Pearson v Shanidar Ltd [2009] NIIT 72

THE INDUSTRIAL TRIBUNALS

CASE REF: 72/09

CLAIMANT: Anne Pearson

RESPONDENT: Shanidar Limited

DECISION

The unanimous decision of the tribunal is that the claimant was unfairly dismissed by the respondent. The respondent is hereby ordered to pay to the claimant a total sum of £4813.35.

Constitution of Tribunal:

Chairman: Ms Turkington

Members: Mrs Doran

Mr Patterson

Appearances:

The claimant appeared and was represented by her husband Mr Craig Pearson.

The respondent appeared and was represented by Miss Coll, Barrister-at-Law, instructed by Con Lavery, Solicitors.

The Claims

1. The claims were a claim of unfair dismissal and a claim for a statutory redundancy payment.

The Issues

2. The issues to be determined by the tribunal were as follows:-

(a) It was conceded by the respondent’s counsel that the respondent had failed to follow the statutory dismissal procedure and that the dismissal of the claimant was therefore automatically unfair. Accordingly, the tribunal had to determine the amount of compensation due to the claimant and whether compensation should be reduced on the basis of the respondent’s contention that the claimant would have been dismissed in any event even if a fair procedure had been followed.

(b) The tribunal also had to determine whether the claimant had received the full amount due to her by way of statutory redundancy payment.

Sources of Evidence

3. The tribunal heard oral evidence from the claimant and from Michael Johnston, Martin Lennon and Trevor Hilley on behalf of the respondent. In the course of the hearing, the parties also referred the tribunal to a number of documents in the respective tribunal bundles.

Contentions of the Parties

4. Counsel for the respondent accepted that the claimant had been dismissed and conceded in open tribunal in the course of the hearing as follows:-

(i) That the statutory dismissal procedure was applicable in this case;

(ii) That the statutory dismissal procedure had not been completed in this case; and

(iii) That the failure to complete the statutory procedure was due to fault on the part of the respondent.

Accordingly, it was conceded that the claimant was unfairly dismissed and that the issue to be determined by the tribunal was the amount of compensation payable to the claimant in respect of unfair dismissal.

5. Counsel for the respondent’s main contention was that compensation should be reduced to reflect the chance that the claimant would still have been dismissed by reason of redundancy if a fair procedure had been followed.

6. The claimant’s representative did not dispute that there was a redundancy situation at the Coach Inn. However, he contended that the claimant had been unfairly selected for redundancy and that she had therefore been unfairly dismissed. He contended that the claimant was unfairly selected for redundancy because the respondent was unable to address her complaints of alleged harassment by a long-standing member of staff. The claimant’s representative further argued that compensation for unfair dismissal should not be reduced and that the claimant had not received the full amount due to her by way of statutory redundancy payment.

Facts of the Case

Having considered the claim form and response, and having heard the oral evidence of all the witnesses and considered the documents referred to in evidence, and the submissions made by the representatives of both parties, the tribunal found the following relevant facts:-

7. The claimant who was born on 21 October 1958 was employed by the respondent from June 2003 to 8 August 2008. The claimant was employed in the kitchen of the respondent’s premises the Coach Inn, Banbridge as a Kitchen Porter. Having heard the evidence of all the witnesses, the tribunal has concluded that there was no real distinction and no difference in pay between posts described as Kitchen Porter and Kitchen Assistant. The claimant worked 32 hours per week Monday to Friday 9am to 4 or 5 pm each day. The claimant also worked every other Saturday. The claimant’s duties included ensuring that the kitchen was clean and tidy, food preparation, food hygiene, checking and receiving deliveries.

8. From around September 2006, Linda Freeman was also employed in the kitchen of the Coach Inn, initially as a dishwasher. At the date of termination of the claimant’s employment, the claimant and Mrs Freeman were paid at the same rate and the tribunal therefore considers that there was no significant distinction between Mrs Freeman’s job and that of the claimant. Mrs Freeman normally worked in the evenings.

9. On 30 May 2007, the claimant made an informal complaint regarding alleged harassment by another member of staff. The claimant made a further complaint to management regarding alleged harassment in or around 4 August 2007 and was advised that management were not in a position to take action unless she had a witness to support these allegations. On 18 November 2007, the claimant made a further complaint to the respondent’s General Manager and an informal meeting was arranged between the claimant and the alleged harasser. The claimant’s complaint was not resolved and the claimant was left to consider whether she wanted to proceed further.

10. From around November 2007, there was a downturn in business at the Coach Inn, particularly the night club part of the business. The claimant’s work related to day-time bar food sales which was not substantially affected by a downturn in business. The respondent took various measures to reduce costs generally, including a decision that the night club would not open on Wednesday evenings. Further, there was an overall reduction in front of house staffing levels due to reduction of working hours and natural wastage.

11. The claimant gave evidence that, around January 2008, she lodged a formal letter of complaint in relation to her allegations of harassment. The respondent’s witnesses denied having received any such written complaint. Having considered all the evidence and taking account of the sequence of events in relation to the succession of complaints made by the claimant, the tribunal considers it likely that such a complaint was lodged by the claimant.

12. On 3 March 2008 and 19 March 2008, meetings took place of the Coach Management team. At these meetings, there was general discussion of the need to save labour costs in all parts of the business. There was a further meeting of Kitchen Management on 27 May 2008. At this meeting, the Head Chef was tasked to consider how costs could be saved by reduction of hours and/or absorption of roles within the kitchen.

13. On 30 May 2008, a memo was sent to all staff of the Coach Inn. This memo was enclosed with pay packets and indicated that the respondent company was reviewing its position and seeking to generate cost savings through control of labour costs. The memo further stated “this may or may not affect you”. This memo continued “We will endeavour over a short period to outline who may be affected by this strategic review. We will then speak with you directly, so as to outline the possible impact to you.”

14. Following the meeting on 27 May 2008, the Head Chef concluded that the role of Kitchen Porter could be absorbed by other staff within the kitchen, in other words, this post could be done without.

15. The respondent’s witnesses gave evidence that in or about July 2008, there was a meeting with the claimant when she was warned of potential redundancy. The respondent’s witnesses further stated that, at this meeting, the claimant was offered the option to move to Harry’s Bar in the position of Commis Chef. The claimant strongly denied that any such meeting had ever taken place. It was not disputed that any offer of alternative employment was not put in writing and no note was taken of any such meeting. The tribunal found the evidence of the respondent’s witnesses in relation to this alleged meeting to be vague and confused. The tribunal was also surprised that no written record was made of such an important meeting if it had taken place and that the offer of alternative employment which was alleged to have been made at this meeting was not confirmed in writing. On balance, the tribunal found the claimant’s evidence in relation to this meeting to be more consistent and credible and the tribunal has therefore concluded that it is more likely that this meeting did not take place.

16. Around July 2008 Linda Freeman moved to Harry’s Bar to take up the post of Commis Chef with a pay rise of 50p per hour initially.

17. On 8 August 2008, Michael Johnston, Operations Manager of the respondent and Martin Lennon, General Manager met with the claimant. The claimant was informed that she was being made redundant. At this point, the claimant offered to work on, but this was refused by Mr Johnston and Mr Lennon. The claimant was handed a letter which had been prepared the day before. This letter set out the details of the claimant’s “redundancy package”. At this stage, the claimant received the following sums:-

10 days holiday pay = £ 366.00

One weeks pay in lieu of notice

Redundancy payment – 7.5 weeks = £1167.22

Total = £1688.85

18. The claimant was not offered any right of appeal against the decision to make her redundant.

19. Two cleaners were also made redundant in or around the same time as the claimant. No front of house staff were made redundant, although as noted at para 10 above, there has been a reduction in hours of such staff and overall reduction in staff numbers due to natural wastage. Dishwashers who worked in the kitchen were not made redundant as they were regarded as being more flexible since they did not have fixed working hours.

20. On or about 6 September 2008, following an internal investigation, Ms A who worked in the kitchen of the Coach Inn as a cook resigned from her post.

21. On or about 22 September 2008, Linda Freeman returned to the Coach Inn as a Trainee Commis Chef. Mrs Freeman continued to be paid 50p per hour more than she had previously received at the Coach Inn before her move to Harrys Bar. The vacancy at the Coach Inn was not offered to anyone else other than Mrs Freeman. The respondent produced records which purported to be in-house training records relating to Mrs Freeman. No such records were produced in relation to Mrs Freeman’s time at Harrys Bar. These documents were not signed by the Head Chef who was held out as being responsible for Mrs Freeman’s training. On balance, the tribunal does not accept that these are genuine, contemporaneous training records.

22. The claimant’s net pay at the date of termination of her employment was £155.63. The claimant’s gross pay was £176.07. After the termination of her employment with the respondent, the claimant received Incapacity Benefit. The claimant indicated on her claim form that she had claimed Income Support. However, it is not clear to the tribunal whether the claimant ever received Income Support. At the date of hearing, the claimant had not applied for any other post. The respondent has not provided the claimant with a reference but nor has the claimant sought one.

Statement of Law

23. The statutory dismissal procedure introduced by the Employment Rights (Northern Ireland) Order (“the 2003 Order”) applies in this case. In basic terms, the statutory procedure set out in Schedule 1 of the 2003 Order requires the following steps:-

Step 1 – written statement of grounds for action and invitation to meeting – the employer must set out in writing the grounds which lead the employer to contemplate dismissing the employee

Step 2 – meeting – the meeting must take place before action is taken. The meeting must not take place unless –

(a) the employer has informed the employee what the basis was for including in the statement the grounds given in it, and

(b) the employee has had a reasonable opportunity to consider his response to that information

After the meeting, the employer must inform the employee of his decision and notify him of the right to appeal against the decision.

Step 3 - appeal – if the employee informs the employer of his wish to appeal, the employer must invite him to attend a further meeting. After the appeal meeting, the employer must inform the employee of his final decision. The employee must be afforded the right to be accompanied at any meetings under the statutory dismissal procedure.

24. By Article 130A (1) of the Employment Rights (Northern Ireland) Order 1996 (“the Order”), where the statutory dismissal procedure is applicable in any case and the employer is responsible for non-compliance with that procedure, the dismissal is automatically unfair. Further, by Art 17 of the 2003 Order, where the tribunal is satisfied that the non-completion of an applicable statutory procedure is wholly or mainly attributable to failure by the employer, it shall increase any award which it makes to the employee by 10% and may, if it considers it just and equitable in all the circumstances to do so, increase it by a further amount up to an increase of 50%.

25. By Article 152 of the Order, where a tribunal makes an award of compensation for unfair dismissal, the award shall consist of a basic award and a compensatory award. By Article 157 of the Order, the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the claimant in consequence of the dismissal in so far as that loss is attributable to the action taken by the employer. In ascertaining the claimant’s loss, the tribunal is required to apply the common law rules in relation to the claimant’s duty to mitigate his or her loss.

26. The manner in which the tribunal should approach the calculation of the compensatory award was considered in the decision of the EAT in Digital Equipment Co Ltd v Clements (No 2) 1997 IRLR 140 [1997] ICR 237 and the judgment of the Court of Appeal in the same case. The approach to be adopted by the tribunal involves the following steps which are relevant in this case:-

(1) The first task is to calculate the loss which the claimant has sustained in consequence of the dismissal, and insofar as the loss is attributable to action taken by the employer.

(2) Sums earned by way of mitigation or which should have been earned by way of mitigation should also be deducted at this stage.

(3) Any Polkey reduction should then be made: this determines that proportion of the loss for which the employer is responsible.

27. The situation where it was impossible to make a firm determination as to whether or not the claimant would have been dismissed had a fair procedure been followed was considered in the case of Sillifant v Powell Duffryn Timber Limited 1983 IRLR 91. In this case, it was suggested that, in cases of this type, the tribunal should make a percentage assessment of the likelihood that the employee would have been retained.

28. In the recent case of Sheffield Forgemasters International Ltd v Fox 2008 All ER 253, the EAT held that receipt of Incapacity Benefit does not necessarily preclude the recovery of compensation for loss of earnings during the same period because the relevant statutory provisions enabled a person who was fit for some work to obtain this benefit.

Conclusions

29. In this case, it was accepted by the respondent that the claimant had been dismissed. It was further conceded that:-

(i) the statutory dismissal procedure was applicable in this case;

(ii) the statutory dismissal procedure had not been completed in this case; and

(iii) the failure to complete the statutory procedure was due to fault on the part of the respondent.

Accordingly, the respondent conceded that the claimant was unfairly dismissed and that the issue to be determined by the tribunal was the amount of compensation payable to the claimant in respect of unfair dismissal.

30. The claimant did not seek reinstatement or re-engagement. In determining the compensation due to the claimant, the tribunal began by considering the basic award. The basic award is equivalent to a statutory redundancy payment and any sums paid to the claimant by way of statutory redundancy payment must be set off against the basic award.

31. In this case, the respondent had made various payments to the claimant at the time she was dismissed and subsequently. The claimant’s representative accepted that the claimant had eventually received her full entitlement in respect of pay in lieu of notice and holiday pay. As far as statutory redundancy payment was concerned, the claimant’s representative accepted that the claimant had received her full entitlement, save that the redundancy payment paid by the respondent was based on net pay rather than gross pay.

32. Calculation of statutory redundancy payment/basic award

Statutory redundancy payment/basic award = £176.06 x 5 x 1.5 = £1320.45

Less sum received from the respondent = £1167.22

Balance due = £153.32

33. The tribunal then addressed the compensatory award. In this case, it was beyond doubt that the respondent had failed to follow the statutory dismissal procedure. The respondent contended that this was a case where the claimant would have inevitably been dismissed even if a fair procedure had been followed. The tribunal considered whether it could determine with certainty whether the claimant would have continued in employment if a fair procedure had been followed. The tribunal considered the steps involved in a fair redundancy procedure. In this case, the tribunal was of the view that a fair procedure would have involved early warning of the potential redundancy situation, consultation with the claimant and other affected employees and consideration of suitable alternative employment. This would have been followed by the 3 steps of the statutory dismissal procedure as set out at para 23 above. The tribunal was satisfied that such a fair procedure would have taken at least 4 weeks to complete and that the claimant’s dismissal would therefore have been delayed by that period.

34. The tribunal noted that another member of kitchen staff at the Coach Inn resigned on 6 September 2008 – see para 20 above. If the respondent had followed a fair redundancy dismissal procedure, this would have delayed the claimant’s dismissal by at least 4 weeks until at least 6 September meaning that the claimant would have still been employed when the vacancy in the kitchen at the Coach Inn arose. On this basis, the tribunal therefore concluded that, if a fair procedure had been followed by the respondent in this case, there is a high likelihood that the claimant would have been offered this post and would then have continued in employment within the kitchen of the Coach Inn. The tribunal assesses the likelihood of the claimant continuing in this employment at 75%.

35. At the date of hearing, the claimant remained out of work. The claimant was under a duty to mitigate her loss by seeking alternative employment. The claimant accepted that she had not made any applications for other employment. The claimant contended that there were no suitable vacancies available in the Banbridge area since the date of her dismissal. In considering this issue, the tribunal took account of the current economic climate. However, using its collective experience of the labour market, the tribunal considers that it would be reasonable to expect the claimant to have found suitable employment at a comparable rate of pay within 6 months of the date of her dismissal. Accordingly, the tribunal determined that a compensatory award of 6 months loss of earnings would be just and equitable in this case.

36. The tribunal was mindful that the claimant had been in receipt of Incapacity Benefit throughout the period since her dismissal. The tribunal considered whether this precluded the claimant from receiving any compensation in respect of loss of earnings. The claimant contended that her dismissal and the manner in which she had been treated by the respondent had exacerbated her depression and this had resulted in her meeting the criteria for receipt of Incapacity Benefit. The tribunal accepts the claimant’s evidence in this regard and also notes that it was confirmed in the Sheffield Forgemasters case (see para 28) above that receipt of Incapacity Benefit does not necessarily preclude compensation for loss of earnings for the same period. Accordingly, the tribunal concluded that the claimant’s receipt of Incapacity Benefit should not lead to any reduction of compensation in this case.

37. Calculation of compensatory award

6 months loss of earnings:-

26 weeks x net wage of £155.63 = £4046.38

Adjustment to reflect percentage likelihood of being retained in employment if fair procedure followed:-

75% of £4046.38 = £3034.79

38. Loss of statutory rights

The tribunal decided to make an award in respect of loss of statutory rights of £250

39. Total of basic award, compensatory award and award for loss of statutory rights is as follows:-

Basic award £153.32

Compensatory award £3034.79

Loss of statutory rights £250.00

Total £3438.11

40. The tribunal had no hesitation in concluding that the respondent was wholly responsible for the failure to comply with the statutory dismissal procedure which was applicable in this case. The tribunal considered the increase in the amount of award which would be appropriate in this case – see para 24 above. The tribunal considered that the respondent’s default was particularly serious since it had failed to comply with each and every step of the statutory dismissal procedure. Accordingly, the tribunal determined that the award should be increased by 40%.

41. Application of increase in award by 40%:-

Total award £3438.11

Increase by 40% Add £1375.24

GRAND TOTAL £4813.35

42. In conclusion, the unanimous decision of the tribunal is that the claimant was unfairly dismissed and the respondent is ordered to pay to the claimant compensation of £4813.35.

Recoupment

This award may be subject to the Employment Protection (Recoupment of Jobseeker’s Allowance and Income Support) Regulations (Northern Ireland) 1996.

The claimant indicated on her claim form that she had made a claim in respect of Income Support. It is not clear to the tribunal whether the claimant received Income Support during the period following the termination of her employment. If the claimant did receive Income Support during the relevant period, then the award in this case will be subject to recoupment. The dates of the prescribed element are

8 August 2008 until 8 February 2009. The prescribed element of the award is £3034.79. The attention of the parties is drawn to the notice below which forms part of this decision.

This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.

Chairman:

Date and place of hearing: 19 and 29 May 2009, Belfast.

Date decision recorded in register and issued to parties:

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You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> Pearson v Shanidar Ltd [2009] NIIT 72_09IT (10 August 2009) URL: http://www.bailii.org/nie/cases/NIIT/2009/72_09IT.html Cite as: [2009] NIIT 72_9IT, [2009] NIIT 72_09IT

Industrial Tribunals Northern Ireland Decisions