McFalone v Michael Young Younger Homes Ltd [2011] NIIT 02788

THE INDUSTRIAL TRIBUNALS

CASE REF: 2788/10

CLAIMANT: Gavin McFalone

RESPONDENTS: 1. Michael Young

2. Younger Homes Ltd

DECISION

The Decision of the Industrial Tribunal is:

(i) the claimant was employed by Younger Homes Ltd and accordingly the first named respondent is dismissed from the proceedings;

(ii) the claimant terminated his employment with notice to the second named respondent, after a period of “lay off” and is entitled to a redundancy payment in the sum of £3,420.00. The claimant is also entitled to monies in respect of unpaid notice pay in the sum of £1,201.00. The second named respondent is ordered to pay to the claimant the sum of £4,621.00.

Constitution of the Tribunal:

Chairman (sitting alone): Ms M Sheehan

Appearances:

The claimant was represented at hearing by Stuart Marriott from Magherafelt District Advice Services Ltd.

Mr Michael Young, as director in Younger Homes Ltd appeared on behalf of the respondents.

The Issues

1. The main issues for the tribunal to decide were (a) who was the claimant’s employer at the effective date of termination of employment; (b) was the claimant eligible for redundancy payment by reason of being laid off; (c) the amount of any redundancy payment due in respect of same; (d) was the claimant entitled to notice pay and holiday pay and if so the amount of same. At the outset of the hearing the claimant accepted that he had received monies in respect of holiday pay and that part of his claim was withdrawn.

The Facts

2. The tribunal considered the claim form and the response filed by the second named respondent. There was also oral evidence given by the claimant and Mr Michael Young. A bundle of documents was produced at the hearing by the claimant’s representative. The documents ranged from statements of main terms and conditions of employment for the claimant and various correspondence between the parties prior to and after the “lay off” period and the notice of intention from the claimant to the second named respondent to claim a redundancy payment. A letter dated 11 April 2011 signed by Michael Young on behalf of Younger Homes Ltd was faxed and posted to the Office of the Industrial Tribunals and Fair Employment Tribunal stating that any holiday pay due and owing had been discharged, accepting redundancy payment of £3,420.00 was still outstanding due to financial difficulties of the second named respondent and the only claim opposed by them was the claim for notice pay. On the basis of the evidence received we make the following findings of fact.

3. The claimant when employed initially at Younger Homes Ltd was aged 23 years of age. He was given a statement of main terms and conditions of employment which indicated his employer was the second named respondent. The claimant’s written statement of terms and conditions of employment included an express provision regarding “lay of” or “short time”. There had been earlier “lay off” periods in 2009 and this claimant, like others, had remained in the second named respondent’s employment subsequent to the period of lay off. These “lay off” periods in 2010 followed on from changes in pay arrangements proposed in January 2010 by the respondent company as well as an agreed reduction in pay some years previously.

4. The claimant’s employment commenced on 18 June 2001 as a technical co-ordinator. By 2008 he was employed as Buyer and Project co-ordinator. By letter dated 18 June 2010 the claimant was placed on temporary lay-off for an initial eight week period. During this period the claimant was provided with some work by the second named respondent but the claimant earned less than half a weeks pay. No such employment was offered after the 30 July 2010. By letter dated 9 August 2010 the claimant received notice of the second named respondent’s intention to extend the current period of “lay off” for a further five weeks with effect from 2 August 2010. At the time before the lay off period commenced the claimant had been earning weekly £400.00 gross. Against this background the claimant by letter dated 31 August 2010 gave notice to Younger Homes Ltd of his intention to claim a redundancy payment. At the same time he gave notice to terminate his contract of employment. He referred to his contract of employment as stating “I must give one weeks notice for each year of employment”. Accordingly the claimant gave nine weeks notice expiring on 29 October 2010.

5. The claimant received no response from the second named respondent to his letter dated 31 August 2010 until a letter was sent dated 28^th October 2010 – indicating that his resignation was accepted and acknowledging he was owed a redundancy payment in the sum of £3,420.00. It also referred to his holiday pay and the requirement to give the second named respondent “a notice period of 1 week for every year of employment, which equates to nine weeks, and expires on 29^th October 2010”. The respondent stated they had insufficient funds to pay the monies owed but “hope to be in a position to pay you and all our creditors by the middle of next year”.

6. The written statement of terms and conditions of employment produced at hearing by the claimant sets out notice entitlements/Requirements at clause 14 of that document. The entitlement of the claimant to notice from the respondent company was detailed first. The clause then reads

“It is a condition of your employment that you may be asked to give an equal amount of notice as shown above should you decide to leave the company. By mutual agreement these notice periods may be waived and the Company reserves the right, where it deems it appropriate, to pay wages in lieu of notice instead of the above. The company reserves the right, in the case of gross misconduct, to dismiss you summarily which means without notice and without payment in lieu of notice. Where an employee leaves before the end of the notice period given, (whether notice is given by the Company or the employee) he/she will forfeit the wages and other benefits for the un-worked period”.

7. The claimant wrote again to the second named respondent by letter dated 1 November 2010 chasing up payment of redundancy, notice pay and pay in lieu of holidays. On 5 November 2010 the claimant was sent a cheque for £599.73 with a compliment slip from the second named respondent stating “Please find enclosed cheque for holiday pay”. No breakdown of how the monies were calculated was enclosed. At hearing evidence was produced of the calculations underlying the monies tendered in November 2010. It was clear the sum tendered represented pay in lieu of holidays accrued and statutory guarantee payments – less national insurance and income tax.

8. The claimant submitted his claim to the Office of Industrial Tribunals and Fair Employment Tribunal on 2 December 2010. In the claim form the claimant disclosed that he had claimed “Contribution based job seekers allowance from 16 August 2010”. The claimant as an employee on “lay off” can, for a period of 13 weeks, receive Job seekers allowance provided specified conditions are met. The claimant referred to correspondence received from the second named respondent dated

15 November 2010. The letter dated 15 November starts “This letter is to confirm the following: As per your letter of 31 August 2010 requesting redundancy and resigning your position, your notice period expired on 29 October 2010. We confirm you have now received any outstanding holiday pay and other entitlements owed to you by Younger Homes Ltd excluding your redundancy settlement. We plan to pay you your redundancy as soon as possible. We expect this to be early next year”.

9. The parties were agreed that at the time of termination of the claimant’s employment, the claimant was receiving a gross weekly wage of £400.00. The claimant’s net weekly wage was £315.00.

The Relevant Law and Decision

10. The tribunal considered the provisions of Article 170 (1) (b) of the Employment Rights (Northern Ireland) Order 1996 (hereafter referred to as the 1996 Order) which states that an employer “shall pay a redundancy payment to any employee of his if the employee is eligible for a redundancy payment by reason of being laid off or kept on short time”. Employers do not have an automatic right to lay off employees without pay. Their right depends on contractual provisions which can be incorporated into the contract of employment in a number of ways. It can be expressly written, included in a collective agreement, implied as a term through custom and practice or agreed by both parties to the contract.

11. There are certain conditions laid out in Part XII of the 1996 Order which the claimant must satisfy to protect his entitlement to a redundancy payment. The relevant provisions in respect of this claimant are found in Articles 182 – 185, 190, 198 and 199 of the 1996 Order. Article 183 to 185 inclusive sets out qualifying conditions that must be satisfied to protect that eligibility to redundancy payment. Article 185 of the 1996 Order provides “An employee is not entitled to a redundancy payment by reason of being laid off unless he terminates his contract of employment by giving such period of notice as is required for the purposes of this Article before the end of the relevant period”. The relevant period is defined in Article 185 (3) - in effect before the expiration of four weeks from service of the notice of intention to claim. The period of notice required in the circumstances where the employee is required by his contract of employment to give more than one weeks notice to terminate the contract is “the minimum period which he is required to give and otherwise one week”.

12. In regard to the claim for pay in lieu of notice, the claim of the claimant is based on contractual arrangements made between the parties when he commenced his employment. No evidence was called or produced that clause 14 was varied at any stage during his employment. If the contract of employment gives employee or employer a right to longer notice than that in legislation then the longer period of notice applies. Equally the principal right conferred during a period of notice is “to be paid in cases where the employee is ready and willing to work but no work is provided for him by his employer” amongst other circumstances. Any payments in fact made by an employer during period of notice (including holiday pay or sick pay) go towards meeting the employer’s liability – see Harvey on Industrial Relations and Employment Law paragraph 48.12.

13. The date of termination is governed by Article 129 (1) (b) of the Employment Rights (Northern Ireland) Order 1996 and is the date the “termination takes effect”.

14. Article 197 of the 1996 Order sets out how the amount of the redundancy payment shall be calculated.

15. Under the Industrial Tribunal Extension of Jurisdiction Order (Northern Ireland) 1994 an employee may bring a claim for damages for breach of his contract of employment or for a sum due under that contract or any other contract connected with his employment before an Industrial Tribunal if the claim arises out of or is outstanding on termination of his employment.

Applying the Law to Facts Found

16. The tribunal is satisfied in light of the evidence of an express provision in the written statement of terms and conditions of employment in the circumstances of this case there is express provision in the contract of the claimant permitting the second named respondent to “lay off” this employee without pay. The claimant established that he is eligible for a redundancy payment by reason of “lay off” as provided for by Article 183 of the 1996 Order. The period of lay off had commenced for this claimant on 18 June 2010 and the claimant received notice that it would continue for 8 weeks taking it to the 13 August 2010. Then by letter dated 9 August the claimant was given notice of an extension of the “lay off” for five weeks, effective from 2 August 2010, due to end 6 September 2010. During the period of “lay off” the claimant received less than half a weeks pay. By the claimant giving notice on the 31 August 2010, he gave notice within four weeks of the ending of the first “lay off” period thereby satisfying the conditions of Article 183 (1) and (2) (a) of the 1996 Order.

17. No counter notice was served by the second named respondent. The claimant must give notice of resignation as required by Article 185 of the 1996 Order before “the end of the relevant period” – see Article 185 (1) of the 1996 Order. The period of notice to be given in this case was “the minimum period he was required to give” within the terms of his contract of employment. Clause 14 of the claimant’s contract of employment made it clear an employee “may be asked to give an equal amount of notice – as that required by the employer which in the circumstances of this case would be “one week for each year of service”. The notice period could only be waived by mutual agreement – thereby implying that the notice required in the absence of waiver was nine weeks. The “relevant period” where an employer does not give a counter notice is within four weeks of notice of intention to claim. While case law supports the proposition that the legislative requirements must be followed strictly – there is authority the tribunal can “resolve the issue as to resignation by taking into account “the particular circumstances which applied in that context” – Buffrey, Auker–Howlett and Baldwin v Manpower PLC [2003] UKEAT 0443/02/0804. In this case the claimant gave notice of resignation at the same time as the notice of intention to claim. Even though the notice of resignation was given at the same time as the notice of intention to claim it appears to the tribunal that does not undermine the claimant’s legal entitlement as such notice of resignation has still been given “before the end of the relevant period”. The tribunal takes the view that this notice of resignation is still “within four weeks of notice of intention to claim”. In all the circumstances of this case the tribunal determined that the date of effective termination for the claimant’s employment in all the circumstances of this case was 29 October 2010.

18. The claimant gave notice as required by clause 14 – one week for each year of service. Clause 14 contained a penalty for employees who did not give the required notice of termination – without the express agreement or waiver of same by the employer. The tribunal was faced with a claimant who had registered for jobseekers contribution based allowance from the 16 August 2010 – some two weeks before he gave notice of his intention to terminate his employment with the second named respondent. While the claimant had not worked for the second named respondent during the lay off period since 30 July 2010, he had worked when any work was offered to him. It was against this background that the issue of whether or not the claimant was entitled to notice pay in circumstances where he exercised his right to claim entitlement to redundancy having been laid off or placed on short time by his employer fell to be resolved.

19. While there are certain legislative provisions governing when notice of termination can be waived “lay off” does not appear as one of the statutory exceptions. Equally in this case while there was express provision in the written statement of terms and conditions of this claimant providing the employer the right to exercise a lay off period no mention was made whether it should be with or without pay. However as similar lay off action without pay had occurred in 2009 without same being treated as a repudiation of contract, a term covering same can be implied into the contract of employment. The second named respondent could easily have reacted to the notice given in the letter dated 31 August 2010 and waived the claimant’s obligation to give nine weeks notice but did not do so. The tribunal took particular notice of the documents and letters that passed between the parties including the correspondence dated 28 October 2010 – which exhibited no evidence of an intention on the part of the second named respondent to waive the contractual notice period as provided within clause 14 of the contract of employment held by the claimant.

20. It is difficult for the tribunal to conclude anything other than on the balance of probabilities, had work been offered to the claimant during that nine week period he would have completed same. Clause 14 of the claimant’s contract of employment made it clear that for an employee to leave before the end of the notice period - the employee would forfeit the wages for the un-worked period. The notice period could only be waived by mutual agreement – thereby implying that the notice required in the absence of waiver was nine weeks. The contract also contained a clause 22 entitled “lay-offs”. There was nothing in that clause that amended the provisions of clause 14. On that basis it appears to the tribunal that the claimant has established that he had a contractual obligation to give nine weeks notice to the second named respondent which the respondent could have waived but didn’t. Accordingly in contract law the claimant is entitled to nine weeks pay for the notice period running from 31 August 2010 until 29 October 2010. It is noteworthy the claimant had still not found alternative employment at the date he submitted his claim in early December 2010. The claimant during the period from 31 August to 29 October 2010 received job seekers allowance. It is necessary to deduct that amount from the weekly net pay due to the claimant – as it would be contrary to law for the claimant to be awarded a sum greater than his loss. Accordingly his net weekly pay was £315 and the sum of £105.00 should be deducted to make a total weekly loss of £200.00. Any payments in fact made by an employer during period of notice (including holiday pay or sick pay) go also towards meeting the employer’s liability in respect of notice pay.

21. The tribunal was satisfied that monies in respect of all holiday pay due and owing has been discharged in the cheque tendered to the claimant in early November 2010.

Award

22. The tribunal considered Articles 17 to 20 and Articles 197 of the Employment Rights (Northern Ireland) Order 1996. There was no break in any of the claimant’s continuity of employment. The claimant had nine complete years of service, commencing when he was aged 23 years. This would have entitled the claimant to one week’s gross pay for each of the nine years service as a redundancy payment subject to the relevant statutory maximum weekly wage which is £380.00. The claimant is entitled to a payment representing nine weeks gross pay – 9 x statutory maximum gross weeks pay namely £380.00 = £3,420.00.

23. The tribunal orders that the first named respondent be dismissed from these proceedings as he was not the employer of the claimant at any time during the claimant’s employment in particular at the relevant date of termination of that employment.

24. In respect of the breach of contract claim for notice pay the tribunal have concluded that the sum owed in respect of same is nine x £200 (£1,800) less £599.00 (monies tendered in respect of holiday pay less taxes) leaving the sum owing as £1,201.00

25. The Employment Protection (Recoupment of Job Seeker’s Allowance and Income Support) Regulations (Northern Ireland) 1996 do not apply to this decision.

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

Chairman:

Date and place of hearing: 19 April 2011, Belfast.

Date decision recorded in the register and issued to the parties:

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You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> McFalone v Michael Young Younger Homes Ltd [2011] NIIT 02788_10IT (10 June 2011) URL: http://www.bailii.org/nie/cases/NIIT/2011/02788_10IT.html Cite as: [2011] NIIT 2788_10IT, [2011] NIIT 02788_10IT

Industrial Tribunals Northern Ireland Decisions