Mr K PellingClaimantGtep AdministrationRespondentDate 17 November 2023
JUDGMENT
The complaint that the claimant was unfairly dismissed is struck out.
REASONS
[2]Section 108 of the Employment Rights Act 1996 requires a claimant to have not less than two years service to make an unfair dismissal complaint.[3]The claimant was employed by the respondent for less than two years.[4]Therefore the claimant is not entitled to bring such a complaint.[5]The claimant has failed to give an acceptable reason, despite being given the opportunity to do so, why the complaint should not be struck out.[6]Accordingly, the complaint of unfair dismissal is struck out. The claimant’s other complaints are not affected by this judgment.[1]The claimant worked for the respondent under the terms of a contract dated 6 June 2022 entitled: “Agreement to Supply Exclusive Services” (“the Agreement”).[2]The respondent provided business administration services to its clients: for example, acting as a postal agent and providing business templates. Claims[3]The claimant ceased working for the respondent on 3 October 2022. His notice period was stated to end on 3 November 2022. Conciliation commenced on 7 Nov 2022 and ended on 9 December 2022.[4]The ET1 was issued on 18 January 2023. The claimant brought complaints of unfair dismissal, and breach of contract due to failure to pay notice pay (ET1 Para 8.1). Paragraph 9.2 of the claimant’s ET1 also stated: “We were due our bonus at the end of September (£2500) but I was told that it was deferred although as per our contracts we had to be informed via writing with 65 days notice, this did not happen.”[5]The Respondent denied that the claimant was an employee, denied that he was entitled to notice and stated that the claims were without merit. The Respondent’s ET3 was issued on 3 March 2023.[6]The Unfair Dismissal Complaint was struck out on 25 April 2023 by a judgment of EJ Ferguson because the claimant lacked the required period of continuous service. EJ Ferguson’s judgment expressly provided that the other claims were unaffected.[7]The claimant’s remaining claims are therefore for breach of contract and for non-payment of a bonus payment - in effect a claim for unauthorised deduction of wages. The Tribunal confirmed to the respondent in a letter of 2 June that the remaining complaints were: “Breach of Contract & WA [Wages Act] Failure of employers to pay unauthorized deductions (sic)”.
The Hearing
[8]The hearing was listed for a remote hearing. Parties were notified of the date by letter from the tribunal dated 24 May 2023.[9]The claimant appeared remotely in person. The Respondent did not appear.[10]Having considered the contents of the file and ensured that the respondents had been emailed by the Tribunal that morning to attend the hearing I exercised my discretion under Rule 47 of the Employment Tribunal Rules to proceed with the hearing in the absence of the respondent. The reasons for that decision are set out in my separate CMO dated 17 November 2023.[11]In summary these were: the respondent was informed by the Tribunal on 2 June 2023 that the complaints other than unfair dismissal were continuing. The Tribunal wrote the respondent again on 29 June 2023 stating that the other claims were continuing and that the issue of whether the claimant was an employee would be considered at the hearing before me. At approximately 23:00 on the evening before the hearing (and forwarded to me at 09:16 am) the respondent’s director emailed the Tribunal to say: “The matter was struck out in April 2023....GTEP Administration sees no reason to attend a video meeting; Mr Pelling is wasting the Courts time”. The Tribunal responded at 09:20 telling the respondent that the other complaints (apart from unfair dismissal) were still to be dealt with and instructing the respondent to attend. I waited to commence the hearing until 10.50 to give the respondent time to log in, or to make an application to adjourn. No contact was made. I concluded that it was possible to have a fair hearing of the issues and the respondent was willingly absent because it had taken its own view of the merits of the claimant’s claims. Time had been extended to give the respondent the opportunity to attend. Further delay would prejudice the claimant and it would save expense to resolve the claim. I therefore decided to proceed in the respondent’s absence.[12]I heard oral evidence from the claimant under oath.[13]There was no live witness evidence from the respondent. I did however take into account a statement of truth dated 31 May 2023 from Mr Stamp – the respondent’s CEO – which was on the file although I gave limited weight to its contents because Mr Stamp did not appear for cross-examination.[14]I was not provided with any hearing bundle. However, the file contained a copy of the relevant contract and the claimant’s resignation email of 3 October 2022. I permitted the claimant to email me four additional documents relevant to his claim during the hearing which he referenced in his evidence.[15]I asked the claimant questions about his work and his status as an employee or a worker. His work was performed remotely from home. He initially said that he thought he was self-employed. I explained that the Tribunal had no jurisdiction to hear a claim for breach of contract unless the arrangements he worked under amounted to a contract of service such that he was an employee. He told me he wanted to pursue his Breach of Contract claim. It was therefore necessary for me to consider the Agreement and the discussions surrounding the agreement to pay notice pay.[16]He told me that here were no extraneous aspects to his work which were outside the terms of the Agreement dated 25 November 2022.[17]The claimant told me that the respondent breached of the terms of the Agreement in that in particular:-a. The respondent had made an oral offer to pay 4 weeks pay in lieu of notice, which the claimant accepted by his letter of resignation of 3 October 2023, but the respondent had failed to pay him that sum; andb. He had previously been told by his then manager Ms Collins that following his quarterly appraisal he was entitled to his quarterly bonus of £2500 payable at the end of September. The Respondent had failed to pay him that sum and gave no explanation why.[18]He told me he had received a letter on 5 October 2023 informing him that he was being dismissed. He says that at a grievance meeting he was given no proper explanation of the reasons for the respondent taking that course, and there was no mechanism for an appeal.[19]I made the following findings of fact based on the documentary and unchallenged oral evidence before me. Facts[20]The parties entered into an Agreement dated 6 June 2022.[21]The Agreement provided amongst other matters that:a. The Supplier may terminate this Agreement with one months’ notice in writing to the Company [Clause 8.1];b. The Company may terminate this Agreement with one days’ notice in writing to the Supplier [Clause 8.2];c. the quarterly bonus is a fixed sum of £2500 [Schedule 1].[22]The claimant underwent a quarterly appraisal with his then line manager Ms Collins sometime in autumn 2022. His performance was in line with or above requirements set for him by the respondent. Ms Collins orally confirmed to him that he was entitled to his quarterly bonus.[23]In the last week of September 2022 the respondent undertook a restructuring exercise which led to the business no longer having a need for an administration department in which the claimant provided his services.[24]During an open meeting to announce the restructuring the respondent orally offered to people working in the administration department (incuding the claimant) a payment of 4 weeks pay described as ‘gardening leave’.[25]At that meeting the claimant made critical comments about the restructuring. Mr Stamp’s statement stated that: “the Claimant voiced negative comments and opinions about strategic decisions that I had made regarding the discontinuation of an administrative service that GTEP offered its customers. The Claimant tried to advance an argument that GTEP should refund its customers the fees they paid for the administrative services as the process the customer had instructed may not achieve the outcome the customer wanted. I reminded the Claimant that GTEP takes instructions from its customers and does not provide any warranty of the success of the process they instruct. The customer has no right to a refund as there is no breach of contract. The Claimant disagreed with my position and became hostile in the meeting. I requested the Claimant to leave the meeting due to his disruptive behaviour. The Claimant left the meeting and walked out of the offices never to return. The claimant told me that Mr Stamp responded to his comments during the public meeting in way which the claimant felt was disrespectful to him.[26]After the meeting the claimant made inquiries of Ms Collins’ successor Mr Barry McDowell about the payment of bonuses but received no answer. The bonus was due to be paid at the end of September 2022.[27]The claimant sent a letter of resignation on 3 October 2022 . He stated that following the re-structure there was no suitable role for him and said that his last day of work would be 31 October 2022. He gave 28 days notice.[28]In response on same day the respondent sent the claimant a letter confirming his entitlement to 4 weeks pay. The letter stated: “I can confirm receipt of your written notice. Please take this letter as confirmation that your last working day will be the 3rd of November 2022 and you will receive full payment for your notice period on the last working day of November 2022. This final pay will include any unused holiday allowance from January 2022 until your last working day (pro rata). You are not required to attend the office during your notice period and therefore take today as your last day in office. Any questions please do let us know. We wish you the best of luck for all your future endeavours”.[29]On 5 October 2022 the respondent sent an email to the claimant saying that his contract had been terminated. The respondent says that this was because the claimant had been insubordinate during a company meeting.[30]A disciplinary meeting was held on 20 October 2022 and the decision to dismiss him/terminate his contract was confirmed. The claimant asked how to appeal but was not told how to do so. No appeal was made or determined. Issues[31]I identified the issues before me to be as follows:- Jurisdiction:[32]I have jurisdiction to hear claims for breach of contract under section 3(2) of the Employment Tribunals Act 1996 ("breach of a contract of employment or any other contract connected with employment") and Article 3 of the Extension of Jurisdiction Order 1994 (which requires a claim to arise or be outstanding "on the termination of the employee's employment").[33]By s 230 ERA 1996 an employee is an individual who has entered into or works under a contract of employment. A contract of employment is a contract of service express or implied oral or in writing.[34]Unless the claimant can prove that he was an employee the Tribunal has no jurisdiction to hear and determine a complaint of breach of contract.[35]But if the claimant is an employee, there is no qualifying period of continuous employment for contract claims (Masiak v City Restaurants (UK) Ltd [1999] IRLR 780).[36]The first issues therefore are :-a. Is the Agreement a contract of employment?b. Was the claimant an employee of the respondent within the meaning of section 230 of the Employment Rights Act 1996?c. Did this claim arise or was it outstanding when the claimant’s employment ended? Breach of Contract[37]Did the respondent do the following:a. made a binding contract to pay to the claimant 4 weeks pay in lieu of notice ?b. fail to pay the claimant that sum ?;c. make a binding contract to pay to the claimant a quarterly bonus of £2500 at the end of September ?d. fail to pay him that sum;e. Purport to dismiss the C during his notice period on 5 October 2023 with inadequate explanation and an inadequate disciplinary procedure ?f. Was that a breach of contract?g. How much should the claimant be awarded as damages? Unauthorised deduction from wages[38]Under section 13 of the Employment Rights Act 1996 (ERA 1996) workers are protected against unauthorised deductions from their wages (other than Excepted Deductions – ERA s 14). Their remedy is to bring a claim to an employment tribunal (section 23(1), ERA 1996). 39. ‘Wages’ means any sum payable to a worker in connection with employment including any ‘bonus’: ERA s 27(1)[40]A claim must be brought within three months beginning with the date of the payment from which the deduction was made (section 23(2), ERA 1996) or, if there is no payment at all, from the date on which the contractual obligation to make the payment arose : Mr A P Arora v Rockwell Automation Ltd UKEAT/0097/06, 21 April 2006.[41]A ‘worker’ means an individual who has entered into or work under... a) a contract of employment or b) any other contract whether express or implied and (if it is express) whether oral or in writing , whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of a contract that of a client or customer of any profession or business undertaking carried on by the individual: ERA s 230(3).[42]The issues arising therefore are:-a. Was the claimant a worker within the meaning of ERA s 230(3) ?b. Was he entitled in connection with his employment to a bonus payment of £2500 ?c. Was that sum paid? If not was the non-payment for an Excepted Reason ?d. Was the claim brought in time? Relevant Law Employment Status
Relevant Law
[43]The classic description of a contract of employment is set out in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance 1968 1 All ER 433: ‘A contract of service exists if these three conditions are fulfilled.(i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master.(ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master.(iii) The other provisions of the contract are consistent with its being a contract of service.’[44]The continuing relevance of this passage was confirmed by the Supreme Court in Autoclenz Ltd v Belcher and ors 2011 ICR 1157.[45]In essence, there are three questions:a. did the worker agree to provide his or her own work and skill in return for remuneration?b. did the worker agree expressly or impliedly to be subject to a sufficient degree of control for the relationship to be one of employer and employee?c. were the other provisions of the contract consistent with its being a contract of service?[46]There is an ‘irreducible minimum’ without which it will be all but impossible for a contract of service to exist. It is now widely recognised that this entails three elements:a. controlb. personal performance, andc. mutuality of obligation.[47]In Revenue and Customs Commissioners v Atholl House Productions Ltd 2022 EWCA Civ 501, CA, the Court of Appeal clarified that mutuality of obligation and the right of control are necessary pre-conditions to a finding that a contract is one of employment. Once those necessary, but not necessarily sufficient, conditions are satisfied, the identification and overall assessment of all the relevant factors present in the particular case is to be factored in.[48]The Tribunal’s task at the third stage is to examine all relevant factors, both consistent and inconsistent with employment, and determine, as a matter of overall assessment, whether an employment relationship exists : Kickabout Productions Ltd v Revenue and Customs Commissioners [2022] EWCA Civ 502, CA. The other factors can shed light on the question identified in Market Investigations Ltd v Minister of Social Security 1969 2 QB 173, QBD: is the person performing the services under the contract in business on his or her own account?[49]The incidence of tax and national insurance is a relevant but not a determinative factor: Enfield Technical Services Ltd v Payne; BF Components Ltd v Grace 2008 ICR 1423, CA. Registration for VAT points more strongly towards self-employment, but that to can be outweighed by other considerations such as the degree of a worker’s integration into the company: Cascade Aluminium Windows Ltd v Powlson EAT 321/82 t[50]As regards the contractual terms Tribunals have to establish:a. where the terms of the contract are to be found. If there are written terms, the court or tribunal will need to consider whether it was the intention of the parties, objectively ascertained, that all the terms of the contract be contained in the documents. This is a question of fact — Ministry of Defence HQ Defence Dental Service v Kettle EAT 0308/06b. what the terms of the contract are. If the court or tribunal is satisfied that the contractual documentation is a full record of the parties’ agreement, then identifying the terms of the contract will be a simple matter.c. how to characterise the relationship that those agreed terms give rise to. If the terms are exclusively contained in written documents, then the legal relationship to which those terms give rise is a question of bare law — Clark v Oxfordshire Health Authority (above). However, such a case will only ‘exceptionally’ arise, according to Sir Christopher Slade in that case. Where an investigation and evaluation of the factual circumstances in which the work was done is required, the question becomes one of mixed fact and law. Or rather, the tribunal must find those facts and weigh their importance in such a way as the law directs “it is all a question of fact and degree”. — O’Kelly and ors v Trusthouse Forte plc (above). Conclusion on Jurisdiction/Employment Status[51]I am satisfied that the Agreement is a contract of employment/contract of service and that claimant was an employee of the respondent until October 2022.[52]The Tribunal therefore has jurisdiction to consider and determine the claimant’s claims for breach of contract and unauthorised deduction of wages.[53]My reasons are as follows:-[54]I accept the claimant’s evidence that the Agreement contained the terms of his employment with the respondent Did C agree to provide his own work and skill in return for remuneration? Own work and skill[55]Pursuant to the express terms of the Agreement:-[56]The claimant undertook to provide the Services (as defined) on a weekly basis (until varied or terminated) [Clause 2][57]The obligations of the ‘Supplier’ (defined as the claimant) were to ‘exclusively supply services to the Company in accordance with Schedule One. [Clause 3.1] . Exceptions to exclusivity were only available subject to “other projects ..benefitting the Company or providing a synergistic benefit to the Company”. “Exclusive Services” were defined as “The Supplier will supply services exclusively and on a full-time basis to the Company”[58]By clause 11.2 “The Supplier is responsible for and obliged to conduct [my emphasis added] all contracted activities in accordance with Schedule 1. “[59]The services set out in Schedule 1 were: Provision of Specialist Skills: Natural Justice Administrator. These Collaborators are required to provide their services to Natural Justice via their generic level of skill and knowledge and by carrying out tasks and projects set by management, work full time using MATRIXFREEDOM provided software [my emphasis added].[60]By Clause 3.4 “The Supplier undertakes and represents (and acknowledges that in reliance on this representation the Company has entered this Agreement) that the Supplier is in possession of the resources, knowledge and experience required to provide the Services”;[61]The claimant agreed to "the working terms of Monday – Friday, a minimum of 37.5 working hours per week” [Clause 11.1.][62]The Agreement therefore imposed on the claimant an obligation that was full time, with fixed hours, which required continuity, was personal to the claimant whose own skills were required to be brought to the job (without provision for substitution) and was exclusive. There was clear mutuality of obligation. In return for Remuneration[63]By Clause 5: “In consideration of the provision of the Services, the Company shall from the commencement date of the Remuneration Plan pay to the Supplier: 5.2 Remuneration as detailed in Schedule One to this agreement; 5.3 Commission as detailed in schedule One to this agreement;[64]In fact there is no reference or definition of a ‘Remuneration Plan’. In context it is clear that this clause simply provides for the remuneration payable to the claimant. It is also clear in the context of Clause 5 that the reference to Schedule One in sub-clause 5.2 is intended to refer to Schedule 2 of the Agreement.[65]Schedule 2 is entitled “Remuneration and Commission”. It provides 1. Supplier remuneration of £25,000 per annum (£12.82 per hour) 2. Bonus of £2,500 per quarter based on quarterly appraisal 3. Personal payment reclaims at 50% without administration fees 4. Personal tax settlement without administration fees[66]The definitions include reference to a Performance Review’ as a quarterly review carried out by the Company of the services provided by the Supplier.[67]The Agreement therefore expressly provided for the work to be provided in consideration of remuneration. That remuneration included a bonus payment which was payable on the basis of a quarterly appraisal. Did the claimant agree expressly or impliedly to be subject to a sufficient degree of control for the relationship to be one of employer and employee?[68]In my judgment the claimant was subject to a sufficient degree of control to support a conclusion that the relationship was one of employer and employee.[69]My reasons are as follows:[70]By Clause 11.5 “The Supplier is fully responsible for performing the work assigned [my emphasis] and agrees to act in the best interests of the Client, exercising prudence and diligence, during performance of the work”.[71]Clause 11.5 provided that “The Supplier will work using MATRIXFREEDOM provided software including use of our bespoke platforms in order to complete designated tasks”.[72]Schedule 1 also mandated the use of this system[73]MatrixFreedom was defined as : “The parent brand name for all freedom solutions created and controlled by GTEP ADMINISTRATION LTD”[74]The Supplier’s obligations in Clause 3 also included obligations to: Fulfil all lawful and reasonable requests of the Company; Complete all Priority Projects within agreed upon deadlines; apply any reasonable corrective findings or recommendations made by the Company.[75]The claimant therefore was required to use exclusively software provided by the respondent, to complete tasks on time which were assigned to him by the respondent, to do these things exclusively unless the respondent benefitted from and agreed to any other activity, to work a fixed number of hours weekly and to work ‘full time’.[76]The claimant was also subject to a quarterly appraisal process the parameters of which were set by the respondent and the outcome of which determined his remuneration. Were the other provisions of the contract consistent with its being a contract of service?[77]In this case the factors above strongly point to a contract of employment. The following further provisions and consideration also support a finding of an employment contract :- :[78]The claimant was remunerated by an hourly rate and also by a performance-related bonus. The claimant did not take any financial risk himself.[79]The Agreement provided for 7 days discretionary sickness pay and 28 days holiday pay.[80]Although none is referred to in the Agreement, and there was no evidence of the details before me, there claimant referred me to a ‘grievance’ meeting, suggesting that there were procedures in place to deal with grievances.[81]Weighing against that conclusion:-[82]The Agreement expressly states that it does not constitute the claimant as an employee. And C was an independent supplier. Under the heading “Status and Tax Liability” it provides at Clause 9:- In the performance of its duties and responsibilities under this Agreement the Supplier shall be and shall act solely as an independent Supplier and nothing in this Agreement or in the relationship of the Company and the Supplier, or for the avoidance of doubt in the relationship between the Company and the Supplier, shall constitute or be construed to be or create any partnership or joint venture between the Company and the Supplier or be construed to appoint or constitute the Supplier as a branch, agent, manager or employee of the Company for any purpose whatsoever; [Clause 9.1] The Supplier shall bear exclusive responsibility for the payment of the Supplier's costs [Clause 9.2].[83]The claimant told me that he thought he was self-employed.[84]The claimant worked from home using his own hardware. Provided that he worked the set number of hours per week and delivered the Services it appears that he had a degree of control over his daily working hours.[85]The claimant was responsible for his own tax/PAYE - and could use help from the respondent's own software to facilitate that task. Gross payments of wages is indicative of self-employment.[86]Similarly, the claimant undertook [Clause 3.8] to provide his services exclusive of VAT (although there was no evidence that the claimant was VAT registered).[87]Clause 5.4 envisaged that “All payments shall be made to the Supplier by the Company by bank transfer, further to receipt of invoice (as agreed between the Parties)”. The process of payment by invoice suggests selfemployment.[88]There is no provision for a structured disciplinary process in the Agreement.[89]Having regard to all the relevant factors and weighing them together I conclude that the balance falls in favour of a finding that the claimant was an employee within meaning of ERA s 230 and is entitled to bring a Breach of Contract claim before this tribunal[90]Even If I am wrong about that, having regard to the factors above and the terms of the Agreement I consider that the claimant in any event fell within the definition of a worker within ERA s 230 (3)(b)[91]For that reason the tribunal has jurisdiction to consider his claim for unauthorised deduction of wages. Conclusion : Breach of Contract[92]The facts I have found above amounted to breach of contract for the following reasons:[93]At the on-line meeting in September 2022 the respondent acting by its CEO Mr Stamp made an offer to the claimant (along with other administration department workers) to pay 4 weeks pay by way of, in effect, enhanced Notice Pay. Although described as ‘Gardening Leave’ no additional restriction was imposed on the offerees.[94]That offer was intended to be of contractual effect. It was sufficiently clear to constitute a binding contract, or contractual variation to pay 4 weeks notice pay. It was accepted by the claimant by conduct in tendering his resignation on 3 October 2022. Reliance is to be inferred from his referencing the 4 weeks notice period.[95]The agreement was an oral variation to the Agreement between claimant and the respondent, alternatively was a collateral oral contract connected with the termination of the claimant’s contract of employment.[96]The variation or collateral oral agreement was evidenced and confirmed in writing by the respondent’s email of 3 October 2022.[97]No such sum was paid. No lawful reason has been shown by the respondent as to why the claimant is not entitled to that sum.[98]There has therefore been a failure to pay contractual notice pay in breach of contract.[99]Further, in relation to the bonus payment:[100]The claimant was entitled under Schedule 2 of the Agreement to be paid a fixed bonus of £2500 subject to the condition precedent of a successful appraisal.[101]An appraisal took place and there was an oral confirmation by Ms Collins, who was the individual responsible for conducting the appraisal process, that the claimant had passed the appraisal.[102]The condition precedent having been satisfied the claimant was entitled to be paid a bonus of £2500.[103]The respondent did not prove any reason why that sum should not have been paid. I find that it became due and owing on 30 September 2022.[104]The respondent was in breach of the Agreement because it failed to pay the bonus payment. Conclusion : Unauthorised deduction of wages[105]The bonus was a sum payable to the claimant in connection with his employment. That much is clear from my findings above and from the terms of the Agreement. It was therefore ‘wages’ within the meaning of ERA 1996 s 27.[106]The claimant was a worker under the terms of ERA s 230(3) ;[107]I have found that that sum was not paid. The Respondent did not establish either that the deduction was authorised by the claimant (s 13(1) and (2)) or that any of the grounds existed to constitute the deductions as excepted deductions (s 14).[108]I have accepted the claimant’s evidence that he became entitled to the bonus payment at the end of the business quarter on 30 September 2022 having satisfied his appraisal.[109]The last date upon which he could submit a claim for unauthorised deduction of wages, assuming that the sum was payable on 30 September 2022, adjusting for the dates of ACAS conciliation, was 30 January 2023. The claimant’s ET1 was presented on 18 January 2023. The claim was therefore brought in time.[110]I find therefore that on the evidence contrary to ERA s 13(1) the respondent made an unauthorised deduction from the claimant’s wages of £2500. Summary[111]The complaint of breach of contract in relation to notice pay is wellfounded. The respondent must pay the claimant £1,923.00 gross as damages for breach of contract.[112]The complaint of unauthorised deductions from wages is well-founded. The respondent made an unauthorised deduction from the claimant's wages in the period September 2022 to 3 November 2022. The respondent must pay the claimant £2,500 which is the gross sum deducted.[113]The total amount which the respondent must pay the claimant is £3,423.00 gross. The claimant is responsible for the payment of any tax or National Insurance due.