Employment Judge KnowlesIn person for claimantDate 24 November 2022
JUDGMENT
[1]The Claimant’s claim of unfair dismissal is dismissed upon withdrawal.[2]The Claimant’s claim of unlawful deductions from wages under the Employment Rights Act 1996 is well founded and succeeds.[3]The amount unlawfully deducted from the Claimant’s pay was £1,747.68.[4]The Respondent is ordered to pay to the Claimant the sum of £1,747.68 gross which was unlawfully deducted from the Claimant’s pay. The Respondent is liable to account to HMRC for any statutory deductions which may apply.[5]The Claimant’s claim for accrued but untaken holiday pay under the Working Time Regulations 1988 is well founded and succeeds.[6]The Respondent is ordered to pay to the Claimant £538.46 gross compensation for failure to make a payment to the Claimant in lieu of accrued but untaken holiday leave upon termination of employment. The Respondent is liable to account to HMRC for any statutory deductions which may apply.[7]The Claimant’s claim of breach of contract (notice pay) is well founded and succeeds.[8]The Respondent is ordered to pay to the Claimant the sum of £180.42 net damages for breach of contract.[9]The Recoupment Regulations do not apply.
REASONS
Issues
[1]This issues for determination today are: Wrongful dismissal; notice pay[2]What was the Claimant’s notice period?[3]Was the Claimant paid for that notice period? Holiday Pay (Working Time Regulations 1998)[4]Did the Respondent fail to pay the Claimant for annual leave the claimant had accrued but not taken when their employment ended? Unauthorised deductions (Part II of the Employment Rights Act 1996)[5]Were the wages paid to the Claimant less than the wages she should have been paid?
Evidence
[6]This hearing was undertaken using the HMCTS cloud video platform.[7]The parties produced a bundle of documents, 105 pages.[8]The Claimant and Mr Urrutia attended and gave evidence. The Claimant affirmed the truth of her evidence and Mr Urrutia swore on the bible.[9]References in this Judgment to numbers in brackets are to page numbers in the bundle of documents.
Findings of fact
[10]I made the following findings of fact on the balance of probabilities. This is not intended to be a complete record of the evidence heard or read. These are the findings which are core to my conclusions.[11]The Claimant was employed as Store Manager of the Respondent’s accessories store in Marylebone.[12]The Claimant’s employment commenced 9 August 2021 and terminated 6 May 2022.[13]She was provided with a draft contract of employment but this was never finalised (hyperlinked through the bundle).[14]Clause 8.4 stated that she was entitled to “[x]” days per annum company sick pay. It was never completed.[15]In evidence the Claimant told me that she understood she was entitled to full pay during sickness and that is what she was paid.[16]Mr Urrutia did not challenge the Claimant’s evidence on sick pay.[17]Mr Urrutia stated that he discussed absences with his accountant at the time they occurred and they agreed that it would be best to pay full pay “then settle up at the end of the working year”. Mr Urrutia accepted in evidence that he never discussed settling up with the Claimant.[18]Mr Urrutia gave evidence about subsequent discussions with his accountant and lawyers about how best to operate sick pay. These are not relevant to what happened at the time.[19]I find that on the balance of probabilities, the Respondent agreed to pay the Claimant full pay during her sickness absence and honoured that agreement.[20]The Claimant’s contract, whilst never finalised, provided for 28 days per annum inclusive of any public holidays. The Claimant accepts that was her entitlement.[21]The shop did not routinely close on public holidays. They might be worked.[22]The contract contained the following provision: “La Portegna Ltd closes for a period of time over Christmas and New Year and you are required to use some of your holiday entitlement to cover this. Details of the compulsory holiday dates will be communicated to you within a reasonable timeframe.”[23]The Claimant was paid £28,000 per annum, on a calendar monthly basis, paid in the week following the relevant month. Her usual take home pay was 78.4% of her gross pay taking into account statutory deductions.[24]The Claimant worked 40 hours per week over 5 days, which meant that she enjoyed 2 rest days per week. The days were not fixed. The Claimant was responsible for determining the rota for herself and for the other employees at the store she managed.[25]At the end of each month the Claimant sent a spreadsheet to Mr Urrutia containing the working pattern of all staff employed at the store.[26]Sometimes the spreadsheet was changed after payroll had run. Mr Urrutia has said this is evidence of manipulation. However, whilst I could see some changes to actual nonworking days, for example, I asked Mr Urrutia to concentrate on establishing what days were worked, what were taken as leave and for what reason, and not be concerned about whether or not that constitutes manipulation. The key matter for me to determine is what days were worked, what days were taken as leave and why they were taken as leave.[27]The parties have agreed that during the 2021/2022 leave year, the Claimant accrued 26 days holiday leave. The Respondent has applied a month-to-month accrual, based upon 11 months. 28. 30 August 2021 was a bank holiday. The Claimant was off that day. The Claimant accepts that this day was annual leave.[29]In September 2021, the Claimant took 10 days holiday leave.[30]The store was closed 25 and 26 December 2021. The Claimant did not work. The Claimant asserts that these were not holiday because she had not been notified of the store’s closure as required in the clause above.[31]I cannot really distinguish these store closure dates from that in August. They are clearly additional days off over and above her two usual non-working days, which she marked on the rota as 23 and 24 December 2021.[32]The Claimant took 27 and 28 December 2021 as her non-working days.[33]From 29 December 2021 to 24 January 2022 the Claimant is on sick leave and went to Madrid for an operation. She was paid for that leave. Mr Urrutia accepts that he knew about this absence and had agreed to pay her, having agreed with his accountant that it would be best to do that.[34]The Claimant was sick again on 26 February 2022. There is a dispute between the parties as to whether that began at work or whether the Claimant did not attend work. In any event, there is no dispute that she was sick and the Claimant was paid full pay.[35]The Claimant injured her ankle and was absent from work 18 and 19 March 2022. Again she is paid full pay.[36]From 4-8 April 2022 the Claimant self-isolates with coronavirus.[37]The Claimant is on holiday leave 14, 15 and 18 April 2022. 15 and 18 April 2022 were bank holidays.[38]On 25 April 2022 the Claimant is given notice of termination of employment said to expire 6 May 2022. The Claimant states that she was entitled to two weeks’ notice but this is 11 days. The Respondent states that this cover two weeks. 39. 2 May 2022 is a bank holiday but the Claimant had not been required to work her notice period anyway.[40]At the end of the Claimant’s employment, the Respondent subtracts 17 days as owing to them due to unauthorised absence and/or overpayments of sick pay.[41]How this is calculated is very difficult to follow. They begin with 26 days accrued annual leave.[42]They subtract 3 days holiday for April.[43]They then subtract all public holidays (albeit for April that includes double deduction) falling within the period that the Claimant worked, 7 days, stating that the balance is 16 days.[44]They subtract 10 days holiday for September 2021.[45]They subtract a day for 2 May 2022, the public holiday, during the Claimant’s period of notice.[46]They then recoup all payments they have made for sick pay, and deduct wages for the days off in April due to coronavirus. They say that they have no “proof” of positive COVID but do not dispute that notification occurred. The Claimant has put into the bundle an isolation note.[47]In total deduct in total 20 days holiday.[48]They further deduct 23 days sickness or unauthorised absence.[49]From the Claimant’s holidays they therefore deduct 20 days from 26 leaving a balance of 6 days.[50]They then deduct 23 days sickness or unauthorised absence leaving a deficit of 17 days which they deduct from the calculation of April’s pay (albeit the May holiday would fall in the next month). They make no deduction from May’s pay, notwithstanding the bank holiday issue.[51]Whilst these are described as sick pay / unauthorised absence it appears to me clear on both parties evidence that they were(a) notified as days sick and(b) authorised.[52]The payments for April and May, less deductions, were made in a single payment on 12 May 2022. The amounts were £507.56 and £538.46 gross respectively.[53]The principal disputes appear to me to be:a. How to treat the December closure, was that leave or not.b. Should public holidays that fall within sick leave be deducted from leave entitlement.c. Did the Respondent have a right to deduct sick pay on termination of employment.[54]I asked Mr Urrutia three times in evidence why he felt he could deduct sick pay on termination of employment, having accepted that the Claimant had notified him of her absence, having agreed to pay sick pay, and having paid it. Mr Urrutia’s position on this point is simply that his accountant told him that he could and that he followed that advice. Submissions[55]The Respondent submitted that he instructed a chartered accountant to do it and even contacted a lawyer to double check.[56]The Claimant made no submissions.
Law
[57]Section 13 of the Employment Rights Act 1996 contains the right not to suffer unauthorised deductions from wages and provides as follows.(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.(2) In this section “relevant provision”, in relation to a worker’s contract, means a provision of the contract comprised— (a) in one or more written terms of the contract of which the employer has given the worker a copy on an occasion prior to the employer making the deduction in question, or (b) in one or more terms of the contract (whether express or implied and, if express, whether oral or in writing) the existence and effect, or combined effect, of which in relation to the worker the employer has notified to the worker in writing on such an occasion.(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.[58]An overpayment of wages can be deducted by virtue of Section 14(1).[59]Wages accrue day to day on the basis of calendar days not working days (Apportionment Act 1870) for the purposes of a claim of breach of contract or unlawful deductions from wages, but the opposite is the case in a claim under the Working Time Regulations 1998.[60]Regulation 13 of the Working Time Regulations 1998 sets out the rights to 28 days annual leave.[61]Regulation 14 makes the provision for payment of accrued but untaken leave upon termination of employment. This provides:(1) This regulation applies where— (a) a worker’s employment is terminated during the course of his leave year, and (b) on the date on which the termination takes effect (“the termination date”), the proportion he has taken of the leave to which he is entitled in the leave year under regulation 13(1) differs from the proportion of the leave year which has expired.(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 paragraph (3).(3) The payment due under paragraph (2) shall be— (a) such sum as may be provided for for the purposes of this regulation in a relevant agreement, or (b) where there are no provisions of a relevant agreement which apply, a sum equal to the amount that would be due to the worker under regulation 16 in respect of a period of leave determined according to the formula— (AXB)-C where— A is the period of leave to which the worker is entitled under regulation 13(1); B is the proportion of the worker’s leave year which expired before the termination date, and C is the period of leave taken by the worker between the start of the leave year and the termination date. Conclusions Breach of contract (notice pay)
Conclusions
[62]The Claimant was entitled to receive from the Respondent 2 weeks’ notice of termination of employment.[63]That is the case whether one looks at the statutory minimum provision under Section 86 of the Employment Rights Act 1996 or the draft contract which the Claimant was working under.[64]The Claimant was given written notice on 25 April 2022. Written notice delivered that day would be deemed to become effective at the end of that day. This means that the Claimant would be entitled to notice expiring on 9 May 2022.[65]The Claimant’s actual notice expired 6 May 2022.[66]There was a 3-day shortfall in notice provided to the Claimant.[67]The Claimant’s claim of breach of contract is well founded. The Respondent is ordered to pay to the Claimant the sum of £180.42 which has been calculated as follows:a. Daily pay gross £76.71 (£28,000 / 365)b. 3 days X £76.71 = £230.13c.£230.13 X 78.4% - £180.42 net Unlawful deduction from wages[68]The Claimant was entitled to £2,333.44 gross pay in April plus £690.39 gross pay in May 2022.[69]The wages paid to the Claimant were less than the wages she should have been paid.[70]They were less because of the Respondent’s sick pay deductions.[71]The deductions were not required or authorised by statute.[72]The deductions were not required or authorised by a written term of the contract.[73]The deductions were not overpayments. The Respondent had agreed to pay to the Claimant sick pay at full pay and had failed to specify any limit to those arrangements.[74]The absence in April 2022 was coronavirus sickness absence which had been notified to the Respondent. Notification is sufficient, there is no legal requirement upon a sick employee to supply “proof”. She may self-certify that absence but that is a different issue to notification. Notification is all that the SSP regulations require, and the contract (including the written term and the agreement to pay sick pay at full pay) provided for contractual sick pay to operate as a top-up to SSP. The absence cannot be categorised as unauthorised.[75]The Respondent has produced no written agreement from the Claimant to the deduction being made. The Respondent accepts that the Claimant did not agree to the deduction of sick pay. It was a unilateral act.[76]The Claimant’s claim of unauthorised deductions from wages is well founded and succeeds.[77]Remedy is calculated as follows:a. April and May pay due £2,333.44 plus £690.39 = £3,023.83 grossb.£507.56 plus £538.46 paid = £1,046.02 grossc. Balance = £1,977.81 grossd. Minus £230.13 gross already covered by the breach of contract award above = £1,747.68[78]The amount of wages unlawfully deducted from pay (net of the award for breach of contract above) is £1,747.68.[79]The Respondent is ordered to pay to the Claimant the sum of £1,747.68. Holiday pay[80]The Claimant took the following days of leave holiday pay: 30 August 2021 1 day September 2021 10 days 25 and 26 December 2021 2 days 14, 15 and 18 April 2022 3 days TOTAL 16 days[81]In relation to my total annual leave calculation in the table above:a. I have included 25 and 26 December 2021 which was the period of closure for the shop over Christmas. Notwithstanding any provision in the contract concerning notice, the Claimant received paid leave on those two days over and above her standard 2 non-working days. In total, 4 days were not worked in that week but the Claimant received pay. The circumstances do not differ from 30 August 2021 bank holiday, which the Claimant concedes was taken.b. I have not included 27 or 28 December 2021 because these were nonworking days.c. I have not included 3 January 2022 because the Claimant was absent due to illness. An employee cannot take holiday leave when absent due to illness (applied - Pereda v Madrid Movilidad SA 2009 IRLR 959, ECJ, and Asociación Nacional de Grandes Empresas de Distribución (ANGED) v Federación de Asociaciones Sindicales (FASGA) and ors 2012 ICR 1211, ECJ).d. I have not included 2 May 2022 because the Claimant was absent from work because the Respondent had told her she need not work her notice. The Claimant did not ask for holiday on that day. The Respondent did not require the Claimant to take that day as holiday leave. The shop did not routinely close on public holidays. The Respondent cannot therefore retrospectively allocate that day as annual leave.[82]The Claimant was entitled to 5.6 weeks paid annual leave per annum, 28 days.[83]Between her employment commencement date 9 August 2021 and the date of termination of employment 6 May 2021, 38 weeks and 5 days had elapsed. This is 75% of a year.[84]The Claimant had accrued 75% X 28 = 21 days.[85]Minus 16 days taken = 5 days accrued but untaken.[86]The Claimant’s claim for pay for leave accrued but untaken under the Working Time Regulations 1998 is well founded.[87]The Respondent is ordered to pay to the Claimant 5 days pay which is £538.46 gross. Other issues concerning remedies claimed by the Claimant[88]In the Claimant’s calculation of remedies she has included a sum of loss of income arising from the end of her employment. Those sums can only be awarded as compensation for unfair dismissal. I explained the 2-year qualification rule to the Claimant at the outset of the hearing and the Claimant withdrew that claim. The Claimant is not referring in her claim to any matter which would mean that the 2-year rule does not apply. I make no award for lost income or loss of profit after dismissal.[89]The Claimant has invited me to assess an amount for technical and support expenses and for psychological help. I do have the power to award financial losses arising from the breach of contract under the principles of damages for breach of contract. I have the power to award financial losses arising from the wages claim by reason of Section 24(2) of the Employment Rights Act 1996. I also can award losses sustained from the failure to pay holiday pay under Regulation 30(4)(b).[90]I am unable to make any award relating to technical and support expenses because these are not specifically itemised nor have any supporting receipts been provided.[91]I am unable to make any award relating to psychological help because costs incurred have not been specifically itemised nor have any supporting receipts been provided. Furthermore, it is not clear whether those expenses have been incurred as a consequence of the matters complained in under this complaint, or as a consequence of the Claimant’s dismissal.