Mr E Ward v V G Performance Cars Ltd: 1403863/2022
EMPLOYMENT TRIBUNALS
Case No 1403863/2022Venue CHAMBERS AT PlymouthHearing 24 January 2023 THE TIME FOR PRESENTING A RESPONSE HAVING EXPIRED AND NO VALID RESPONSE HAVING BEEN PRESENTED JUDGMENT UNDER RULE 21 1. The claimant’s claim for breach of contract succeeds and the respondent is ordered to pay the claimant one month’s notice pay in the sum of £1,026.40; and 2. The claimant’s claim for unlawful deduction from wages succeeds and the respondent is ordered to pay the claimant unpaid commission in the gross sum of £9,000.00; and 3. The claimant’s claim for accrued but unpaid holiday pay succeeds, and the respondent is ordered to pay the claimant four weeks’ pay in the gross sum of £1,026.40; and 4. The respondent failed to issue the claimant with a written statement of the terms of his employment and the respondent is ordered to pay the claimant four weeks’ pay in the gross sum of £1,026.40. JUDGMENT OF THE EMPLOYMENT TRIBUNAL HEARD REMOTELY BY VHS ON 16 June 2023
Between
Mr E WardClaimantV G Performance Cars LtdRespondent
Before
Employment Judge N J RoperIn person for claimantDate 12 January 2024
JUDGMENT
[1]The claimant’s claim for breach of contract succeeds and the respondent is ordered to pay the claimant one month’s notice pay in the sum of £1,026.40; and[2]The claimant’s claim for unlawful deduction from wages succeeds and the respondent is ordered to pay the claimant unpaid commission in the gross sum of £9,000.00; and[3]The claimant’s claim for accrued but unpaid holiday pay succeeds, and the respondent is ordered to pay the claimant four weeks’ pay in the gross sum of £1,026.40; and[4]The respondent failed to issue the claimant with a written statement of the terms of his employment and the respondent is ordered to pay the claimant four weeks’ pay in the gross sum of £1,026.40.
REASONS
[1]The respondent has sought a reconsideration of the judgment entered under Rule 21 dated 4 January 2023 which was sent to the parties on 6 February 2023 (“the Judgment”), and it has made an application for an extension of time to serve its response. The grounds were initially set out in its e-mail letter dated 21 March 2023.[2]This has been a remote hearing on the papers which has been consented to by the parties. The form of remote hearing was by Video Hearing Service. A face to face hearing was not held because it was not practicable, and all issues could be determined in a remote hearing. The documents that I was referred to are in a bundle of 67 pages, the contents of which I have recorded. The order made is described at the end of these reasons.[3]Schedule 1 of The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 contains the Employment Tribunal Rules of Procedure 2015 (“the Rules”). Under Rule 21(2) judgment can be issued where no response has been presented within the time limit in Rule 16, or a response has been rejected and no application for reconsideration is outstanding, or the respondent has stated that no part of the claim is contested.[4]Under Rule 71 an application for reconsideration under Rule 70 must be made within 14 days of the date on which the decision (or, if later, the written reasons) were sent to the parties.[5]Under Rule 5 the Tribunal may, on its own initiative or on the application of a party, extend or shorten any time limit specified in the Rules or in any decision, whether or not (in the case of an extension) it has expired.[6]The grounds for reconsideration are only those set out in Rule 70, namely that it is necessary in the interests of justice to do so.[7]The grounds relied upon by the respondent are effectively that it was unaware of the proceedings for the following reasons. The respondent was in dispute with its landlord who had been withholding mail, and the respondent was sufficiently concerned about this to have reported the matter to the Police. On 21 March 2023 Miss Stachowicz, a director of the respondent, emailed the Tribunal office to the effect that she had not been aware of these proceedings and had just learnt of the Judgment. She applied for reconsideration of the same. That application was resubmitted on 4 April 2023 with Mr Stachowicz again confirming that she was unaware of the claim as a result of the missing mail. I then gave directions to the effect that any application for reconsideration should be supported by an application for extension of time and the proposed defence to the claim.[8]On 4 April 2023 the claimant emailed the Tribunal office to confirm that he opposed the application for reconsideration on the basis that the respondent was aware of their dispute.[9]The respondent subsequently instructed its representative, and by letter dated 25 April 2023 the respondent’s representatives emailed the Tribunal to confirm that the respondent had been unaware of these proceedings until after receipt of the Judgment. That letter made an application for reconsideration; an application for an extension of time to consider the reconsideration; and an application for an extension of time to file the response. The letter also included a detailed proposed response which raises a valid arguable defence to each of the claimant’s four claims of breach of contract, unlawful deduction from wages, accrued holiday pay, and in respect of an alleged failure to provide a written statement of the terms of the claimant’s employment.[10]Under the previous Rules of Procedure (relating to the review of what were called Default Judgments) the EAT gave guidance on the factors which tribunals should take into account when deciding whether to review a default judgment in Moroak t/a Blake Envelopes v Cromie [2005] IRLR 535. The EAT held that the test that a tribunal should apply when considering the exercise of its discretion on a review of a default judgment is what is just and equitable. In doing so, the EAT referred to the principles outlined in Kwik Save Stores Ltd v Swain and others [1997] ICR 49.[11]In the Kwik Save decision, the EAT held that “… the process of exercising a discretion involves taking into account all relevant factors, weighing and balancing them one against the other and reaching a conclusion which is objectively justified on the grounds of reason and justice". The case established that an Employment Judge should always consider the following three factors. First, the explanation supporting an application for an extension of time. The more serious the delay, the more important it is that the Employment Judge is satisfied that the explanation is honest and satisfactory. Secondly, the merits of the defence. Justice will often favour an extension being granted where the defence is shown to have some merit. Thirdly, the balance of prejudice. If the employer's request for an extension of time was refused, would it suffer greater prejudice than the employee would if the request was granted?[12]This guidance in Kwik Save was approved by reference to the subsequent 2013 Rules in Office Equipment Systems Ltd v Hughes UKEAT 0183/16/ JOJ.[13]I have also considered the case of Pendragon Plc (trading as C D Bramall Bradford) v Copus [2005] ICR 1671 EAT which confirms that in conducting a reconsideration of a Rule 21 Judgment (formerly a review of a default judgment under the previous Rule 33) an Employment Judge has to take account of all relevant factors, including the explanation or lack of explanation for the delay and the merits of the defence, weighing and balancing the possible prejudice to each party, and to reach a conclusion that was objectively justified on the grounds of reason and justice.[14]Applying these principles in this case, I find that the respondent made a prompt application for reconsideration as soon as it became aware that the Judgment had been entered against it. The explanation for the failure to submit a response, namely that the proceedings were served by mail and never delivered to the respondent, has been maintained consistently by the respondent throughout. Upon receiving directions to clarify the nature of the response and to apply for an extension of time the respondent instructed its representatives who made that application promptly. The proposed defence to the claim arguably has merit, not least because it gives details of alleged dishonesty by the claimant which, if proven, would defeat the vast majority of his claims. The defence also includes an employer’s contract claim which the respondent also wishes to pursue and which follows logically from its submissions.[15]In conclusion there was no significant delay with this application; the proposed defence has merits; and on considering the balance of prejudice between the parties if the application were to be granted than the claimant would lose the opportunity to rely on the Judgment, but would still be able to argue his case on its merits, whereas if the application were refused the respondent would be denied the opportunity to rely on an arguable defence at a full hearing. In my judgment therefore it would be more prejudicial to the respondent to refuse the application, and I therefore allow the respondent’s application.[16]Accordingly, I allow the application for reconsideration pursuant to Rule 70 and the Judgment is hereby revoked. I also allow the application for an extension of time and the respondent’s response is accepted.[17]The response which has been allowed also includes an Employer’s Contract Claim. The claimant has brought a claim for breach of contract under the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994, and an employer’s contract claim is allowable under these provisions, and I consider that it is just and equitable to allow this employer’s contract claim in the circumstances. This claim will now be processed, and further case management orders will follow so that the matter progresses.
Discussion and conclusions
[18]I have made a finding of fact that no written terms of employment were in place. The contractual agreement between the parties was a simple oral agreement that the Claimant would receive a minimum wage basic salary in addition to 50% of the profit from the sale of any vehicle negotiated by him. In relation to the Ford Focus, I have made a finding of fact that a £10,000 profit was made. It was submitted that the part exchanged vehicle was not sold until after the employment had ended, this was agreed by the Claimant. The Respondent’s position was that this meant that he was not entitled to the relevant commission. However, there were no contractual terms agreed reflecting the concept that the profit had to be realised in cash during the Claimant’s employment or that commission would not be paid after termination. Therefore, I make a finding that the Claimant is contractually entitled to £5,000 in respect of this part of his claim.[19]Section 23 of the Employment Rights Act 1996 gives workers the right to make a complaint to the Employment Tribunal where an employer has breached section 13 of the Employment Rights Act 1996, the right not to suffer unauthorised deductions. Section 13 sets out the following: (1) 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.[20]Section 27(1) of the Employment Rights Act 1996 defines ‘wages’ as ‘any sums payable to the worker in connection with his employment’. This includes ‘any fee, bonus, commission, holiday pay or other emolument referable to the employment’. Section 13 therefore applies to the commission payable by the Respondent to the Claimant under the contract between them.[21]The defence put forward by the Respondent was simply that no profit had been made. It was not argued in the alternative that there was a statutory or contractual right to make the deductions. In these circumstances, the nonpayment of the £5,000 commission was an unauthorised deduction in breach of section 13 of the Employment Rights Act 1996. It should have been paid at the end of the month, on 3 November 2022, along with the Claimant’s basic salary.[22]The Claimant has not proven any profits in relation to the Audi S3 and the VW Golf. He could not explain his calculations. Therefore, I dismiss the claim in relation to the commission relating to these vehicles. Notice Pay[23]In circumstances where the Claimant resigned with immediate effect and was not willing to work during his notice period, he was not entitled to be paid for a notice period. In the absence of an allegation that there was a constructive dismissal, this would require him to have worked or been available to work his notice period. This claim is dismissed. Written Particulars of Employment[24]Section 38 of the Employment Act 2002 states that a Tribunal must award compensation to a worker where, on a successful claim being made under any of the tribunal jurisdictions listed in Schedule 5 to that Act, it becomes evident that the employer was in breach of its duty to provide full and accurate written particulars under section 1 of the Employment Rights Act 1996.[25]The claims listed under Schedule 5 to the Employment Act 2002 include unauthorised deduction from wages claims made pursuant to section 23 of the Employment Rights Act 1996. The Claimant has therefore made a successful complaint which falls within Schedule 5. I have also made a finding of fact that there were no written particulars of employment in place before the claim was submitted.[26]Pursuant section 38 of the Employment Act 2002, I must award the minimum amount of two weeks’ pay subject to exceptional circumstances which would make an award or increase unjust or inequitable. In my finding there are no such circumstances which would justify a reduction. I may, if I consider it just and equitable in the circumstances, award the higher amount of four weeks’ pay. I consider it just and equitable to make an award of two weeks’ pay. This is the standard award and I do not see that there is any reason to increase it, given the short employment and the fact that it had been agreed between the parties that the Claimant would start his employment before the written terms had been produced by the Respondent. I have calculated two weeks’ losses to be that to be £483.46 (gross). This is slightly different to the figure stated orally, because it should be a gross award. This has been calculated by the gross pay of £1,047.50 referenced in the payslip at page 128 of the Hearing Bundle. This has been multiplied by 12 and divided by 52 to get a weekly amount, then multiplied by two to reflect the two weeks’ pay award ((£1,047.50 x 12)/52 x 2 = £483.46). Counterclaim[27]An employer’s counterclaim must be a contractual claim related to employment. The clause relied on was the “salary” clause in the written terms at page 53 of the Hearing Bundle. There is no wording in that clause which is relevant to losses made on sales. In submissions, Mr Fakunle could not clarify the clause and the breach said to have taken place. It is rather academic in any case because my finding of fact was that there was only an oral contract between the parties and that these written terms were not in place. The oral terms gave no basis for the Respondent to make a counterclaim for losses made on sales. The Respondent’s counterclaim is dismissed.