Garvey v Norlect Engineering (UK) Limit... [2010] NIIT 1661

THE INDUSTRIAL TRIBUNALS

CASE REF: 1661/10

CLAIMANT: John Garvey

RESPONDENT: Norlect Engineering (UK) Limited

DECISION

The decision of the tribunal Chairman sitting alone is that the claimant’s claim for a redundancy payment is well-founded and the respondent is ordered to pay to the claimant the sum of £3,200.

Constitution of Tribunal:

Chairman (Sitting Alone): Ms J Knight

Appearances:

The claimant appeared and represented himself.

The respondent was represented by Mr Stephen Sheppard, Director of the respondent company.

Issue

1. The tribunal (Chairman sitting alone) had to determine whether the claimant is entitled to a redundancy payment from the respondent company.

Evidence

2. The tribunal heard the oral evidence of the claimant, Mr John Garvey, and Mr Sheppard, Director of the respondent company, together with various documents handed in by the witnesses.

Findings of Fact:

3. The following facts were found to be proven on a balance of probabilities:

4. The claimant, Mr John Garvey, was employed by the respondent company as a Store Man from 24 October 1998 until 16 October 2009. At the effective date of termination he was 31 years old, had 10 full years continuous service and his weekly gross earnings were £320. The claimant was given written terms and conditions of employment in June 2003 which did not contain any lay off provisions. Mr Sheppard contended that there was a consultation about the possibility of lay off due to a downturn in business, between the respondent company and its employees, including the claimant, and that revised terms and conditions were issued in July 2009. Paragraph 24 of the revised terms in July 2009 provided for temporary lay off and short-time working during periods of shortages of work, without pay and for up to 12 weeks at a time in order to preserve
long-term employment security. The claimant disputed that he had been so consulted or that he had agreed to the inclusion of a lay off provision. It is clear however that neither version conferred on the claimant a contractual entitlement to receive any pay from his employer during a lay off period.

5. The claimant was issued with a letter dated 16 October 2009 which stated that he had been laid off on a temporary basis owing to the difficult economic climate and that due to his lay off, a payment would be made to him in the amount of £21.50 per day to a maximum of five days in three months, less income tax and national insurance. Mr Sheppard explained that the respondent had been advised by the Labour Relations Agency that it was necessary to make this statutory payment to the claimant. The payment was not made to the claimant under foot of his contract.

6. The claimant sought advice from the Citizen’s Advice Bureau which sent a letter dated 13 November 2009 to the respondent company in the following terms:

“Re-redundancy

I refer to the above and we have been instructed by the above named to draft this short letter serving notice of his intention to claim redundancy”.

Upon receipt of this letter on 16 November 2009, Mrs Bronagh Sheppard, the respondent’s Company Secretary, rang the claimant and offered him a position as Sales Assistant with another company, namely Clanrye Electrical Supplies Limited (Clanrye). Mr Sheppard is also a director of Clanrye which operated out of the same building as, although it had a different registered address, the respondent company. Mr Sheppard told the tribunal that he met with the claimant on 17 November 2009 to discuss the position being offered with Clanrye and that it was agreed that the claimant would commence employment with Clanrye from 18 November 2009 for a four week trial period. Mr Sheppard produced a letter which he said was sent to the claimant on 17 November 2009 to formalise the offer of “alternative employment” with “our sister company Clanrye Electrical Supplies Limited in lieu of redundancy”. The claimant denied that he ever received that letter or that he met with Mr Sheppard on 17 November. It was his case that he met with Mr Sheppard on the morning of 18 November 2009 to discuss the offer of employment and that a six week trial period was agreed. The claimant’s post with Clanrye included sales and working on the trade counter with Saturday work and a late night on a Thursday once a month. Mr Sheppard told the tribunal that he considered that the claimant’s employment with the respondent company ceased on 17 November 2009 when the claimant accepted the position with Clanrye.

7. After a period the claimant decided that the new position did not suit him and sought further advice from the CAB which drafted a further letter to the respondent company dated 10 December 2009 giving one week’s notice of his intention to resign and again requesting that all redundancy monies are forwarded without delay. The claimant told the tribunal that he handed the letter personally to Mr Sheppard on 11 December 2009 when he advised that he intended to resign whereas Mr Sheppard insisted that this was received by post on 16 December 2009. The tribunal was satisfied that Mr Sheppard understood that the claimant was tendering his resignation from Clanrye.

8. The claimant worked until Wednesday, 23 December 2009, and wrote on his Clanrye timesheet that this was his last day. The claimant was paid two days holiday pay for the Thursday and Friday. The claimant received two P45s - one from Clanrye Electrical Supplies Limited on 6 January 2010 which stated his leaving date to be 23 December 2009 and another which was issued on 13 January 2010 for Norlect Engineering Limited stating his leaving date to be the 1 January 2010. A further letter dated 11 February 2010 was sent by the CAB to the respondent company again requesting a redundancy payment. Mr Sheppard told the tribunal that this letter was not received by the respondent.

The Law

9. Article 170(1)(b) of the Employment Rights (Northern Ireland) Order 1996 (“the 1996 Order”) provides that:

“(1) An employer shall pay redundancy payment to any employee of his if the

employee -

…….

(b) is eligible for a redundancy payment by reason of being laid off or kept on short time.”

10. Article 182(1) provides the statutory definition of “lay off” and provides that:

“…..an employee shall be taken to be laid off for a week if -

(a) he is employed under a contract on terms and conditions such that his remuneration under the contract depends on his being provided by the employer with work of the kind which he is employed to do, but

(b) he is not entitled to any remuneration under the contract in respect of the week because the employer does not provide work for him.”

Thus there is a statutory lay off, only if the employee is entitled to no pay at all during the relevant week. If the contract provides for any guaranteed minimum wage or fallback rate it means there cannot be a statutory lay off. However a statutory guarantee payment does not prevent a statutory lay off because such payments are not made under the contract. [See Harvey Division E.11 Paragraph 1937]

11. Article 183(1) provides that an employee is eligible for a redundancy payment by reason of being laid off if:-

"(a) he gives notice in writing to his employer indicating (in whatever terms) his intention to claim a redundancy payment in respect of lay-off… (referred to in this Part as “notice of intention to claim”) and –

(b) before the service of the notice he has been laid off or kept on short-time in circumstances in which paragraph (2) applies.

(2) This paragraph applies if the employee has been laid off…:-

(a) for four or more consecutive weeks of which the last before the service of the notice ended on, or not more than four weeks before, the date of service of the notice…”

12. Article 199(1) provides:-

“(1) An employee does not have any right to a redundancy payment unless, before the end of the period of six months beginning with the relevant date -

..(b) The employee has made a claim for the payment by notice in writing given to the employer....;

(2) An employee is not deprived of his right to a redundancy payment by paragraph (1) if, during the period of six months immediately following the period mentioned in that paragraph, the employee -

(a) makes a claim for the payment by notice in writing given to the employer,

(b) refers to an industrial tribunal a question as to his right to, or the

amount of, the payment

… and it appears to the tribunal to be just and equitable that the employee should receive a redundancy payment.”

Conclusions

13. The tribunal is satisfied that the conditions for a statutory lay off are present in the instant case. The tribunal was satisfied that the payment of £107.50 by the respondent company to the claimant was a statutory guarantee payment under Article 60 of the 1996 Order, as this payment was not made to the claimant due to any contractual obligation.

14. The tribunal is further satisfied that the claimant complied with the provisions of Article 183(1) and that the letter dated 13 November 2009 from the CAB constituted proper notice of the claimant’s intention to claim a redundancy payment. At the time that the notice was given to the respondent, the claimant had been laid off for four consecutive weeks. Therefore the claimant became eligible for a redundancy payment at that point.

15. The tribunal carefully considered Mr Sheppard’s argument that the claimant was not entitled to a redundancy payment because he was offered alternative employment with the associated company, Clanrye. The claimant became entitled to the redundancy payment when the notice was given. In any event the Clanrye was not in a position to offer “alternative employment” as the claimant was never employed by them and there was no provision in his contract to transfer his employment to that company. I consider that the correct position is that the claimant’s employment with the respondent company in fact terminated on 17 November 2009 when he agreed to accept the position with Clanrye. His acceptance of the position with Clanrye did not affect his entitlement to a redundancy payment from the respondent company. It is immaterial that there is an association in the sense that Mr Sheppard is a Director of both the respondent company and Clanrye.

16. I am therefore satisfied that the claimant is entitled to a redundancy payment of £3,200 calculated as follows:-

£320 (Gross weekly pay) x 10 (completed years service) x 1 (age multiplier)

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

Chairman:

Date and place of hearing: 14 September 2010, Belfast.

Date decision recorded in register and issued to parties:

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You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> Garvey v Norlect Engineering (UK) Limit... [2010] NIIT 1661_10IT (26 October 2010) URL: http://www.bailii.org/nie/cases/NIIT/2010/1661_10IT.html Cite as: [2010] NIIT 1661_10IT

Industrial Tribunals Northern Ireland Decisions