Pearson v McCrory & Anor [2009] NIIT 6086

THE INDUSTRIAL TRIBUNALS

CASE REF: 6086/09

CLAIMANT: Martina Pearson

RESPONDENTS: James McCrory and Eugene Hannigan t/a “Mortgage Direct Solutions”

DECISION

The unanimous decision of the tribunal is that the correct respondents in the proceedings are James McCrory and Eugene Hannigan, t/a “Mortgage Direct Solutions”. The tribunal finds the claimant’s claims to be well-founded and orders the respondents and each of them to pay to the claimant compensation as follows:-

(a) Redundancy pay £761.25.

(b) Unauthorised wages deductions £219.68.

(d) Holiday pay £87.87.

(e) Statutory enhancement (Article 17 of the Employment (Northern Ireland) Order

2003) £551.30.

(f) Failure to provide statement of employment particulars £439.36.

TOTAL: £2,828.34

Constitution of Tribunal:

Chairman: Mr J V Leonard

Members: Ms N Wright

Mr J Nicholl

Appearances:

The claimant was represented by M. Roddy of Omagh Independent Advice Services.

There was no appearance by or on behalf of the respondents.

Reasons

1. The tribunal heard oral evidence from the claimant and noted the content of the claim form which was dated 1 June 2009 and received by the Office of the Tribunals on the following date. There was no response to this claim within the statutory time provided. The claimant submitted a bundle of documents in evidence at the hearing.

The Issues

2. At the outset of the hearing the tribunal addressed the issue of the proper identity of the respondents. From the evidence of the papers before the tribunal and the claimant’s oral evidence, the tribunal finds that the firm named ‘Mortgage Direct Solutions’ was a trading name for two persons who traded in partnership, these being James McCrory and Eugene Hannigan. The tribunal therefore finds that the correct title of the respondent in these proceedings is, James McCrory and Eugene Hannigan, t/a “Mortgage Direct Solutions”. The tribunal further noted that by e-mail sent to the Office of the Tribunals on 19 October 2009, James McCrory made a request for a postponement of the hearing. Therein James McCrory referred to comments which he contended had been made on a response form returned to the Office of the Tribunals some two months before, as he put it. The tribunal examined the office file and noted that there was no record on the file of any response having been received from either of the respondents. The tribunal further noted that neither of the respondents had appeared before the tribunal to make any application in person nor had either appointed any representative to make any such application. The tribunal determined that there were no proper grounds to postpone the hearing of the matter, and in reaching that determination the tribunal took into account the overriding objective contained within the tribunal’s Rules of Procedure. Turning then to the substance of the claim, in her claim to the tribunal, the claimant claimed redundancy payment, unauthorised deductions of wages and pay in lieu of notice and also outstanding wages in respect of annual leave. Accordingly, the tribunal had to determine if these claims were well-founded and, if so, the matter of appropriate remedy including compensation had to be determined.

The Tribunal’s Findings of Fact

3. In consequence of the oral and documentary evidence before it, the tribunal on the balance of probabilities determined the following material facts:-

(a) The claimant commenced employment as an Office Administrator with the respondents on some date in November 2001. The claimant was unaware of the precise date. There were no written terms and conditions of employment and a statement of terms was never provided by the employers. The claimant’s days and hours of work were constant throughout the employment from the commencement up to the start of January 2009. In this employment the claimant had worked 24 hours per week; in respect that work she received £174.00 per week gross pay and £152.61 net take-home pay. This work was carried out on three working days per week, each of eight hours.

(b) At the start of January 2009, the work pattern changed to two days per week, being 15 hours per week. As this was a matter of significance, the tribunal closely questioned the claimant in the course of the hearing regarding how this change in working hours came about. From the evidence, it appears that the business conducted by the respondents had substantially reduced and there were trading difficulties. The facts are that there were apparently four members of staff and the respondents, upon some undetermined date, announced to all staff that the working hours of staff members would have to be reduced in order to save overhead costs for the business. Whatever might have been the mood when that announcement was made, none of the staff, including the claimant, appear to have protested or strongly resisted the reduction in working hours. From 5 January 2009 the new working arrangement applied to the claimant’s employment. The claimant seems to have either acquiesced in that arrangement or even might fairly and properly be taken to have agreed to this in order to assist in the continuance of the respondents’ business. There is no evidence that the claimant “worked under protest”. The claimant did however anticipate that her working hours might be restored to 24 hours per week once the business had recovered from what she hoped might have been a temporary difficulty. The tribunal will comment further upon this below.

(c) On 20 February 2009 the respondents informed the claimant that her employment would come to an end on 27 February 2009 due to the closure of the respondents’ business. The claimant worked two days or 15 hours in the week commencing 23 February 2009 then the employment came to an end.

(d) At the time of termination of employment the claimant was receiving a gross wage in respect of this employment at a rate of £7.25 per hour, meaning that her gross weekly wage was £108.75. From inspection of her wages records, including an income tax refund, the claimant’s net wage per week varied between £109.74 and £109.94. The final wages cheque received by the claimant from the respondents, being a cheque dated 5 March 2009 for £109.74, was not honoured by the respondents’ bank.

(e) At the time of termination of the employment the claimant had been employed for seven complete years and she was aged 33. She had worked a ‘lying week’ arrangement from the commencement of this employment and thus her wages were always in arrears in respect of that until the employment concluded.

(f) Regarding the claimant’s claim for holiday pay entitlement, in the absence of any contradiction of her evidence, the tribunal accepts the claimant’s evidence that she was entitled to 25 days’ holiday with pay per year. The customary arrangement in respect of holidays was that the holiday year ran from 1 January in each year. The claimant claimed that she was entitled to four days holiday on a pro-rata basis for the period of the year up to termination of employment and the tribunal had no reason to determine otherwise, on the facts.

The applicable law

4. Article 45 (1) of the Employment Rights (Northern Ireland) Order 1996 (“the 1996 Order”) provides that: "An employer shall not make a deduction from wages of a worker employed by him unless – (a) the deduction is required or authorised to be made by virtue of a statutory provision or a relevant provision of the worker's contract, or (b) the worker has previously signified in writing his agreement or consent to the making of the deduction". Where the total amount of wages paid by an employer to a worker employed by him is less than the total amount of the wages properly payable, the amount of the deficiency shall be treated as a deduction made by the employer from the worker’s wages and the tribunal may make an appropriate order.

Article 170 of 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 forth 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.” 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 and Article 23 of the 1996 order, as amended, provides that for the purpose of calculating a redundancy payment the amount of the week’s pay shall not exceed (at the material time) £350.00.

The Industrial Tribunals Extension of Jurisdiction Order (Northern Ireland) 1994 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. That entitles an award to be made for pay in lieu of notice.

The Employment (Northern Ireland) Order 2003 ("the 2003 Order") amends the 2006 Order and includes provisions under Article 17(1) to (4), in relation to non-completion of statutory procedure: adjustment of awards by industrial tribunals. Schedule 1 to the 2003 Order sets out statutory dispute resolution procedures. Part 1 of Schedule 1 provides for standard and modified dismissal and disciplinary procedures. Article 17 (3) of the 2003 Order provides for an adjustment of compensation as follows:- “ If, ..... it appears to the industrial tribunal that— the 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, it shall…. increase any award which it makes to the employee by 10 per cent 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 per cent”. The jurisdictions to which that adjustment applies are set forth in Schedule 2 to the 2003 Order and these include the claims of unauthorised wages deductions, redundancy payments, breach of employment contract and termination, and breach of the Working Time Regulations (Northern Ireland) 1998. Article 27 of the 2003 Order addresses any failure to give a statement of employment particulars by an employer and relates to the jurisdictions set forth in Schedule 4 to the 2003 Order and, once again, these include the claims of unauthorised wages deductions, redundancy payments, breach of employment contract and termination, and breach of the Working Time Regulations (Northern Ireland) 1998. This provides to the tribunal a discretion to award either two or four weeks’ pay.

In relation to annual leave, Regulation 13 of the Working Time Regulations (Northern Ireland) 1998 as amended by the Working Time (Amendment) Regulations (Northern Ireland) 2007 applies and the tribunal may make an appropriate order.

The Tribunal’s Decision

5. One of the central issues for determination in this case is what properly constitutes ‘a week’s pay’ in regard to this employment. The claimant’s customary arrangement from the outset of this employment was that she worked for 25 hours, equivalent to three days, per week for the respondents. That arrangement changed with effect from 5 January 2009. From that date effectively the claimant’s working time was reduced to two days per week, being the equivalent of 15 hours. That much is certainly reflected in the wages records seen and inspected by the tribunal. However, the significant matter is that the claimant has made her claim in respect of the various heads of claim with reference to the earlier weekly wages which had prevailed prior to the start of 2009. Noting that contention, the tribunal’s task was to determine the appropriate figure for ‘a week’s pay’ in this employment upon which compensation for breach of statutory rights would be based. To assist in that determination, the tribunal noted the statutory provisions set forth in Part 1, Chapter IV of the 2006 Order and also to the commentary from the learned author of Harvey on Industrial Relations and Employment Law, Vol. 1, Division C1 [837] ff. The following extracts from Harvey are pertinent (adding the tribunal’s emphasis in bold lettering): -

“[837] … the rate of pay to be considered is that payable under the contract of employment in force on the appropriate calculation date or over the calculation period….

[838] This may produce anomalies, particularly where there has been a change in the rate of pay, perhaps in an unsuccessful attempt to forestall the employer’s imminent insolvency, followed shortly thereafter by redundancy, but that is an inevitable consequence of a method of calculation that focuses on the present or immediate past.”

6. Having regard to Part 1, Chapter IV of the 2006 Order, and noting the above commentary, the first issue to be determined is whether the employment has “normal working hours” or not (see Articles 16 and following). This is not a case, for example, of remuneration which varies according to the time of work, provided for in Article 18 of the 1996 Order, or an employment with no normal working hours, provided for in Article 20. In this case, looking at the facts, the tribunal has little doubt that there were “normal working hours” in that the employee in this case worked set and regular hours each week by arrangement. Thereafter, the tribunal has to determine whether the normal working hours were 15 hours per week, which the claimant was working at the time of termination of employment, or 24 hours per week, which had prevailed up to the end of 2008. The tribunal thus endeavoured to discern whether or not the 15 hours per week regime constituted a voluntary agreed amendment to the previously existing arrangement up the end of 2008. Looking at the facts of the matter, there is no evidence of any formal protest on the claimant’s part nor any evidence of her working those revised hours under duress or in an involuntary manner. Certainly the claimant might not have been very happy at the situation; but the facts appear to bear out the suggestion that all of the members of staff, including the claimant, gave some measure of agreement to the new arrangement. Clearly that was in order to assist in the continuance of the respondents’ business, if for no other reason than the prospect that their individual jobs might have been saved. Certainly the tribunal is conscious of the implications of this in regard to the claimant’s case. Indeed the leaned author of Harvey, quoted above, also seems to have been conscious of the point.

7. Having noted the foregoing, the tribunal must accept that the claimant’s normal working hours were varied to 15 hours per week at a time which was approximately two months before the employment regrettably came to an end. These varied hours became the claimant’s “normal working hours”. That being the case, the appropriate figure for “a week’s pay” for the statutory purpose reflects the wages paid to the claimant under these amended terms. This was a gross weekly wage of £108.75 and a net wage varying between £109.74 and £109.94. The tribunal takes that latter figure (in the absence of any further evidence) at the average of these figures, £109.84. Accordingly, the tribunal’s computation of the compensation which follows below is based upon these figures. That is of course at variance with the sums claimed by the claimant in this case. To summarise the foregoing, this is not a case of remuneration which varies according to the time of work, provided for in Article 18 of the 1996 Order, or an employment with no normal working hours, provided for in Article 20; rather this is a case where the tribunal determines that there were agreed working hours, these being 15 hours per week at the time of the employment being terminated.

8. The tribunal finds, in the absence of any defence to the claim, that the claimant is owed by the respondents one week’s wages in respect of the ‘lying week’. Further, the tribunal finds, in the absence of any defence, that the claimant is owed one week’s wages in respect of the dishonoured final wages cheque. These are unauthorised deductions from wages properly due. Additionally, the tribunal finds that the claimant is owed four days’ holiday pay and that she is owed seven weeks’ pay in lieu of notice. Finally the tribunal looks to the facts and to the reason for the dismissal. In the absence of any evidence nor any explanation from the respondents stating the reason for the dismissal, all that the tribunal can do is to note that it is fairly clear that the respondents’ business was in financial difficulty. All of the staff members it seems, including the claimant, were dismissed as a result. The business dismissed all staff at the same time. That seems to support the conclusion that the reason for the dismissal of the claimant falls fairly within the statutory definition of redundancy. The tribunal therefore determines that redundancy was the reason for the dismissal of the claimant. On that account, the claimant is entitled to a redundancy payment based upon Article 197 of the 1996 Order that sets out how the amount of the redundancy payment should be calculated with reference to length of service and age of the employee. All of the foregoing are set out below.

9. Two further matters require to be addressed by the tribunal. Firstly, as mentioned above, there is power under the foregoing statutory provisions contained in the 2003 Order to provide for an uplift compensation beyond the mandatory 10% provided for by Article 17 of the 2003 Order if the employer has failed to follow the statutory procedures. The tribunal does not see any exceptional circumstances upon the facts of the matter which would make an increase in compensation unjust or inequitable to the respondents. Taking into account the relevant case law bearing upon matters of compensation uplift and the principles to be applied (see Metrobus v Cook [2006] UKEAT/0490, Aptuit (Edinburgh) Ltd v Kennedy [2006] UKEAT/0057, Cex Limited v Lewis [2007] UKEAT/0013 and McKindless Group v McLaughlin [2008] IRLR 678) the tribunal determines that this is an appropriate case in which to afford an enhancement of compensation by a figure of 30%. That is reflected in the figures set out below and applies to those areas contained within Schedule 2 to the 2003 Order. This relates to the respective claims of unauthorised wages deductions (Article 55 of the 1996 Order), redundancy payments (Article 55 of the 1996 Order), breach of contract - pay in lieu of notice (the Industrial Tribunals Extension of Jurisdiction Order (Northern Ireland) 1994), and holiday pay (the Working Time Regulations (Northern Ireland) 1998 as amended).

10. The final matter to be addressed relates to the failure to afford written particulars of employment. Article 27 of the 2003 Order provides to the tribunal a discretion to award either two or four weeks’ pay in respect of this. The tribunal is afforded a broad discretion in respect of this. In exercise of that, the tribunal makes an award of four weeks’ pay in regard to this default on the employer’s part.

11. The tribunal accordingly finds the claimant’s claims to be well-founded and orders the respondents and each of them to pay to the claimant the compensation which is set out below:-

(a) In respect of the claim for redundancy pay, based on the claimant’s age (33) and length of service (7 years), the appropriate multiplier is 7. This produces a figure for redundancy pay as follows:-

7 x £108.75 = £761.25

(b) In respect of the claim for unauthorised wages deductions there is owed one week’s wages in respect of the ‘lying week’ and one week’s wages in respect of the dishonoured final wages cheque, two weeks’ pay:-

2 x £109.84 = £219.68

(c) In respect of the claim for breach of contract – pay in lieu of notice, the claimant is owed seven weeks’ pay in lieu of notice:-

7 x £109.84 = £768.88

(d) In respect of the claim for holiday pay, the claimant is four days’ holiday pay at £21.968 per day:-

£21.968 x 4 = £87.87

The statutory enhancement applied to headings (a), (b), (c) and (d) above at 30% of the total of these sums (£1,837.68) is:- £551.30

The tribunal also awards four weeks pay under Article 27 of the 2003 Order as follows:-

4 x £109.84 = £439.36

TOTAL: £2,828.34

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

Chairman:

Date and place of hearing: 21 October 2009, Omagh

Date decision recorded in register and issued to parties:

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	Industrial Tribunals Northern Ireland Decisions
You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> Pearson v McCrory & Anor [2009] NIIT 6086_09IT (18 December 2009) URL: http://www.bailii.org/nie/cases/NIIT/2009/6086_09IT.html Cite as: [2009] NIIT 6086_09IT, [2009] NIIT 6086_9IT

Industrial Tribunals Northern Ireland Decisions