Mr Restivo and Mr C Fernando v UKRO Ltd (T/a Buddha Bar): 2201793/2021 and 2201795/2021
JUDGMENT
[1]The respondent made unauthorised deductions from wages from the claimants: 1.1. Mr Fernando in the sum of: £7,994 net 1.2. Mr Restivo in the sum of £3,486 net.[2]The respondent was in breach of contract by failing to pay notice pay to the claimants and failing to pay them for the work they did during their notice period. The respondent is ordered to pay to the claimant one month’s net wage each, amounting to: 2.1. Mr Fernando: £3,136 net 2.2. Mr Restivo: £2,098 net.[3]The total due to the claimants is therefore: 3.1. Mr Fernando £7,994 + £3,136 = £11,130 net 3.2. Mr Restivo £3,486 + £2,098 = £5,584 net[4]The claimants’ application for costs is refused.REASONS
[1]There were three hearings listed for these two cases. Today’s full merits hearing of two hours, a two hour preliminary hearing on 12th October and a five day hearing starting on 31 January 2022. It was not clear why multiple dates had been listed. At the start of today’s hearing I discussed options with the parties.[2]The claimants were happy to proceed with the full hearing today and had sent the tribunal and the respondent a bundle and witness statements. Ms Stefanov said that the respondent was not fully prepared for today as they had only recently found out about the hearing from their solicitors. I explained the nature of the full hearing, that if we went ahead it would be to decide the case today. Ms Stefanov confirmed several times that she was happy to go ahead today, despite the lack of preparation.[3]I considered whether to proceed with the hearing today. I particularly considered whether the parties would be on an equal footing. I took into account that there was a bundle with key documents, the respondent’s ET3 had been drafted by solicitors and set out the response clearly, and Ms Stefanov had expressed a firm view that she wanted to proceed. I therefore concluded it would be in line with the overriding objective to deal with cases fairly and justly, would avoid delay and expense and would be proportionate to the complexity of the issues to carry on with the hearing. The hearings on 12th October 2021 and from 31 January to 4th February 2022 are vacated. Claims and issues[4]The respondent operates a restaurant called Buddha Bar. The claimants were both chefs at the restaurant. Mr Fernando was Executive Head Chef and Mr Restivo was Head Chef. They both claim unlawful deduction from wages and notice pay. Unlawful deduction from wages[5]The claimants claim they were paid furlough payments for seven months from May 2020 to November 2020 despite working full time. Mr Fernando claims a shortfall of £1142 net per month and Mr Restivo claims a shortfall of £498 net per month.[6]At the beginning of the hearing Ms Fernando said that the ‘other payments’ box ticked on the ET1 referred to claims of holiday pay. However, holiday pay is not referred to at all in the ET1s. The ‘holiday pay’ box was not ticked and the desired compensation the claimants outlined in the ET1s does not include a figure for holiday pay. Ms Stefanov confirmed during the hearing that the claimants were not paid holiday pay. However, as it was not part of the claimants’ claim, the tribunal has no jurisdiction to make a finding on holiday pay. Notice pay[7]The claimants claim they were not paid for their last month of employment. They say they worked until 17th December and their employment terminated on 24th December. They claim one month’s notice pay for their final month of employment.[8]The respondent contends that no notice pay is owed. It alleges the claimants stole food, names of dishes, and recipes from the respondent business. It says that the claimants are not entitled to notice pay as they are in repudiatory breach of contract. It says further that the tribunal cannot make a finding on the notice pay issue until the civil litigation for damages for breach of contract is determined. Procedure, documents and evidence heard[9]I was referred to the claimants’ documents in an unpaginated bundle, and the claimants’ witness statements. The claimants both gave evidence.[10]Ms Stefanov took the respondent’s ET3 as her witness statement and also gave some evidence in chief.[11]Part way through the hearing the tribunal was shown an additional document – a letter dated 18th December 2020 from the respondent to the claimants regarding the allegations of theft it made against them.The facts
[12]These findings are confined to the facts relevant to the legal issues. Furlough arrangements and alleged underpayment[13]The claimants both started employment with the respondent in 2016. When the pandemic started in March 2020, the respondent, like many other restaurants, was forced to close in March and April. The claimants agreed to be furloughed and this was confirmed by letter on 7th April 2020. They agreed to receive 80% of their salaries accordingly. The letter confirmed that furloughed workers would not be provided with work.[14]However, the claimants continued to work for much of the time they were on furlough. The claimants say that in the period in question, May to November 2020 they worked full time. The restaurant operated a take away service from May 2020 and opened fully as soon as it was permitted to do so in early July. Mr Restivo gave evidence about rota documents in the bundle. The rotas are dated 7th to 13th of September and 12th to 18th October. They appear in the bundle as screenshots of mobile phone screens. The September rota is part of a message dated 07/09/2020 and the October rota is part of a message dated 11/10/20, which also contains the text “Dear All please have a look at the rota. Thanks”.[15]The rotas list first names and dates in a grid. The two claimants’ names are included. Many of the entries say “15-CL” or 16-CL”. Mr Restivo explained that 15– CL meant that he was to work from 3pm to closing time. The restaurant closed at 11pm but it was common for chefs to stay until around midnight to prepare for the next day.[16]When the restaurant closed again during the second lockdown in the autumn of 2020, the claimants were required to attend their workplace to do cleaning and painting. Ms Stefanov confirmed this. In the bundle there is also a screenshot of messages dated 22-30th November 2020 which contains further rotas (although too small to read) and notes about cleaning (“Friday program cleaning schedule All the kitchen walls and shelves + both toilets. Thank you.”). It also contains a message about chefs not being permitted to leave early.[17]Ms Stefanov said she was not aware of any rotas as these were kept by Christian Malaan, the other General Manager. She referred instead to a clocking in and out system. She confirmed there was no key card for this. She said there was a passcode system or a fingerprint system on the computer.[18]In light of the apparently contemporaneous nature of the evidence, I prefer Mr Restivo’s evidence on the rotas. Both claimants said in their evidence they were required to work full time from May to November. The claimants were required to work 8-9 hour shifts roughly 5 days per week when the restaurant was open. They were required to attend the workplace to clean and paint when it was closed. All this work took place during a period when the claimants were being paid 80% of their wages as furlough pay which Ms Stefanov confirmed was being paid by the government.[19]Ms Stefanov contends that it is unrealistic to suppose that the claimants would have put up with being underpaid for so many months. She says that they were being paid the correct amount for the hours they worked. The claimants say that they were told if they did not come into work full time they would lose their jobs. They say they felt they had no choice but to work in the circumstances.[20]In light of the very difficult situation of being a hospitality worker in the pandemic when many restaurants were closing and people were losing their jobs, I accept the claimants’ accounts that they felt they had no choice but to continue working even though they were not being paid their full salaries. Salary payments[21]Mr Restivo claimed at the hearing he ought to have received £2,098 net per month, but actually received £1,600 net. In the ET3 the respondent says Mr Restivo was normally paid £2,098 net. It agrees that he was paid £1,600 when on furlough but refers to this as a gross payment. Given £1,600 is close to 80% of Mr Restivo’s net salary of £2,098, I have concluded that Mr Restivo was due to be paid £2,098 net but actually received £1,600 net when being paid furlough.[22]Mr Fernando claims in his ET1 he should have received £3,136 net per month but actually received £1,994 net. At the hearing Ms Fernando put the amount he received at £1,924. The ET3 agrees with Mr Fernando’s normal net payment but contends that he received £2,500 gross each month when on furlough. There is a payslip of Mr Fernando’s in the bundle, dated 31 July 2020. This states Mr Fernando’s net pay was £1,924.24, but also includes a deduction for “Smart Monthly” of £99. Two previous payslips of Mr Fernando’s (from 2019) also refer to this ‘Smart Monthly’ deduction, of £100.80 and £172.73. Removing this deduction would make Mr Fernando’s take home pay for July £2,023.24. Variations in pay will have occurred based on tax and national insurance. As the claimant’s figure in the ET1 is the closest to the amount on the payslip, and is also close to what the respondent’s figure would be if it were net, I have taken the claimant’s figure in the ET1 as the net amount he actually received, rather than the respondent’s gross figure or the figure Ms Fernando gave at the hearing. Date of termination of employment and notice pay[23]The claimants both handed in their resignations on 25th November 2020. They say they did this as they were not being paid properly and felt exploited. They agreed to work until 24th December, but also to help out over Christmas and New Year if necessary.[24]On 19th December they were called into a private room at the restaurant and accused of theft of food, recipes and dish names. They were each given a letter dated 18th December 2020, written by the respondent’s solicitors. This listed the food they were alleged to have stolen from the respondent for the benefit of a new business the claimants were setting up. The respondent showed them CCTV which it alleged showed them stealing food. The letter asked them to pay £50,000 in damages and said the respondent might take legal action against them for breach of contract. The claimants deny the allegations of theft. They say that Mr Restivo cannot be seen on the CCTV at all, and that Mr Fernando is seen carrying out his normal role which, as a chef, naturally involved him getting food out of the fridge and freezer.[25]The letter refers to the claimants’ alleged repudiatory breach of contract. It does not refer to dismissal at any point in the letter. The respondent has not specifically claimed that it dismissed the claimants, and in its ET3 seems unsure of when the claimants’ employment terminated, stating "The Respondent's position is reserved in respect of when the Claimant's employment ended". However, it has referred to the claimants fundamentally breaching their contracts.[26]In considering whether the wording in the letter amounted to a dismissal, I have considered the guidance in Chapman v Letheby and Christopher Ltd 1981 IRLR 440, EAT that the interpretation of ambiguous words should reflect what "an ordinary, reasonable employee... would understand by the words used", in light of facts known to the employee when he received the letter. The claimants did not understand that they had been dismissed as a result of receiving this letter. They believed that the respondent had started civil claims against them. In accordance with Graham Group plc v Garratt EAT 161/97, I apply the principle that any ambiguity should be construed against the party seeking to rely on it. The claimants were therefore not dismissed by the respondent. Their employment terminated on 24th December at the end of their notice period. As there was no dismissal, it is not necessary for me to make a finding of fact about the alleged theft.[27]Ms Stefanov confirmed that the claimants were not paid notice pay due to their alleged breach of contract.Law
[28]The claimants claim unlawful deduction from wages under section 13 Employment Rights Act 1996 for both unpaid wages and holiday pay: s.13(1) An employer shall not make a deduction from wages of a worker employed by him… (3) Where the total amount of wages paid on any occasion by an employer to a worker employed by him is less than the total amount of the wages properly payable by him to the worker on that occasion (after deductions), the amount of the deficiency shall be treated for the purposes of this part as a deduction made by the employer from the worker’s wages on that occasion.[29]The claimants claim breach of contract under article 3 Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994. Section 89 Employment Rights Act 1996 is also relevant to this claim Section 89 Employments without normal working hours.(1) If an employee does not have normal working hours under the contract of employment in force in the period of notice, the employer is liable to pay the employee for each week of the period of notice a sum not less than a week's pay.(2) The employer's liability under this section is conditional on the employee being ready and willing to do work of a reasonable nature and amount to earn a week's pay. Employment status and working hours[30]There is no dispute about employment status. The parties agree that the claimants were employees (s230 Employment Rights Act 1996). The rotas show the claimants’ working hours were to some extent variable, although they usually worked eight to nine hours per shift and five shifts per week. Conclusions Unlawful deductions from wagesConclusions
[31]The respondent unlawfully deducted sums from the claimants’ wages as it paid them 80% of their wages when they were working full time. The furlough letter sent to the claimants in April, seeking their agreement to reduced pay is not relevant as that letter confirmed that employees would only receive reduced pay when they were not working.[32]There was therefore an unlawful deduction from wages under s.13 ERA 1996.[33]The calculations for the sums the claimants are owed are as follows: 33.1. Mr Fernando: normal monthly salary £3136, received monthly salary £1994. Shortfall = £1142. £1142 x 7 months (May – November) = £7994 net. 33.2. Mr Restivo: normal monthly salary £2098, received monthly salary £1600. Shortfall = £498. £498 x 7 months (May – November) = £3486 net Notice pay[34]I considered whether the tribunal had jurisdiction to hear the notice pay claim in light of the respondent’s argument in the ET3 about its litigation against the claimants for alleged theft and breach of contract. I took into account that no evidence of other litigation had been presented to the tribunal and the respondent had not made a counterclaim in the employment tribunal. In any event, the claimants had worked until 19th December so were due to be paid for that work. For the period from 20th to 24th December, as there was not a dismissal, and the claimants were ready and willing to work, they were due notice pay. I concluded that other litigation was not relevant to this finding.[35]The claimants should have been paid wages and notice pay for that period. The failure to pay notice was a breach of their contracts. Although there is a distinction between the December wages and the notice pay, the sums are the same, so I follow the claimants’ approach in labelling the period from 25th November to 24th December ‘notice’.[36]Both claimants are therefore due a month’s net pay which amounts to: Mr Fernando £3136 net and Mr Restivo £2098 net. Application for costs[37]The claimants made an application for costs at the hearing. They each claim £3000 plus VAT, a total of £3600 each.[38]I do not consider that any of the grounds in rule 75(1)(a) of the Employment Tribunals (Constitution & Rules of Procedure) Regulations 2013 have been sufficiently made out, and no arguments along those lines were advanced by the claimants. The application for costs is therefore refused.