Industrial Tribunals Northern Ireland Decisions

THE INDUSTRIAL TRIBUNALS

 

CASE REF:      6509/09

 

 

CLAIMANT:                    Helen Montgomery

 

 

RESPONDENTS:           1. Craig Bennett

 

       2.          Dreemore Developments Ltd (in administration)

 

                                       3.        BC(NI) Ltd

 

 

 

DECISION

 

 

The decision of the tribunal is that the tribunal awards the claimant £2,641.54 in respect of her claims for a redundancy payment and unpaid wages.

 

 

 

Constitution of Tribunal:

 

Chairman (sitting alone):           Mr I Wimpress

 

 

 

Appearances:

 

The claimant was unrepresented and appeared on her own behalf

 

The respondents did not appear and were not represented

 

 

The Claim and the Response

 

1.       On 7 July 2009, the claimant filed claims in respect of a redundancy payment and unpaid wages, (including back pay) against Mr Craig Bennett arising from the termination of her employment as a sales assistant on 8 April 2009.  Mr. Bennett filed a brief response in the form of a letter dated 18 August 2009 in which he indicated that the appropriate respondent was Dreemore Developments Ltd (in administration).  As a result Dreemore Developments Ltd was joined to the proceedings and was sent a copy of the claim form on 18 September 2009. 

2.       On 6 October 2009, Mr Cavanagh of Cavanagh Kelly, a firm of chartered accountants and insolvency practitioners, wrote to the tribunal office.  In the letter Mr Cavanagh advised that he had been appointed as administrative receiver in respect of Dreemore Developments Ltd on 2 February 2009 and that all the employees including the claimant were transferred to BC (NI) Ltd on 1 December 2008.  Mr Cavanagh enclosed a copy of his Notice of Appointment, the relevant sections of a Business Sales Agreement together with a schedule which listed all employees who had been transferred.  Mr Cavanagh concluded the letter by stating that he did not believe that there were grounds for any claim against Dreemore Developments Ltd. 

 

3.       A Case Management Discussion took place on 6 November 2009 which resulted in BC (NI) Ltd being joined to the proceedings. The tribunal office wrote to BC (NI) Ltd at 97A Main Street, Fintona on 17 November 2009 advising that it had been joined as a party to the proceedings and provided instructions as to how to respond to the claim.  No response was filed by BC (NI) Ltd.

 

Sources of Evidence

 

4.       The tribunal heard oral evidence from the claimant and received a number of documents from her which included a pay slip, several P60s, some correspondence and a cheque.  None of the respondents appeared at the hearing of this matter on 22 January 2010 but written submissions were filed by Messrs McGrigors, Solicitors on behalf of the Administrative Receiver, Mr Cavanagh.    

 

The Facts

 

5.       The claimant's date of birth is 28 April 1974.  The claimant commenced employment as a sales assistant in a grocery store owned by Mr Bennett on 1 September 1996 at the VG store at Main Street, Fivemiletown.  The claimant was paid £6.40 per hour gross with a take home pay of £167.38 per week.    The claimant later moved to another store at Spout Road, Fivemiletown which at various times traded as Spar, Centra or Mace.  In 2006, the claimant moved to the Mace Store in Main Street, Brookborough.  The claimant's hours of work varied over the course of her employment and when the store closed she was working a thirty hour week. 

 

6.       By early 2009 it was clear that the business was in difficulties and staff were called to a meeting by Mr Bennett on 14 February 2009.  Mr. Bennett stated that he would not be able to pay staff their wages as he needed the money to re-stock the shops.  The staff agreed to work on without pay in order to keep the shops going.  Mr Bennett told them that he would pay them back their lost wages as soon as he was able to do so.  The claimant was normally paid monthly with payment being made on the 14th of the month.  When Mr Bennett started paying the claimant again she was paid weekly instead and in cash.  Some repayment of the lost wages was paid over time but the claimant was unaware of the precise amount that had been repaid to her. 

 

7.       On Thursday 8 April 2008, the claimant went to work in the shop as normal but found that it was locked up.  The claimant tried to contact Mr Bennett at the Fintona shop where the main office was located.  Mr Bennett refused to speak to her but a girl who worked in the office told her that she would be given her wages.  The claimant duly received a cheque for £721.54 plus a pay slip.  The cheque was post dated 17 April 2009 and was signed by Mr Bennett.  It was also stamped “Bennett & Selvin Spmrkts Ltd".  The pay slip gave the employer's name as "BC (NI) Ltd" and comprised three elements as follows:

 

Payments                Hours                      Rate                       Amount

 

Basic Pay               30.00                      £6.40                      £192.00

 

Back Pay                38.40                      £6.40                      £245.76

 

Redundancy Pay     60.00                      £6.40                      £384.00

 

8.       This produced a total gross figure of £821.76 which after deductions for tax and national insurance contributions reduced to £721.54.  The basic pay accorded with the claimant's normal weekly wage.  The back pay represented partial repayment of the amount that the claimant gave up in February 2009 in order to keep the shops running.  The claimant had previously been paid additional amounts to recompense for this but she had not retained the relevant pay slips.  She was not sure if this figure represented full repayment but she did not take issue with it.  The redundancy pay equated to two years redundancy.  In the event the cheque was not honoured by the bank and the claimant received nothing.  Nor did the claimant receive notice pay. 

 

9.       The P60s produced by the claimant described her employer as Bennett’s Ltd in 2004/2005, Dreemore Developments Ltd in 2005/2006 and 2006/2007 and BC (NI) Ltd in 2008/2009.  The pay slip produced by the claimant dated 11 April 2009 gave the employer's name as BC (NI) Ltd.  The claimant was not sure when she first started to receive pay slips from BC (NI) Ltd but believed that it was from early 2009.  The claimant knew nothing about the changes in ownership of the business but her evidence tied in with the business changing hands in December 2008. 

 

10.     The claimant wrote to Mr Bennett on 22 April 2009 and 11 May 2009.  In the first letter she complained that the redundancy payment appeared to represent only two years service in the Brookborough store and did not take into account her time in the Fivemiletown store.  She also complained about the absence of notice.  The cheque was then returned by the bank on 11 May 2009 and this prompted her second letter in which she understandably complained about the cheque not being honoured.  No reply was received to either letter. 

 

11.     It is apparent from the signature on the Business Sale Agreement that Mr. Bennett sold Dreemore Developments Ltd as the owner of the business.  The Agreement also identified a Mr Eugene Donnelly as a Director of the purchaser, BC (NI) Ltd.  The claimant knew that Mr Donnelly was a business associate of Mr Bennett.  She had seen him around the shop and was introduced to him by Mr Bennett in late 2008.  All of the shops formally owned by Mr Bennett shut in April 2009 and have not reopened since. 

 

Submissions

 

12.     Messrs McGrigors submitted that the claimant had been transferred under the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE") from Dreemore Developments Ltd to BC (NI) Ltd by a Business Asset Sale Agreement dated 1 December 2008.  Clause 10.1 of the Agreement provides as follows:

 

"TUPE applies to the sale and purchase of the Business effected by this Agreement and accordingly the contracts of employment between the Employees and the Seller [Dreemore Developments Ltd] shall not terminate as a consequence of the Agreement and shall transfer to the Buyer [BC (NI) Ltd] with effect from the completion date [1 December 2008] pursuant to TUPE."

 

13.     It was further submitted that this was a normal solvent transfer as Dreemore Developments Ltd, the transferor, was not the subject of insolvency proceedings at the time of the transfer on 1 December 2008.   As the claimant's claim  accrued  both after the transfer and after Dreemore Developments Ltd had entered into administrative  receivership on 2 February 2009, the amounts claimed were not liabilities arising during employment with Dreemore Developments Ltd or related to transfer or the insolvency proceedings [Article 8 TUPE].  Under Articles 45,118, 120 and 170 of the Employment Rights (NI) Order 1996 liability in respect of unlawful deduction from wages, obligations in respect of notice and entitlement to redundancy payments fell to be dealt with by the employer and BC (NI) Ltd was the claimant's employer during the relevant period rather than Dreemore Developments Ltd.  In essence it was contended that all liabilities in respect of the claimant's employment transferred to BC (NI) Ltd on 1 December 2008 and liabilities accruing after that date were the sole responsibility of BC (NI) Ltd.  The submission also drew attention to the consequences of the tribunal finding that any of the outstanding amounts related to past employment with Dreemore Developments Ltd.  It was submitted that if this occurred these liabilities would not be regarded as preferential debts within the meaning of Schedule 6 of the Insolvency Act 1986 and that it would therefore be unlikely that there would be funds available to meet such an award.  The submission concluded by requesting that Dreemore Developments Ltd and the Administrative Receiver be removed as respondents in the proceedings.

 

The Law

 

14.     Article 170 of the Employment Rights (Northern Ireland) Order 1996 (“the 1996 Order”) provides that an employer shall pay a redundancy payment to any employee in the event that the employee is dismissed by the employer by reason of redundancy.  Circumstances in which an employee who is dismissed shall be taken to be dismissed by reason of redundancy are set out in Article 174 of the 1996 Order. This provides as follows:

 

                    “For the purposes of this Order an employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to (a) the fact that his employer has ceased or intends to cease (i) to carry on the business for the purposes of which the employee was employed by him, or (ii) to carry on that business in the place where the employee was so employed, or (b) the fact that the requirements of that business— (i) for employees to carry out work of a particular kind, or (ii) for employees to carry out work of a particular kind in the place where the employee was employed by the employer, have ceased or diminished or are expected to cease or diminish.”

 

15.     Article 197 of the 1996 Order sets out how the amount of the redundancy

          payment should be calculated with reference to length of service and age of

          the employee.
 

16.     The Industrial Tribunals Extension of Jurisdiction Order (Northern Ireland) 1994 (“the 1994 Order”) provides that an employee may bring a claim for damages for breach of contract of employment or for a sum due under that contract if the claim arises or is outstanding on termination of employment. 

Conclusions

 

17.     The tribunal's knowledge of BC (NI) Ltd is limited to the Business Sales Agreement and the submissions filed by Messrs McGrigors.  In this regard the tribunal takes into account the information placed before it by the Administrative Receiver, Mr Cavanagh.  It is apparent that none of the stores are now trading notwithstanding the statement in paragraph 2.1 of the Business Asset Sale Agreement of the intention to carry on with the business as a going concern.  The tribunal does not however have the means to look behind this document  and based on all of the evidence presented it is clear that the business transferred for better or worse to BC (NI) Ltd on 1 December 2008.  Accordingly I am satisfied that the award should be made against BC (NI) Ltd.

 

18.     The tribunal is satisfied that the claimant’s claim for a redundancy pay has been made out.  The claimant is also entitled to her last weeks wages and back pay as these payments were outstanding on the termination of her employment.  

 

Award

 

19.     Redundancy Payment 12 x 1 x £192.00 (gross pay)               £2,304.00

 

Final week's pay                             £192.00 (gross pay)

Back Pay                                       £245.76 (gross pay)

                              

                   Sub total £437.76

 

Less PAYE & National Insurance    £100.22

 

                                                                                          £   337.54

 

                                                                       TOTAL AWARD     £2,641.54

 

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

 

 

 

 

Chairman:

 

 

Date and place of hearing: 22 January 2010, Enniskillen

 

 

Date decision recorded in register and issued to parties: