THE INDUSTRIAL TRIBUNALS
CASE REF: 1091/13
CLAIMANT: Catherine Claire Grainger
RESPONDENT: Castle Hotels N.I. Ltd
DECISION
The unanimous decision of the tribunal is that:-
(1) the claimant was unfairly dismissed by the respondent and the tribunal makes an award of compensation to be paid by the respondent to the claimant in the sum of £7,268.00; and
(2) the tribunal declares the claimant has had unauthorised deductions made by the respondent from her wages and the said claim is well-founded; and the respondent is therefore ordered to pay to the claimant the said sum of £1,632.00 deducted from her wages by the respondent.
Constitution of Tribunal:
Employment Judge: Employment Judge Drennan QC
Members: Mr J Boyd
Ms E McFarline
Appearances:
The claimant was represented by Mr M O’Brien, Barrister-at-Law, instructed by P Fahy & Company, Solicitors.
The respondent did not appear and was not represented.
Reasons
1.1 The claimant presented to the tribunal on 5 June 2013 a claim for unfair constructive dismissal, arrears of pay and/or holiday pay and/or breach of contract against the respondent. The respondent presented to the tribunal on 2 July 2013 a response denying liability for the claimant’s said claims.
1.2 The claimant had brought previous proceedings against the respondent in the tribunal pursuant to the TUPE Regulations (Case Reference Nos: 2462/10 and 300/11) together with a number of other persons, who had all been employed by various employers at the Lough Erne Hotel in Kesh, Co Fermanagh (‘the Hotel’), in respect of claims for unauthorised deduction of wages in relation to employment by them with these employers at the Hotel. In a decision on a pre-hearing review issued to the parties on 4 February 2014, under the name Catherine Claire Grainger v 1. Lough Erne Hotel Ltd, 2. Department of Employment and Learning, 3. Castle Hotels N.I. Ltd (Case Reference No: 300/11), the background to this claim was set out. The said decision on the pre-hearing review has not been the subject of an appeal. The claimant herein was the ‘lead’ claimant, for the purposes of the pre-hearing review. For the avoidance of any doubt, the claimant adopted and relied upon the decision in the pre-hearing review and the reasons therein, for the purposes of her claim in the present proceedings against the respondent.
In summary, the decision in the pre-hearing review found that there was a relevant transfer, pursuant to the Transfer of Undertakings (Protection of Employment) Regulations (Northern Ireland) 2006 (‘TUPE Regulations’) from Markville Trading Ltd (‘Markville’) to ACEC Enterprises Ltd (‘ACEC’) on or about 30 April 2010/1 May 2010. The tribunal was satisfied, following the said transfer to ACEC, there subsequently was a further relevant transfer from ACEC to the respondent, pursuant to the TUPE Regulations, on 11 November 2011. The tribunal so concluded for the following reasons. The respondent in its response, dated 3 October 2013, denied liability for the claims of the claimant, the subject-matter of the pre-hearing review. This response was provided by Alan Castle, the then managing director of the respondent, who appeared at the hearing of the pre-hearing review. In this said response it was accepted by him that, at all material times, there was a relevant transfer, pursuant to the TUPE Regulations, from ACEC to the respondent on or about 11 November 2011. In the response of the respondent, received by the tribunal on 2 July 2013, in relation to these proceedings, as referred to previously, there was a reference by the respondent to the claims, the subject-matter of the pre-hearing review; but, in particular, there was no denial in the said response there was such a relevant transfer from ACEC to the respondent on 11 November 2011, which was consistent with what was stated in the said response, dated 3 October 2013. In the circumstances, if it had been necessary to do so, the tribunal would have followed and adopted the reasons set out in the decision on the pre-hearing review that there was such a transfer between ACEC and the respondent. The tribunal was further satisfied, on the oral evidence of the claimant, that, prior to her employment with Markville and thereafter ACEC and the respondent, there had been a series of relevant transfers, pursuant to the TUPE Regulations, with the consequence the claimant therefore had continuity of employment from the commencement of her employment at the Hotel in or about April 1985 to the termination of her employment with the respondent, as set out elsewhere in this decision.
1.3 The respondent did not appear and was not represented at the substantive hearing in respect of the present proceedings. Notice of Hearing was issued to the respondent on foot of an Order for Substitute Service made by the Vice President, dated 31 October 2014.
1.4 In accordance with Rule 27(5) of the Industrial Tribunals Rules of Procedure, in the absence of the respondent, the tribunal, before it determined the issues in these proceedings, considered the information in its possession, which had been made available to it by the parties, including the response of the respondent, presented to the tribunal on 2 July 2013, referred to previously.
2.1 Having heard the oral evidence of the claimant, and considered the documents contained in the ‘trial bundle’, including the amended schedule of loss provided to the tribunal by the claimant’s representative, and submissions of the claimant’s representative, insofar as relevant and material for the determination of the claimant’s claims, the tribunal made the following findings of fact, as set out in the following sub-paragraphs.
2.2 The claimant, who was born on 13 August 1965, commenced employment at the Hotel in or about 1985 as a receptionist and was promoted to senior receptionist from in or about 2007 and was further promoted to manageress, when employed by ACEC, following the transfer from Markville. In her said role, the claimant was not only an employee but also a worker for the purposes of the Employment Rights (Northern Ireland) Order 1996 (see later). She was in the position of manageress, when, following the said relevant transfer from ACEC to the respondent, she was employed by the respondent from on or about 11 November 2011. Following various disagreements between the claimant and Mr Alan Castle, the then managing director of the respondent, whom she found very difficult to work with, the claimant, in or about December 2011, decided to step down from her position as manageress and she reverted to her previous position as receptionist with a reduced salary.
2.3 The claimant continued in that position throughout 2012; but due to Mr Castle’s frequent and lengthy absences from the Hotel and her inability to be able to contact him during these absences, the claimant found herself, in reality, continuing to act as manageress of the Hotel. In Mr Castle’s absence, she had to try to continue to keep the Hotel running as a going concern and at the same time to try to sort out unpaid bills from suppliers and goods not being delivered because of non-payment by the respondent. She lodged in the relevant bank account for the Hotel all monies paid into the Hotel; but she was not provided with a cheque book by the respondent and, in the circumstances, she had no ability to pay the suppliers, who were always pressing her for payment. She was constantly on the telephone to the respondent’s head office to try to resolve the situation; but, despite leaving urgent messages with his receptionist, Mr Castle was never available and rarely replied to calls and/or e-mails from the claimant. The claimant’s wages were not paid in the period of three weeks from mid-February 2013 to early March 2013. On 4 March 2013, the claimant was helping out with the breakfasts for guests, due to lack of other staff employed by the respondent. She had great difficult in doing so, due to the absence of any heating in the Hotel but also limited supplies in the Hotel for breakfast for the guests.
She had to try to explain the situation to disgruntled guests, who were naturally most dissatisfied with the service the Hotel was providing to them. In the circumstances, the claimant had found herself, in the period prior to this event, under increasing strain and stress by the failure of the respondent, and, in particular, Mr Castle, to resolve the situation and to employ sufficient staff, to properly equip and supply the Hotel, to pay the outstanding bills to suppliers and to pay the wages earned by her and owed to her by the respondent. Her working conditions, in these circumstances, had become intolerable; as she tried to keep the Hotel running and guests satisfied, but without any backup or support from Mr Castle and, in particular, the provision of money by him to pay the claimant’s wages but also to pay for the necessary supplies for the Hotel to remain in business. Eventually, when she was able to speak to Mr Castle on 4 March 2013, he told her there was no money and she was to tell the guests they would have to leave the Hotel and she was also to cancel any bookings already made, as the Hotel would no longer be open from Monday to Friday. The claimant finished her shift and went home; but felt that, for the sake of her health and family, she could no longer continue her employment at the Hotel in such circumstances, despite her long and loyal service to the Hotel over many years and despite the many changes of ownership. She felt the whole relationship of trust and confidence between her and the respondent had completely broken down in the circumstances. As a consequence, the claimant sent an e-mail to Mr Castle on 5 March 2013, resigning her position with immediate effect.
2.4 On 22 March 2013, the claimant wrote to Mr Castle stating, inter alia, there was:-
“ ...
· Breakdown of mutual trust between employer and employee
· Constructive unfair dismissal
· Unlawful deduction of wages (three weeks plus lying week’s wages)
· 120 hours £8.00 p/h, I am owed £960.00 wages.
· Non-payment of holiday pay. I commenced employment with Lough Erne Hotel in November 2011 and accrued holiday pay at the rate of 2.33 days per calendar month. For tax year 2012/13, I took 14 days’ paid annual leave, I am owed 14 days’ annual leave pay, 84 hours at £8.00 p/h in total of £672.00 is owed.
... .”
Mr Castle had sent a text in response to the claimant’s e-mail of 5 March 2013 asking the claimant whether she was returning to work later that week; but she had replied she was not. Mr Castle subsequently sent a letter dated 10 April 2013, in which, inter alia, he denied the claimant’s claims set out in her said letter of 22 March 2013.
The respondent failed to pay to the claimant the outstanding wages and also holiday pay due to her, as detailed by her in her letter dated 22 March 2013 to Mr Castle, on the termination of the claimant’s employment with the respondent; and the said sums remain outstanding.
2.5 The claimant at the termination of her employment was earning £365.20 gross per week and £288.00 net per week. On 9 April 2013, the claimant obtained alternative employment at £280.00 net per week. Within a very short period after the claimant resigned her employment, the tribunal is satisfied the Hotel ceased to operate as a going concern. The respondent, as a company, however continued in existence. In this context, the tribunal noted that, despite the claimant’s resignation, Mr Castle asked the claimant was she returning to work later in the week of her resignation and it was uncertain when in fact the Hotel finally ceased to trade as a going concern; but it concluded, in the circumstances, there was certainly no prospect of any employment at the Hotel for the claimant after 10 April 2013, when Mr Castle wrote to the claimant disputing her claims; and that no claim for loss of earnings (£8.00 per week) could therefore extend beyond that date.
Relevant legislation and law
3.1 Employment Rights (Northern Ireland) Order 1996 (‘the 1996 Order’) provides:-
Article 126 of the 1996 Order:-
“(1) An employee has the right not to be unfairly dismissed by his employer.”
Article 127 of the 1996 Order:-
“(1) For the purposes of this Part an employee is dismissed by his employer if ...
(c) The employee terminates a contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer’s conduct.”
3.2 As stated in Harvey on Industrial Relations and Employment Law, Volume 2, Section D1, at Paragraph 403, it has long been held that:-
“In order for an 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 him 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 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.”
(See further Western Excavating v Sharp [1978] QB 761.)
3.3 It should also be noted, in the above context, that a constructive dismissal is not necessarily unfair and it is normal for a tribunal, in order to make a finding of unfair constructive dismissal, to find the reason for the dismissal and whether the employer has acted reasonably in all the circumstances (Stevenson & Company (Oxford) Ltd v Austin [1990] ICR 609).
3.4 Even if an employee cannot establish a breach of an express term of a contract, it has also been recognised that a contract of employment includes an implied obligation that an employer would not, without reasonable and proper cause, act in a manner calculated to or likely to destroy or seriously damage the relationship of trust and confidence between an employer and employee. This is often referred to as the Malik term (see Malik v Bank of Credit & Commerce International SA [1997] UKHL 23 and Baldwin v Brighton & Hove CC [2007] IRLR 232).
3.5 As seen in Amnesty International v Ahmed [2009] ICR 1450 and Ministry of Justice v Sarfraz [UKEAT/0578/10] the phrases ‘without reasonable and proper cause’ and ‘destroy or seriously damage’ must be given their full weight. As Lord Steyn stated in Malik, the term is there to protect ‘the employee’s interest in not being unfairly and improperly exploited’; the conduct must, objectively speaking, if not destroy then seriously damage trust and confidence – mere damage is not enough.
In Abbey National PLc v Fairbrother [2007] IRLR 320 the Employment Appeal Tribunal set out the following useful guidance:-
“(30) ... conduct calculated to destroy or seriously damage the trust and confidence inherent in the employer/employee relationship may not amount to a breach of the implied term; it will not do so if the employer had reasonable and proper cause for the conduct in question. Accordingly, the questions that require to be asked in a constructive dismissal case appear to us to be:-
1. What was the conduct of the employer that is complained of?
2. Did the employer have reasonable and proper cause for that conduct?
If he did have such cause then that is an end of it. The employee cannot claim that he has been constructively dismissed.
3. Was the conduct complained of calculated to destroy or seriously damage the employer/employee relationship of trust and confidence?”
A failure to hold a proper appeal may be a significant breach of the implied term of trust and confidence.
3.6 The above authorities established it is an implied term, which is descriptive of conduct, viewed objectively, that is repudiatory in nature. In assessing whether or not there has been a breach, what is significant is the impact of the employer’s conduct on the employee, objectively tested, rather than what, if anything, the employer intended (see further Woods v WM Car Services Peterborough [1981] IRLR 3) and the Malik decision. In the more recent decision of Buckland v Bournemouth University Higher Education Corporation [2010] EWCA Civ 121, the Court of Appeal emphasised that a tribunal should determine the matter by reference to the law of contract and not by reference to the fairness and/or merits of the case:-
“the range of reasonable responses test is not appropriate to establish whether an employer has committed a repudiatory breach of contract entitling an employee to claim constructive dismissal”;
and thereby confirming the test for establishing constructive dismissal remains objective (see Western Excavating v Sharp [1978] ICR 221). In the case of Tullett Prebon PLc v BGC Brokers LP [2011] IRLR 420, it was confirmed that the test for determining whether there was a repudiatory breach of the implied term of trust and confidence had to be determined objectively, ie from the perspective of the reasonable person in the position of the innocent party.
In the decision of the Court of Appeal in the case of Nottingham County Council v Meikle [2005] ICR 1.
Keane LJ held:-
“It has long been held by the EAT in Jones v Sirl & Son (Furnishers) Ltd [1997] IRLR 493 that in constructive dismissal cases the repudiatory breach of the employer need not be the sole cause of the employee’s resignation. The EAT there pointed out that there may well be concurrent causes operating on the mind of an employee whose employer has committed fundamental breaches of control and that the employee may leave because of both those breaches and another factor such as the availability of another job. It suggested the test to be applied was whether the breach or breaches were the ‘effective cause’ of the resignation. I see the attractions of that approach but there are dangers in getting drawn too far into questions about the employee’s motives. It must be remembered that we are dealing here with a contractual relationship and constructive dismissal is a form of termination of contract by a repudiation by one party which is accepted by the other; see the Western Excavating case. The proper approach therefore, once a repudiation of the contract by the employer has been established, is to ask whether the employee has accepted that repudiation by treating the contract as at an end. It must be in response to the repudiation but the fact that the employee also objected to other actions or inactions of the employer not amounting to a breach of contract would not vitiate the acceptance of the repudiation … Once it is clear the employer was in fundamental breach ... the only question is whether [the employee] resigned in response to the conduct which constituted that breach.”
This dicta was followed by Elias J, as he then was, in the case of Abbeycars (West Horndon) Ltd v Ford [UKEAT/0472/07], when he stated:-
“On that analysis it appears that the crucial question is whether the repudiatory breach played a part in the dismissal … “
and
“It follows that once a repudiatory breach is established if the employee leaves and even if he may have done so for a whole list of reasons, he can claim that he has been constructively dismissed if the repudiatory breach is one of the factors relied upon.”
and also was followed in the case of Logan v Celyn Home Ltd [UKEAT/0069/12] where HHJ Shanks stated:-
“ … It should have asked itself whether the breach of contract involved in failing to pay the sick pay [the relevant breach] was a reason for the resignation not whether it was the principal reason.”
This approach was again recently confirmed and followed by Langstaff P in the case of Wright v North Ayrshire Council [EATS/0017/13] where he emphasised that it is an error of law for a tribunal, where there is more than one cause, to look for the effective cause in the sense of the predominant, principal, major or main cause and in doing so he raised concerns how the relevant law is expressed in Paragraph 521 of Harvey on Industrial Relations and Employment Law, Volume 1, Section D1.
In the ‘summary head note’, Langstaff P stated:-
“In order to determine a claim for constructive dismissal, a tribunal had applied to a test, referred to in Harvey, whether the contractual breach by the employer was ‘the effective’ cause ‘of an employee’s resignation’. It was now time to scotch any idea that this approach is correct if it implies ranking reasons which have all played a part in the resignation in a hierarchy so as to exclude all but the principal, main, predominant, cause from consideration. The definite article ‘the’ is capable of being misleading. The search is not for one cause which predominates over others, or which on its own would be sufficient but to ask (as Elias J put it in Abbey Cars v Ford) whether the repudiatory breach ‘played a part in the dismissal’. This is required on first principles and by Court of Appeal authority (Meikle). The tribunal here appeared to seek for ‘the’ cause rather than ‘a’ cause ... .”
3.7 As has long been recognised (see further Paragraphs 480 – 481.01 in Harvey on Industrial Relations and Employment Law, Section D1), many constructive dismissal cases which arise from the undermining of trust and confidence, can involve the employee contending that he left in response to a course of conduct carried on over a period of time, but the particular instance which caused the employee to leave may in itself be insufficient to justify his taking that action; but nevertheless, when viewed against a background of such incidents, it may be considered sufficient by the courts to warrant treating the resignation as a constructive dismissal (‘the last straw’ doctrine). As was made clear in the case of London Borough of Waltham Forest v Omilaju [2005] IRLR 35, in order to result in a breach of the implied term of trust and confidence, a ‘final straw’ which is not itself a breach of contract, must be an act in a series of earlier acts which taken together amount to a breach of the implied term. The Court of Appeal held in particular:-
“The act does not have to be of the same character as the earlier acts. Its essential quality is that, when taken in conjunction with the earlier acts upon which the employee relies, it amounts to a breach of the implied term of trust and confidence. It must contribute something to that breach, although what it adds may be relatively insignificant so long as it is not utterly trivial. Thus, if an employer has committed a series of acts which amount to a breach of the implied term of trust and confidence but the employee does not resign and affirms the contract, he cannot rely on those acts to justify a constructive dismissal if the ‘final straw’ is entirely innocuous and not capable of contributing to that series of earlier acts. The ‘final straw’, viewed in isolation, need not be unreasonable or blameworthy conduct. … Moreover an entirely innocuous act on the part of the employer cannot be a ‘final straw’, even if the employee genuinely, but mistakenly, interprets the act as hurtful and destructive of his trust and confidence in the employer. The test of whether the employee’s trust and confidence has been undermined is objective.”
(See further Pan v Portigon AG London Branch [2013] UKEAT/0116 where the tribunal followed the guidance of Omilaju and found a return to work letter sent by the respondent to the claimant as ‘innocuous’, insofar as it was relied upon by the claimant, as the last straw entitling him to regard himself as discharged from further performance.)
3.8 In Adams v Charles Zub Associates Ltd [1978] IRLR 551 it was held a failure to pay an employee’s salary on the due date may amount to conduct which constitutes a breach going to the root of the contract or which shows the employer has no intention thereafter to honour the contract and this justifies the employee resigning.
In FC Gardner Ltd v Beresford [1978] IRLR 298 it was held in most circumstances it would be reasonable to infer a contractual term along the lines that an employee will not treat his employee arbitrarily, capriciously or inequitably in matters of remuneration.
4.1 Article 45 of the Employment Rights (Northern Ireland) Order 1996 (‘the 1996 Order’) provides as follows:-
“(1) An employer shall not make a deduction from wages of a worker employed by him unless —
(a) the deduction is required or authorised to be made by virtue of a statutory provision or a relevant provision of the worker’s contract, or
... .”
4.2 Article 56 of the 1996 Order provides as follows:-
“56. Where the tribunal finds a complaint under Article 55 well-founded, it shall make a declaration to that effect and shall order the employer –
(a) In the case of a complaint under Article 55(1)(a) to pay to the worker the amount of any deduction made in contravention of Article 45.
... .”
4.3 Article 59 of the 1996 Order provides as follows:-
“(1) In this Part ‘wages’ in relation to a worker, means any sums payable to the worker in connection with his employment, including –
(a) any fee, bonus, commission, holiday pay or other emolument referable to his employment, whether payable under his contract or otherwise.
... .”
5.1 In light of the facts, as found by the tribunal, as set out in Paragraph 2. of this decision, the tribunal was satisfied that the respondent, by its failure to pay the claimant the wages to which she was entitled, to pay the outstanding bills to suppliers, to properly equip and supply the Hotel, the continuing absence of Mr Castle, the claimant’s working conditions had become intolerable and were causing her increasing strain and stress, with the consequence there had become a complete breakdown in the relationship of trust and confidence between the claimant and the respondent as her employer. The tribunal has no doubt that the respondent, by its said conduct, was therefore in beach of the claimant’s contract of employment and, in particular, the implied obligation the employer would not, without reasonable and proper cause, act in a manner that was likely to destroy or seriously damage the relationship of trust and confidence between an employer and an employee (the Malik term). The tribunal has no doubt, on the facts found by it, this breach was repudiatory in nature and was a reason/played a part in the claimant’s resignation (see further Abbeycars (West Horndon) Ltd). Even if the tribunal is wrong, it would have found that the failure by the respondent to pay her the wages she was owed would alone have constituted a breach going to the root of the claimant’s contract of employment. It showed the respondent had no intention of honouring the express term of her contract to pay her wages due to her and, in itself, justified her resignation (see further Adams v Charles Zub Associates Ltd [1978] IRLR 551).
5.2 In the circumstances, as set out above, the tribunal was satisfied not only was the claimant constructively dismissed by the respondent but also the said dismissal was unfair. Having acted and/or failed to act, as set out above, the respondent failed to act reasonably in the circumstances. (See Stevenson & Co (Oxford) Ltd.)
6.1 The respondent, having failed to pay to the claimant, as a worker, the wages, including holiday pay, set out in Paragraph 2.4, the tribunal is satisfied, and so declares, the claimant has had unauthorised deductions made by the respondent from her wages and her claim, in respect of such wages, is well-founded; and orders the respondent to pay to the claimant the sum of £1,632.00 deducted from her wages by the respondent, as set out in the schedule below, namely:-
(i) Earnings for three weeks prior to the
termination of her employment,
including a lying week –
120 hours @ £8.00 per hour £ 960.00
(ii) Holiday pay for holiday year 2012/12
14 days – 84 hours @ £8.00 per hour £ 672.00
£1,632.00
6.2 In relation to the unfair dismissal of the claimant, the tribunal assessed the compensation to be paid by the respondent to the claimant as follows:-
A. Basic award
£365.20 x £1.5 x 6 £3,286.80
£365.20 x £1 x 6 £2,191.20
£5,478.00
B. Compensatory award
(i) Loss of earning from
5 March 2013 – 9 April 2013
5 x £288.00 £1,440.00
(ii) Loss of statutory rights £ 350.00
As the claimant obtained alternative
employment on 9 April 2013 at the
sum of £280.00 net per week
(loss of £8.00 per week) the tribunal
has not allowed any loss of earnings –
from 10 April 2013 (see Paragraph 2.5) £1,790.00
6.3 This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.
6.4 The Employment Protection (Recoupment of Jobseeker’s Allowance and Income Support) Regulations (Northern Ireland) 1996, as amended, apply to this decision. Your attention is drawn to the attached Recoupment Notice, which forms part of this decision.
Employment Judge
Date and place of hearing: 29 January 2015, Belfast
Date decision recorded in register and issued to parties: