Mr M Edwards and others v Futurama Ltd (in Administration): 1801471/2023 and others
JUDGMENT
[1]The Tribunal declares that all five claimants have suffered unauthorised deductions from wages in relation to: 1.1. non-payment of their wages from 1 to 23 February 2023; and 1.2. non-payment of accrued holiday pay on termination of employment. The claimants are awarded the amounts set out in the Schedule to this judgment.[2]All five claimants’ claims for: 2.1. non-payment of statutory notice pay; and 2.2. wrongful dismissal (non-payment of contractual notice pay); succeed and they are awarded the amounts set out in the Schedule to this judgment. (The contractual notice pay amounts consist of the balance of the claimants’ notice periods, less their statutory notice pay).[3]The claims of unfair dismissal brought by Mr Edwards, Mr Evans, Mr Sharp and Mr Hurley are upheld (the “Unfair Dismissal claimants”). (Mr Elrick had less than two years’ service and therefore did not claim unfair dismissal). The Unfair Dismissal claimants are awarded the statutory basic awards set out in the Schedule.[4]Mr Sharp’s compensatory award for unfair dismissal will be set out in a separate judgment. No compensatory awards are made to the other four claimants (with their agreement) for the reasons set out below.REASONS
[5]The claimants requested written reasons for this Judgment at the hearing on 10 October 2023. These written reasons are provided in accordance with the Employment Tribunal Rules of Procedure 2013 (the “ET Rules”).[6]The respondent went into administration with effect from 5 May 2023, when Mr Acland and Mr Collier were appointed as administrators on behalf of FRP Advisory Trading Limited. Mr Acland wrote to the Tribunal on 6 July 2023, stating that the respondent did not wish to ‘be active’ in proceedings.[7]The claimants provided witness statements, schedules of loss, copies of their contracts of employment (save for Mr Elrick who did not have a written contract) and their payslips for January 2023.[8]Mr Darren McMurray (respondent’s director) applied to postpone today’s hearing on 25 September 2023. This request was refused and Mr McMurray was informed that he could attend the hearing and provide written submissions or documents, if he wished to do so. The deadline for providing such submissions or documents was extended at Mr McMurray’s request to 4pm on 9 October 2023.[9]Mr McMurray did not attend today’s hearing. He emailed a document to the Tribunal on 9 October 2023, but that document was blank (save for a heading). The Tribunal emailed and telephoned Mr McMurray, who then emailed a further half page document to the Tribunal after judgment had been reached. Mr McMurray’s document was therefore not considered before the Tribunal reached its judgment. FINDINGS OF FACT Contract termsFINDINGS OF FACT
[10]The claimants were employed by the respondent as set out in the table below: Role (at date of dismissal) Start Date Mr Mark Edwards Chief Executive Officer 1 January 2018 Mr William Evans Finance Director 10 February 2016 Mr David Sharp Commercial Director 1 October 2012 Mr David Hurley Operations and Installation 17 July 1990 Director Mr Terence Elrick Acting Managing Director 7 October 2021 (from September 2022)[11]Mr Elrick did not receive a written contract of employment. However, I accept Mr Elrick’s evidence that the respondent had agreed that he was entitled to a 6 month notice period. I also accept Mr Edwards and Mr Evans’ evidence that his role was of the same status as Mr Edwards, Mr Evans and Mr Hurley (each of whom was entitled to 6 months’ notice from the respondent).[12]The terms of employment for the other four claimants are set out in their contracts of employment. All five claimants’ current salaries were evidenced by their January 2023 payslips. Claimants’ dismissals[13]The five claimants were all part of the respondent’s senior management team. The respondent was owned by Rymack Sign Solutions Ltd (”Rymack”). The claimants provided a copy of the minutes of an Extraordinary General Meeting of Rymack’s Board of Directors held on the morning of 23 February 2023, chaired by Mr McMurray. The minutes of that meeting state: “…the business of the meeting was to discuss the possible removal of members of the Board of Directors of Futurama Ltd, a business fully owned by Rymack Sign Solutions Ltd, due to their mismanagement of Futurama Ltd affairs, its assets and its creditors. The chairman and members present discussed at length the areas of concern, specifically with regards to working capital irregularities, significant stock discrepancies, apparent sales invoicing not being raised in a timely manner and also that the Directors of Futurama having acted in a deliberately obstructive manner when asked for appropriate and pertinent information by Rymack Sign Solutions Ltd over an extened time period.”[14]Rymack’s directors decided to remove the Mr Edwards, Mr Evans, Mr Sharp and Mr Hurley as statutory directors of the respondent with immediate effect. Rymack’s directors also decided that: “All four of the statutory directors named, and Terry Elrick, are also to be removed from their employment with Futurama Ltd on the grounds of Gross Misconduct…”[15]The respondent arranged a meeting on the afternoon of 23 February 2023, whose purpose was stated to be a discussion of the respondent’s cashflow. The meeting was attended by Mr Evans and Mr Hurley (in person) and Mr Edwards and Mr Elrick (via Microsoft Teams). Mr Sharp was not invited and did not attend the meeting.[16]The meeting lasted less than ten minutes. Mr Bramhall (a statutory director of the respondent and of Rymack) informed the claimants that they and Mr Sharp were summarily dismissed and would not be paid in lieu of notice. The claimants were instructed to return their company cars and equipment immediately. In addition, The claimants were not offered the opportunity to appeal the respondent’s decision.[17]Following that meeting, all five claimants received letters dated 23 February 2023 stating that they had been summarily dismissed on grounds of gross misconduct.[18]The respondent did not provide any evidence of any investigation undertaken into the claimants’ alleged gross misconduct. The Tribunal therefore accepts the claimants’ evidence that: 18.1. stock discrepancies had been an issue for the respondent for some time. Mr Elrick dismissed the employee responsible for such discrepancies in or around September 2022 when he was appointed acting Managing Director; 18.2. Mr Edwards had been working in a different role within the respondent’s group since 1 January 2022 and had no day to day responsibility for the respondent during the final year of his employment; 18.3. Mr Evans had taken on responsibility for preparing consolidated group accounts and other additional responsibilities from 1 January 2022, in effect acting as a Group Finance Director. He noted that the cashflow position of the group as a whole had worsened from the second half of 2022; 18.4. Mr Sharp had been absent on sick leave from the business from 5 November 2022 until February 2023; 18.5. Mr McMurray had discussed the opportunity of a management buy-out by the senior management team (i.e. the five claimants) with Mr Edwards in early February 2023; and 18.6. none of the claimants had been given any indication by the respondent of any potential gross misconduct allegations prior to the meeting on 23 February 2023.[19]The respondent reached its decision to dismiss the claimants at the Board meeting on the morning of 23 February 2023. The respondent did not follow any disciplinary procedure with the claimants.[20]The claimants were not paid their wages for the period from 1-23 February 2023. They did not receive payslips for that month, nor did they receive P45s. In addition, they did not receive the expenses that they had submitted using the respondent’s online expenses system. The respondent did not provide any evidence that such payments were made to the claimants.[21]The claimants did not receive any notice pay (whether statutory or contractual) because they were summarily dismissed. They were not paid in lieu of notice.RELEVANT LAW
[22]Please see the Annex.CONCLUSIONS
[23]Applying the law to the facts, the Tribunal concludes that: 23.1. Mr Edwards, Mr Evans, Mr Sharp and Mr Hurley were unfairly dismissed and wrongfully dismissed; and 23.2. Mr Elrick was wrongfully dismissed.[24]The key reasons for these conclusions are: 24.1. the respondent has not provided any evidence substantiating the allegations set out in Rymack’s Board minutes of the EGM at 9.15am on 23 Feburary 2023 or in the claimants’ letters of dismissal. The Tribunal has concluded that the claimants did not commit gross misconduct and/or a serious breach of contract entitling the respondents to dismiss the claimants without notice or pay in lieu of notice; 24.2. the respondent did not follow a fair procedure in dismissing the claimants. In particular: 24.2.1. the respondent did not hold any investigatory meeting with the claimants; 24.2.2. the respondent did not inform the claimants that the purpose of the meeting on 23 February 2023 was to discuss gross misconduct allegations and that one outcome of that meeting may be their dismissal; 24.2.3. the respondent did not in fact discuss the allegations at the meeting with the claimants; 24.2.4. Rymack’s Board minutes from the meeting on the morning of 23 February 2023 indicate that the respondent had already decided to summarily dismiss the claimants; and 24.2.5. the claimants were not provided with a right of appeal against their dismissals.[25]The respondent breached the ACAS Code of Practice on Disciplinary and Grievance Procedures by dismissing the claimants in the manner set out above.[26]The claimants are also entitled to receive: 26.1. their wages for 1-23 February 2023; 26.2. their accrued holiday pay on termination of employment; 26.3. their contractual notice pay (inclusive of any statutory notice pay); and 26.4. their expenses payments for expenses incurred during employment but not paid as at termination. Remedies[27]The Tribunal concluded that all of the five claimants would have been dismissed due to redundancy in any event with effect from 5 May 2023 (i.e. the date when the respondent went into administration).[28]The Tribunal has concluded therefore that the claimants (save for Mr Sharp who was entitled to one month’s notice) have no financial losses to be awarded as part of any unfair dismissal compensatory award because they have been awarded 6 months’ notice pay as part of their wrongful dismissal complaints.[29]Mr Sharp’s compensatory award for unfair dismissal will be set out in a separate judgment.[30]The amounts awarded to each claimant are set out in the attached schedule.