal were as follows:-

	(1)	Was the claimant’s contract of employment with the respondent tainted with illegality?

	(2)	Was the claimant unfairly dismissed?

	(3)	Is the claimant entitled to a sum in relation to notice pay?

	(4)	Is the claimant entitled to a sum in relation to outstanding holiday pay?

	(5)	Is the claimant entitled to a sum in relation to the alleged failure of the respondent to provide itemised pay statements?

SOURCES OF EVIDENCE

4.	The tribunal heard evidence from Patrick Treanor and from the claimant.  It was also assisted by bundles of documentation.  Both the claimant and the respondent were afforded several opportunities to explore a resolution of the matter under the auspices of the Labour Relations Agency.

FINDINGS OF FACT

5.	Having considered the evidence insofar as same related to the issues before it, the tribunal made the following findings of fact on the balance of probabilities:-

	(i)	The respondent abandoned jurisdictional points relating to the claimant’s length of service and whether his claim was in time and conceded that he had been continuously employed by the respondent from 31 January 2010 until the effective date of termination of his employment on 16 January 2014.  The claimant was employed as a carpenter/joiner.

	(ii)	In advance of the hearing, the parties were directed to agree a Schedule of Loss subject to liability.  In the course of the hearing, the tribunal was presented with what both sides stated was an agreed Schedule of Loss (subject to liability).  However, later in the course of the hearing, the claimant indicated that he no longer agreed with the amounts inserted for gross and net wages.  He referred to the net weekly wage which had been specified as £240, whereas he claimed that he had been paid an amount of €240 net per week from 9 September 2013.  The claimant complained of the respondent’s failure to provide a P45 and P60.  These documents were ultimately furnished at the hearing itself.  However, the P60 documentation showed the claimant’s leaving date as 17 July 2013 which was clearly incorrect.  Sometime subsequent to that date, the respondent and the claimant agreed that he could embark on a six week period of leave.  However, the claimant exceeded this period by a further period of two weeks without notifying the respondent.  The respondent then purported to summarily dismiss the claimant but re-engaged him from 9 September 2013 under what was described as a 24 hour contract involving work on three days per week.  The claimant, who lives in County Monaghan, claimed benefits in the Republic of Ireland in respect of days he was not working.  It was a constant theme of the claimant’s case that he had tried to obtain payslips, his P45 and P60 documentation but without success.  He had also approached the Inland Revenue to point out irregularities in the manner in which the respondent was conducting his business.  When the claimant presented his claim to the tribunal on 20 March 2014, Inland Revenue investigations were still ongoing.

	(iii)	The tribunal was shown copies of various cheques paid in Euros together with sample payslips and documentation prepared by the claimant in relation to bank lodgements.  These showed manifest inconsistencies and it was impossible for the tribunal to accurately establish what the claimant’s gross and net wages were.  The respondent’s representatives presented the case on the basis that there had been an illegal contract and that the claimant’s claim should fail on this ground alone.

	(iv)	Mr Sheridan, on behalf of the respondent, stated that a cancelled cheque for €800 would be paid to the claimant, irrespective of the outcome of the tribunal hearing.  The respondent also agreed to pay the amount of £12.41 in respect of failure to provide payslips.  The respondent conceded that the claimant had been automatically unfairly dismissed under Article 130A of the Employment Rights Northern Ireland Order 1996 (“The 1996 Order”), as Stage 1 of the Statutory Disciplinary Procedure had not been engaged by the respondent.  Furthermore, the evidence before the tribunal showed that the claimant had not been given proper notice of termination of his employment.  It was clear to the tribunal, in the period from 9 September 2013 until the effective date of termination of his employment, that the claimant knowingly received cash payments and specifically in December 2013, without proper national insurance or income tax deductions.

	(v)	The tribunal is satisfied that the claimant was given ample opportunity to properly present his case.  However, it had to take into account the very limited nature of his cross-examination of Patrick Treanor.  The tribunal is satisfied that, whereas in December 2013, the claimant together with Mr Gillanders, and occasionally Mr Stewart, were employed by the respondent, in January 2014 only Mr Gillanders was employed on a 
full-time basis together with the claimant himself on a part-time basis.  Furthermore, Mr Gillanders not only performed joinery work but also drove the respondent’s lorry and was responsible for spraying furniture.  The tribunal is also satisfied, in the absence of evidence to the contrary, that the respondent did suffer from a downturn in business leading to the claimant’s post being no longer required.

	(vi)	Having considered the claim for holiday pay, the tribunal is satisfied that the evidence before it is insufficient to establish a case that the respondent owed him an amount for outstanding holiday pay.  The tribunal, however, whilst acknowledging that, in normal circumstances, the claimant would be entitled to four weeks’ notice pay, is unable to discern or establish the claimant’s net weekly wage in order to further consider the matter.  It does make a finding, however, that the claimant was automatically unfairly dismissed, under Section 130A of the 1996 Order in respect of the respondent’s abject failure to follow Step 1 of the relevant Statutory Procedure.

	(vii)	The tribunal is satisfied that the claimant knew of the facts which would render the performance of his contract illegal in respect of any payments he received in cash.  However, on balance, it was not satisfied that the evidence showed some active participation on his part in the illegal performance of his contract at least from 9 September 2013 until the effective date of termination of his employment on 16 January 2014.  The claimant’s actual last working day was 23 December 2013.  

	(viii)	The respondent had approached the aspect of illegality of contract on the basis of illegal performance.  There was insufficient evidence before the tribunal to enable it to address the issue of illegality under either of the other two headings, ie, where the contract is entered into with the intention of committing an illegal act or where the contract is expressly or impliedly prohibited by statute.

THE LAW

6.	(1)	In relation to illegal contracts the tribunal obtained valuable assistance from the Employment Appeal Tribunal decision in the case of Enfield Technical Services Limited  v  Payne (2007) IRLR 840.  Mr Justice Elias states in paragraph 26 of his judgement as follows:

“(3)	There are three categories of case where a contract may be tainted with illegality.  These were identified by Lord Justice Peter Gibson in his seminal judgment in Hall v Woolston Leisure Services Ltd [2000] IRLR 587 (paras 30-31).  The first is where the contract is entered into with the intention of committing an illegal act.  The second is where the contract is expressly or impliedly prohibited by statute.  The third – and the category relevant to these two appeals – is where the contract was lawful when made but has been illegally performed, and the party seeking the assistance of the court knowingly participated in the illegal performance.

(4)	In order to fall within this third category, it is traditionally said that there are two requirements.  There must be knowledge of the illegal performance and participation: see the observations of Gibson LJ in the Hall case, para 31, referring to passages from the judgments of Lord Denning MR and Scarman LJ, as he then was, in Ashmore Benson Ltd v Dawson Ltd [1973] 1 WLR 828.

			(5)	Implicit in the analysis of Gibson LJ is of course a third requirement, namely that the performance must be illegal.  It must be a form of illegality which properly attracts the operation of the doctrine.

			(6)	The concept of knowledge requires that the employee must have knowledge of the facts which renders the performance illegal: Gibson LJ in Hall para 38.  However, it is irrelevant whether the party appreciates that what he is doing is illegal.  Ignorance of the law is no excuse, this has been reiterated on many occasions: see eg Miller v Karlinski (1945) 62 TLR 85(CA); Salvesen v Simons [1994] IRLR 52.

			(7)	The concept of participation … requires some active participation …

			(8)	In the context of unfair dismissal claims, it is now settled law that if the underlying contract of employment is illegal then it is against public policy to allow the claim to be pursued: Tomlinson v Dick Evans U Drive Ltd.  [1978] IRLR 77 (EAT) applied in Davidson v Pillay [1979] IRLR 275, both of which were cited with approval by Gibson LJ in the Hall case.  Moreover, the employee cannot count any period during which he was employed under an illegal contract as part of his period of continuous employment for the purpose of obtaining the requisite continuity to pursue a claim: see Hyland v J. H. Barker (North West) Ltd [1985] ICR 861 where continuity was broken by a four week period during which the employee received a tax free benefit which both parties knew to be illegal.

			(9)	Whether there is knowledge or participation is a matter of fact for the Tribunal”.

	(2)	The tribunal also took into account the analysis of the relevant law on illegal contracts as set out in the judgement of Morgan LCJ in the Northern Ireland Court of Appeal case of Gavin McGlinchey and Others v Colm Joseph McGurk and Patrick Pearse Moore, t/a McGurk and Moore and Omega Mechanical Services Ltd (Ref: MOR9112, judgement delivered 09/01/2014).

	(3)	Under Article 130A(1) of the 1996 Order, dismissal in breach of the Statutory Dismissal Procedures is automatically unfair.  However the principles laid down in Polkey v AE Dayton Services Ltd (1998) ICR 142 (“Polkey”), apply in full in relation to compensation (i.e., a deduction of 0%-100% can be made to reflect the percentage chance of dismissal).

		(ii)	Where the statutory dismissal procedure has been complied with, but there is a breach of procedures other than statutory procedures and the employer can show more than a 50% chance that the employee would have been dismissed anyway, the dismissal is fair under Article 132A(2).  Polkey is inapplicable as there is no question of compensation at all.

	(iii)	Where the statutory disciplinary procedures have been complied with and the employer can show less than a 50% chance that the employee would have been dismissed anyway, the dismissal will be unfair but the compensatory award will be subject to a Polkey reduction to reflect the chance of dismissal between 0% and 50%.

	(4)	The tribunal also considered, insofar as relevant, the provision of the 1996 Order relating to unlawful deduction of wages and the provisions relating to breach of contract in the Industrial Tribunals Extension of Jurisdiction Order (Northern Ireland) 1994.

SUBMISSIONS

7.	The tribunal received oral submissions from the claimant and from Mr Sheridan on behalf of the respondent, which it considered.

CONCLUSIONS

8.	Having applied the relevant principles of law to the findings of fact, the tribunal concludes that the claimant’s contract is not tainted by illegality.  It is not satisfied, on the evidence before it, that there was some active participation in the illegal performance of the contract by the claimant.  It dismisses the claimant’s claim for notice pay and holiday pay for the reasons specified in paragraph 5(vi) of the findings of fact.  The tribunal is also satisfied, although the claimant was automatically unfairly dismissed, that, on the evidence, there was a 100% chance of dismissal.  An award of compensation cannot therefore be considered.    At any rate, given the wholly unsatisfactory evidence in relation to wages, the tribunal could not make either a basic or compensatory award.  It however records that the respondent agreed to pay the amount of £12.41 in respect of the respondent’s failure to furnish itemised pay statements, together with a further sum of €800 by way of cheque.

Employment Judge:       

Date and place of hearing:     17 and 18 June 2014, Belfast.

Date decision recorded in register and issued to parties: