O'Donaghue v BAND Distribution Limited BAND Distribution Limited [2014] NIIT 209

THE INDUSTRIAL TRIBUNALS

CASE REFS: 209/14

393/14

CLAIMANT: Gerard O’Donaghue

RESPONDENT: BAND Distribution Limited

DECISION

The unanimous decision of the tribunal is that the claimant was automatically unfairly dismissed by the respondent, has suffered a series of unauthorised deductions from wages in respect of holiday pay and suffered a loss as a result of being paid at less than the national minimum wage in breach of contract. The respondent shall pay the claimant the following compensation:-

BASIC AWARD £ 539.00

COMPENSATORY AWARD £1,665.36

HOLIDAY PAY £ 859.73

NATIONAL MINIMUM WAGE SHORTFALL £ 612.16

TOTAL (£3,676.25)

Constitution of Tribunal:

Employment Judge: Employment Judge Bell

Members: Mr B Schofield

Mrs T Cregan

Appearances:

The claimant was self-represented.

Mr Walter McCrea, a former employee of the respondent, appeared on behalf of the respondent.

1. The claimant complained in his claims that he was unfairly dismissed after seeking payment of his wages from the respondent using language commonly used in the workplace, without prior discussion or a right of appeal, also that from the start of his employment he had not received holiday pay and was paid below the minimum wage.

2. The respondent in its responses resisted the claimant’s claims and asserted that the claimant was first in on a training scheme and only formally employed in 2012 as a casual worker on call as required, was not entitled to notice and had resigned when asked for keys of the shop. At hearing Mr McCrea asserted that the claimant was present only for training to assist him in obtaining qualifications and did not become an employee until 5 July 2013.

3. At hearing Mr McCrea confirmed that whilst the respondent has closed down and is no longer trading the respondent is not legally insolvent.

ISSUES

4. The following issues were before the tribunal:

(i) What was the status of the claimant? Does the claimant have sufficient continuity of employment to claim unfair dismissal? Was the claimant a worker entitled to holidays under the working time regulations? Was the claimant a worker entitled to payment at least at the national minimum wage?

If so,

(ii) Was the claimant dismissed or did the claimant resign from his employment?

(iii) If the claimant was dismissed, was he dismissed in accordance with the statutory dismissal procedure? If he was not so dismissed, was he automatically or technically unfairly dismissed for breaches of that statutory procedure?

(iv) Leaving aside the issue of compliance with statutory procedure, was the claimant, in any event, unfairly dismissed?

(v) If the claimant was automatically or technically unfairly dismissed for breaches of the statutory procedure would following that procedure have made any difference and, if so, what sort of difference?

(vi) If the claimant was automatically unfairly dismissed or ordinarily unfairly dismissed, did the claimant contribute to that dismissal? If so what was his percentage contribution?

(vii) If the claimant was automatically unfairly dismissed or ordinarily unfairly dismissed, what is the appropriate remedy?

(viii) Is there a claim under the Working Time Regulations for the last leave year or a claim under the Employment Rights (Northern Ireland) Order 1996 in respect of a series of unauthorised deductions from wages in respect of all leave years?

(ix) Is there a claim in relation to an alleged failure to pay statutory minimum wage?

EVIDENCE

5. The tribunal considered the consolidated claims, responses, agreed documentation provided at hearing by the parties and oral evidence from the claimant and from Mr McCrea.

FINDINGS OF FACT

6. The respondent operated a business dealing with computer repairs and sales.

7. The claimant was born on 13 November 1976.

8. The claimant attended the respondent’s work place for 13 weeks between the 12 September 2011 and 9 December 2011 as part of an unpaid back to work scheme. The claimant thereafter remained placed in the respondent’s workplace through arrangement with a training provider on a government subsidised training scheme between 12 December 2011 and 12 June 2012.

9. Despite requests by the claimant he was not provided by the respondent with payslips except for four which were produced at hearing dated:

10/05/2013 for £82.20 net being 16 hours at £5.50 gross per hour;

24/05/2013 for £82.20 net being 16 hours at £5.50 gross per hour;

31/05/2013 for £82.20 net being 16 hours at £5.50 gross per hour; and

26/07/2013 for £119.55 net being 19.5 hours at £6.91 gross per hour.

10. No formal deed of apprenticeship was entered into by the claimant with the respondent in respect of the period from 12 June 2012. The tribunal prefer the claimant’s evidence that from 12 June 2012 he was employed by the respondent carrying out computer technical support, rather than being allowed to stay as a trainee to attain his accreditation, and find that for each week from then he worked at least 16 hours as confirmed by Mr McCrea, until termination of his employment. The claimant was paid at a rate of £5.50 gross per hour from 12 June 2012 until July 2013 when his contractual hours increased to 18, as per the statement of particulars provided to the claimant signed by Mr McCrea on 5 July 2013, although in practice he thereafter worked approximately 19 ½ hours each week. As per payslips produced the claimant’s pay rate increased to £6.91 per hour from the week ending 26 July 2013 inclusive, shortly after the claimant having queried with Mr McCrea his hourly rate of pay. The tribunal accept the claimant’s evidence that if he had refused to work when asked to do so by the respondent that he would have lost his job. The claimant held keys to the premises, was responsible for opening up on his work days, which were usually a Monday, Wednesday and Friday, during which he was responsible for looking after customers. No paid holidays were provided to the claimant throughout his employment.

11. In December 2013 Mr McCrea reluctantly agreed to allow the claimant to take unpaid leave on 23 December 2013 due to his childcare responsibilities, consequently the claimant did not receive pay due to him before the respondent closed for Christmas.

12. The claimant on 26 December 2013 texted Mr McCrea and then on 27 December 2013 telephoned Mr McCrea seeking his pay but was told to wait until his return to work. The text messages between Mr McCrea and the claimant on 26 & 27 December 2013 were as follows:

Claimant: THUR 16:16 When r we back?

Mr McCrea: THUR 16:32 Monday

Claimant: THUR 19:42 What’s the craic with the wages 2moro mate?

Mr McCrea: FRI 13:27 Sort them Monday

Claimant: Lol ya mean ur just not paying me?

Claimant: U serious?

Claimant: Hello

Mr McCrea: Yes out for day with Paula first day off in long time I do a seven day week

Claimant: Is there no way off gettin them today?

Mr McCrea: No pal out with Paula

Claimant: Ano pal meant b takin Barbara out hence I need paid

Mr McCrea: Sorry

Claimant: how do you sleep in ur bed at night u lousy cunt. [Sic]

The language used by the claimant in his phone call to Mr McCrea asking if they could meet to allow the claimant to get his wages was abusive and Mr McCrea terminated the call. The claimant tried to telephone Mr McCrea but his call was terminated and Mr McCrea’s mobile phone then switched off. Following this Mr McCrea and the claimant exchanged pleasant New Year wishes by text messages on the 31 December 2013.

13. It was common case that the claimant returned to work on 2 January 2014 but in dispute whether the claimant was then dismissed summarily or resigned. Mr McCrea contended that following the claimant returning to work after Christmas and asking for his wages that he had asked for the claimant’s keys to the shop and the claimant stated ‘you’re not dismissing me, I resign’ whereupon Mr McCrea gave the claimant a prepared letter dismissing him (marked as printed on 30 December 2013 but signed and dated 30 January 2013). Whereas the claimant said that after requesting his wages he was asked for his keys and handed an envelope and on asking what it was, was told that he was not welcome in the shop and to get out, he was sacked. On balance the tribunal prefer the claimant’s evidence but in any event consider that a reasonable employee would have understood Mr McCrea’s request for the claimant’s keys to the premises as tantamount to dismissal, and find that it was the respondent who was really responsible for termination of the claimant’s contract of employment. As at the effective date of termination which the tribunal accepts on the parties evidence as 2 January 2014 the claimant’s normal weekly pay was £134.75 gross being £119.55 net.

14. The claimant was not advised of his right of appeal in the dismissal letter provided to him or at any stage thereafter by the respondent.

RELEVANT LAW

15. An ‘employee’ is an individual who has entered into or works under a contract of employment (being a contract of service or apprenticeship, whether express (oral or written) or implied).

16. Under Article 126 of the Employment Rights (Northern Ireland) Order 1996 an employee has the right not to be unfairly dismissed by his employer subject normally as set out under Article 140 to a qualifying period of continuous employment of not less than one year.

17. The Employment (Northern Ireland) Order 2003 at Schedule 1 sets out the statutory dismissal and disciplinary procedures to be followed as a bare minimum where applicable, by an employer contemplating a dismissal. The standard procedure consists of three steps however a modified two step procedure applies where the employer was entitled, in the circumstances, to dismiss the employee by reason of his conduct without notice or any payment in lieu of notice. The modified procedure requires as follows:-

Step 1: Statement of grounds for action

The employer must:-

(a) Set out in writing:-

(i) the employee's alleged misconduct which has led to the dismissal,

(ii) what the basis was for thinking at the time of the dismissal that the employee was guilty of the alleged misconduct, and

(iii) the employee’s right to appeal against dismissal, and

(b) Send the statement or a copy of it to the employee.

Step 2: Appeal

(1) If the employee does wish to appeal, he must inform the employer.

(2) If the employee informs the employer of his wish to appeal, the employer must invite him to attend a meeting.

(3) The employee must take all reasonable steps to attend the meeting.

(4) After the appeal meeting, the employer must inform the employee of his final decision.

18. A dismissal may be regarded as automatically unfair under Article 130A (1) of the 1996 Order where one of the statutory dismissal and disciplinary procedures applies in relation to the dismissal procedure has not been completed, and, the non-completion of the procedure is wholly or mainly attributable to failure by the employer to comply with its requirements, otherwise Article 130 sets out how the question of whether a dismissal is fair or unfair is to be determined.

19. Where an industrial tribunal finds that the grounds of a complaint of unfair dismissal are well-founded the Orders it may make by way of remedy are set out at Article 146 of the 1996 Order and include reinstatement, or re-engagement, and otherwise compensation. How compensation is to be calculated is set out at Articles 152 to 161.

20. Article 154(1A) of the 1996 Order provides that where an employee is regarded as unfairly dismissed by virtue of Article 130A(1) the industrial tribunal shall increase the basic award where the amount is less than four weeks’ pay to the amount of four weeks’ pay (save as provided therein at 1(B)).

21. Under Article 154(1) of the 1996 Order where an employee is regarded as unfairly dismissed there is provision at Article 17 of the 2003 Order for an uplift to be applied to awards in proceedings before an industrial tribunal relating to a claim under any of the jurisdictions listed in Schedule 2 [which include Article 145 of the 1996 Order (unfair dismissal)] by an employee where it appears to the industrial tribunal that a claim to which the proceedings relate concerns a matter to which one of the statutory procedures applies, the statutory procedure was not completed before the proceedings were begun, and the non-completion of the statutory procedure was wholly or mainly attributable to failure by the employer to comply with a requirement of the procedure, in which case it shall (subject to paragraph (4) therein) 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, but not so as to make a total increase of more than 50%.

22. Where a dismissal is not automatically unfair Article 130(1) of the 1996 Order provides that in determining for the purposes of this part whether the dismissal of an employee is fair or unfair, it is for the employer to show -

(a) the reason (or, if more than one, the principle reason) for the dismissal, and

(b) that it is either a reason falling within Paragraph (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held.

Reasons falling within Paragraph (2) include at Article 130(b) if it relates to the conduct of the employee.

23. Under Article 130(4) of the 1996 Order where the employer has fulfilled the requirements of Paragraph (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer)

(a) depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and

(b) shall be determined in accordance with equity and the substantial merits of the case.

24. Under the National Minimum Wage Act 1998 (NMWA) if a person is a ‘worker’ they are entitled to be paid at least the national minimum wage unless a specific exemption applies. Applicable rates from October each year were in 2013 £6.31, 2012 £6.19, 2011 £6.08 and in 2010 £5.93 A lower rate applies to apprentices aged 16 to 18, or those aged 19 or over in their first year. A ‘worker’ includes not only those working under contracts of employment but also those undertaking 'to do or perform personally any work or services for another party to the contract' (and they are not genuinely self-employed) and the worker's contract may be written, verbal or implied). A specific exemption applies to ‘workers’ who are students undertaking work experience lasting up to one year as part of a UK further or higher education course. The absence of any of the three ingredients essential to the definition of a worker: a contract, personally to do work, for another party to the contract, will take an individual outside the national minimum wage. Training contracts may fall outside the NMWA where work is done effectively for the individual’s own benefit in training for an occupation rather than being required to do the work for another party to the contract, and is a question of fact for determination by the tribunal. Someone who enters into an agreement or contract to work for experience will be a “worker” for national minimum wage purposes and entitled to be paid the national minimum wage in the normal way, unless they are a genuine volunteer or fall into one of the groups who are exempt. Key elements in establishing whether someone has a worker’s contract include whether there is an obligation on the individual to perform the work and an obligation on the employer to provide the work, and whether the individual is rewarded for the work by money or benefits.

25. 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.

26. Article 45 of the Employment Rights (Northern Ireland) Order 1996 provides for a worker’s right not to suffer unauthorised deductions from wages by his employer. A deduction occurs when the employer pays less than the amount due on any given occasion and includes a failure to make any payment.

27. Harvey on Industrial Relations and Employment Law in Division A1 (c) comments in respect of Casual workers at paragraphs:

[54]

‘[….] A number of cases involving casual workers have focused attention on one of the criteria in determining whether they are employees or not-that of mutual obligation. [….]

[57]

[….]in Wilson v Circular Distributors Ltd [2006] IRLR 38, EAT where a relief area manager was not entitled to any set amount of work, but when called on was contractually obliged to undertake the work (and subject to very normal employment terms and conditions); he was held to be an employee on the basis that the 'lack of mutuality' defence only defeats employment status if it applies to both side.

28. The Working Time Regulations (Northern Ireland) 1998 as amended provide under Regulations 13 and 13A for a worker to have minimum leave in a leave year from 1 April 2008 of 5.6 weeks and in the absence of provisions of a relevant agreement for the worker’s leave year to begin on their start date where it is after 23 November 1998. Under Regulation 14(2) where the proportion of leave taken by the worker is less than the proportion of the leave year which has expired, his employer shall make him a payment in lieu of leave in accordance with the formula set out at paragraph (3) in the absence of provision in a relevant agreement. Regulation 15A provides for accrued annual leave to be rounded-up during the first year only on a month-to-month basis to the next half-day.

APPLICATION OF THE LAW TO THE FACTS FOUND RELEVANT TO LIABILITY

29. The tribunal consider that when the claimant was initially placed on the back to work scheme he was not contracted personally to do work for the respondent, thereafter the claimant was under a training contract where the work done by him was for his own benefit in training for an occupation rather than being required to do work for the respondent and find that the claimant prior to 12 June 2012 was not an employee or worker as defined for the purposes of the National Minimum Wage Act or Working Time Regulations. However from 12 June 2012 the tribunal find that the claimant despite his casual status was in fact continuously employed by the respondent as an employee for at least 16 hours per week and obliged to accept the work asked of him, and that from July 2013 the claimant was contracted to work 18 hours per week, but in practice worked 19½ hours per week which he did until termination of his employment on 2 January 2014. As such the claimant has sufficient continuity of employment to qualify for protection against unfair dismissal, was entitled to payment at least at the national minimum wage and to receive 5.6 weeks paid holidays per annum.

(ii) Was the claimant dismissed or did the claimant resign from his employment?

30. The tribunal prefer the claimant’s evidence that he was dismissed but in any event consider that a reasonable employee would have understood Mr McCrea’s request for the claimant’s keys to the premises as tantamount to dismissal, and find that it was the respondent who was really responsible for termination of the claimant’s contract of employment on 2 January 2014.

(iii) If the claimant was dismissed, was he dismissed in accordance with the statutory dismissal procedure? If he was not so dismissed, was he automatically or technically unfairly dismissed for breaches of that statutory procedure?

31. The third requirement under step one of the modified statutory dismissal procedure requiring the respondent to set out the claimant’s right to appeal against dismissal was not complied with at the failure of the respondent. The tribunal in the circumstances finds that the claimant’s dismissal was automatically unfair under Article 130A(1) of the 1996 Order the non-completion of the dismissal and disciplinary procedures being wholly attributable to the failure by the respondent to comply with its requirements.

(iv) Leaving aside the issue of compliance with statutory procedure, was the claimant, in any event, unfairly dismissed?

32. The tribunal consider in the alternative that the claimant’s dismissal was unfair under Article 130 of the 1996 Order, that whilst there was a potentially fair reason of misconduct for dismissal, it was procedurally unfair and the penalty of dismissal not within the range of reasonable responses which a reasonable employer might have adopted in the circumstances.

FINDINGS OF FACT RELEVANT TO REMEDY

33. The use of abusive language was usual in the claimant’s and Mr McCrea’s workplace interactions.

34. The claimant has not, since termination of his employment, claimed jobseekers allowance.

35. The claimant has not obtained a new job.

36. The claimant seeks compensation only.

37. Early to mid-April 2014 the respondent closed its business and is no longer trading.

APPLICATION OF THE LAW TO THE FACTS FOUND RELEVANT TO REMEDY

(v) If the claimant was automatically or technically unfairly dismissed for breaches of the statutory procedure would following that procedure have made any difference and, if so, what sort of difference?

38. The tribunal consider that had the claimant been informed of his right of appeal he would have pursued it, had the opportunity to put forward mitigating circumstances and explain the urgency of his request over Christmas for payment of wages due to him and the language used by him in the phone call to Mr McCrea and consider that in all likelihood the parties would have resolved matters between them and the claimant would not have been dismissed in the circumstances.

(vi) If the claimant was automatically unfairly dismissed or ordinarily unfairly dismissed, did the claimant contribute to that dismissal? If so what was his percentage contribution?

39. The tribunal consider that for the purpose of assessing remedy only that the claimant’s use of abusive language toward Mr McCrea outside of the workplace contributed to his dismissal, the tribunal assess the claimant’s contribution at 30%.

(vii) If the claimant was automatically unfairly dismissed or ordinarily unfairly dismissed, what is the appropriate remedy?

40. The claimant wishes to be compensated only.

(viii) Is there a claim under the Working Time Regulations for the last leave year or a claim under the Employment Rights Northern Ireland) Order 1996 in respect of a series of unauthorised deductions from wages in respect of all leave years?

41. In the absence of preferential contractual provision for paid leave and provision as to the dates of the leave year the claimant was entitled to but did not receive a statutory minimum of 5.6 weeks paid annual leave per holiday year from his start date on 12 June 2012 and has suffered a series of unauthorised deduction from his wages up to termination of his employment on 2 January 2014 in respect thereof.

(ix) Is there a claim in relation to an alleged failure to pay statutory minimum wage?

42. The claimant worked 16 hours per week for which he was entitled to payment of at least the national minimum wage of £6.08 from 12 June 2012 until October 2012 and thereafter a minimum of £6.19 per hour but during these periods he was paid only £5.50 until July 2013 after which his rate of pay was increased to more than the national minimum wage. The claimant has accordingly suffered a loss as a result of a breach of contract by the respondent in failing to pay to the claimant the minimum hourly rate implied by statute.

REMEDY

UNFAIR DISMISSAL

43. As the claimant’s basic award would amount to less than four weeks’ pay the tribunal increases the basic award to an amount equal to four weeks’ pay under Article 154 of the 1996 Order. The tribunal is not persuaded that the claimant’s conduct before dismissal makes a reduction to the basic award just and equitable.

44. The tribunal considers that it is just and equitable in all the circumstances of this case to increase the compensatory award for unfair dismissal by 10% under Article 17 of the 2003 Order.

45. The tribunal does not consider that there is doubt whether or not the claimant would still have been dismissed had the respondent complied with the statutory procedure such that it would be just and equitable to reduce compensation to reflect the chance that the employee would still have lost his employment.

46. The tribunal accordingly orders the respondent to pay the claimant compensation as follows:-

47. COMPENSATION FOR UNFAIR DISMISSAL

Basic Award

The tribunal orders the respondent to pay a basic award for unfair dismissal of four week’s gross pay under Article 154(1A) of the 1996 Order being:

4 weeks X £ 134.75 = £ 539.00

Compensatory Award

Loss of Earnings

The tribunal consider it just and equitable to award the claimant 16 weeks net pay to compensate for the approximate period from the effective date of termination until when it considers his employment otherwise was likely to have ended on expiry of statutory minimum notice following closure of the respondent’s business prior to mid April 2014.

16 weeks’ pay @ £119.55 = £1,912.80

Future Loss

48. In view of the respondent having ceased trading it is not appropriate to compensate for future loss.

Loss of statutory rights

£ 250.00

Uplift under Article 17

(Total before uplift £ 2,162.80)

10% uplift = £ 216.28

Percentage deduction for the employee’s contributory fault

(Total before deduction £2,379.08)

30 % reduction = - £713.72

Total Compensatory Award = £1,665.36

HOLIDAYS

49. The claimant’s statutory minimum holiday entitlement under the Working Time Regulations (Northern Ireland) 1998 was 5.6 weeks per year, the claimant normally worked three days per week and was entitled to but did not receive any paid holidays as follows:

June 2012 - June 2013

5.6 weeks x 3 = 16.8 days

Rounded up under Regulation 15A = 17 days

Average net daily pay £82.80 /3 at that time = £ 27.60

Holiday pay due: 17 x £27.60 = £469.20

June 2013 - January 2014

5.6 weeks x 3 = 16.8 days X 7/12 months (approximate proportion of the leave year expired before termination date) = 9.8 days

Approximate average net daily pay at that time £119.55/3 = £ 39.85

Holiday pay due: 9.8 x £ 39.85 = £390.53

Total holiday pay £859.73

(The claimant is compensated below for the difference between actual pay and the national minimum wage which should have been paid to him in respect of holidays).

NATIONAL MINIMUM WAGE

50. The tribunal find that the claimant worked 16 hours per week for which he was entitled to payment of at least the national minimum wage of £6.08 from 12 June 2012 until the start of October 2012 and thereafter a minimum of £6.19 per hour but he was paid only £5.50 throughout until 19 July 2013 when his pay was increased to more than the national minimum wage. The claimant has accordingly suffered a loss as a result of a breach of contract by the respondent in failing to pay to the claimant the minimum hourly rate implied by statute as follows:

June 2012 - October 2012

£0.58 per hour x 16 hours per week x 16 weeks = £148.48

October 2012 - July 2013

£0.69 per hour x 16 hours per week x say 42 weeks = £463.68

Total £612.16

CONCLUSION

51. The tribunal finds that the claimant was automatically unfairly dismissed by the respondent under Article 130A (1) of the 1996 Order, the claimant has suffered a series of unauthorised deductions from wages in respect of holiday pay and suffered a loss as a result of being paid at less than the national minimum wage in breach of contract. The respondent shall pay the claimant the following compensation:-

BASIC AWARD £ 539.00

COMPENSATORY AWARD £ 1665.36

HOLIDAY PAY £ 859.73

NATIONAL MINIMUM WAGE SHORTFALL £ 612.16

TOTAL (£3,676.25)

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

Employment Judge:

Date and place of hearing: 27 May 2014, Belfast.

Date decision recorded in register and issued to parties:

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Industrial Tribunals Northern Ireland Decisions