Case No 2300412/2018Venue AshfordHearing 26 November 2018 Representation Claimant: Mr T Adkin, Counsel Respondent: Ms C McCann, Counsel
Between
Mr T Adkin, CounselClaimantMs C McCann, CounselRespondent
Before
Employment Judge HarringtonDate 10 January 2020
JUDGMENT
[1]The Claimant was employed by Virgin Holidays Limited.[2]Virgin Holidays Limited is the correct Respondent to this claim and the title to these proceedings is amended accordingly.
REASONS
[The numbers in square brackets below refer to pages within the agreed bundle.]
Introduction
[1]This is an open Preliminary Hearing to determine who was the Claimant’s employer. In considering this matter I have been provided with an agreed bundle of documents. I have also heard evidence from Mrs Shelley Pleydell, a manager in employee relations for Virgin Atlantic Airways Limited and oral submissions from both parties. The Claimant has been represented by Mr Adkin, of Counsel and the Respondent by Ms McCann, of Counsel. I am grateful to them both for their helpful and focused presentations. It is important to note at this stage that Ms McCann is instructed not only by Virgin Atlantic Airways Limited but also by Virgin Holidays Limited.[2]The Claimant was employed from 14 November 2011 to 28 October 2017, most recently in the role of ‘Expert – Personal Holidays’. By an ET1, received by the Tribunal on 30 January 2018, she brings claims of unfair dismissal and wrongful dismissal. At section 2 of the ET1, Virgin Atlantic Airways Limited (‘VAA Ltd’) is identified as the Claimant’s employer. However within the additional information section of the form, the Claimant highlights the disparity between the name of her employer as stated on the Contract of Employment and that appearing on her payslips. Accordingly the Claimant quite sensibly proceeded to enter into early conciliation with VAA Ltd, Virgin Holidays Ltd and Virgin Holidays.[3]VAA Ltd, denies that it was the Claimant’s employer. It has submitted from the start of this process that the Claimant was employed by Virgin Holidays Ltd (‘VH Ltd’). At the commencement of this Preliminary Hearing Ms McCann clarified that there was no objection from either of her clients to VH Ltd being the Respondent to this claim. Mr Adkin confirmed that there could be no agreement between the parties as to the identity of the Claimant’s former employer and that the Claimant required the certainty of a Tribunal determination on the matter.
Findings of Fact
[4]It is agreed that when the Claimant commenced her employment in 2011, she received training with VAA Ltd. She was equipped with the same training in respect of her presentation and the same uniform as cabin crew of VAA Ltd. This uniform had the logo ‘Virgin Atlantic’ on it, as did her identification badge.[5]Throughout her employment the Claimant received payslips, with her salary being paid into her bank account. Her payslip, an example of which is to be found at page 94 of the bundle, refers to ‘Virgin Atlantic’ and this reference was also displayed on her bank statements, see for example, page 93x. ‘Virgin Atlantic’ is not the Respondent, VAA Ltd, but rather is a reference to the name of the company, Virgin Atlantic Limited, which wholly owns both VAA Ltd and VH Ltd.[6]In 2015 there was a merging of some business functions performed for both VAA Ltd and VH Ltd. This merging saw the two businesses moved to the same headquarters and the human resources function for VH Ltd transferred to the VAA Ltd’s people team.[7]In a letter dated 19 September 2017, which enclosed relevant contractual documentation, the Claimant was offered the role of ‘Expert – Personal Holidays’. The letter referred to her appointment being ‘WITH Virgin Holidays Ltd’ [67]. The contract also referred to her employer as being Virgin Holidays – this is in bold type at the top of the document [68], with further relevant references being made in certain clauses, see for example, clause 4.2.[8]The circumstances leading to the cessation of the Claimant’s employment are not relevant to my decision today. What is relevant however is the documentation generated at the time. The P45 produced upon the termination of the Claimant’s employment referred to VAA Ltd as the Claimant’s employer. This was consistent with the Claimant’s P60. Furthermore, internal emails concerning processing the Claimant as a leaver and her pension contributions, were sent from personnel referred to as VAA Ltd Human Resources. ‘Fly.virgin’ email addresses were used which it was confirmed are VAA Ltd email addresses.
Conclusions
[9]Both parties agree that my analysis of this issue must begin with the relevant contractual documentation. During submissions the parties also referred me to three relevant cases: Drake International Systems Ltd and others v Blue Arrow Ltd [2016] ICR 445, Drinkwater Sabey Ltd v Burnett and another [1995] EAT 328 and Ryan v Bennington Training Services Ltd UKEAT/0345/08/LA.[10]I was reminded that I can look behind the written terms of an agreement if I consider it to be a sham. A tribunal faced with an allegation that a contract does not represent the reality of a situation must consider whether or not the words of the written contract represent the true intentions or expectations of the parties – in carrying out this consideration, a tribunal will have to examine all of the relevant evidence.[11]In this case, I do not find evidence of a sham or that the contract was not the reality of the situation.[12]In my judgment, the Claimant was employed by Virgin Holidays Ltd (‘VH Ltd’). I am satisfied, having carefully looked at the relevant contractual documentation, that they were her employers. The Contract of Employment and covering letter is unambiguous. I accept the Claimant entered into a contract of employment with VH Ltd and that contract reflects the true situation.[13]I entirely understand why the Claimant wished to have clarity on the point. There are various factors in this case which have resulted in a confusing state of affairs for the Claimant, as an employee, including different business names being used on other relevant documentation. This confusion has been accepted, to some extent, by a subsequent change being made to payslips which are now given to VH Ltd employees.[14]Whilst I accept that these references were caused because of an agreement with HMRC as to the running of the PAYE system and the documentation which is generated from that, including the P45 and P60, I do consider that this has contributed to the Claimant’s understandable confusion. A letter generated by HMRC refers to the Claimant’s employer as being Virgin Atlantic Airways Ltd [110D]. Without further clarification from her employer, I query how the Claimant was ever to understand that this was incorrect.[15]What is a helpful scheme both to the companies involved and to HMRC is not necessarily helpful to employees and those leaving employment requiring certainty as to the identity of their employer.[16]As set out in the introduction, there is no objection to the Claimant’s application to add VH Ltd to these proceedings. As Ms McCann has identified, there is no prejudice to them being added at this stage.[17]I have taken into account the principles set out in Drake International Systems Ltd and others v Blue Arrow Ltd [2016] ICR 445 and reminded myself of Rule 34 of the Employment Tribunals Rules of Procedure 2013. I am entirely satisfied that it is appropriate to name VH Ltd as the correct Respondent to these proceedings rather than VAA Ltd and the claim shall proceed against VH Ltd accordingly. The Claimant was unfairly dismissed.[2]The Respondent is ordered to re-engage the Claimant, by 3 February 2020, in the full time vacant Adviser role at Bluewater at the level of remuneration for the role which reflects the Claimant’s band and length of service, on the standard terms and conditions and benefits.[3]Upon re-engagement the Claimant’s loss of pension rights since her dismissal shall be restored.[4]The Respondent is ordered to pay to the Claimant by 20 January 2020 her arrears of pay for the period 29 October 2017 to 15 July 2019, consisting of her loss of salary, loss of average incentive earnings and one lost annual Air Share payment, minus the replacement earnings the Claimant received during that period of £4,494.90, and minus 15% reduction (made after the reduction for replacement earnings) to reflect the Claimant’s contribution to her dismissal. CASE NUMBER: 2300412/2018[5]The Claimant was wrongfully dismissed but no separate award was made. ... ......................................................... EMPLOYMENT TRIBUNALS Claimant: Ms E Sumner Respondent: Virgin Holidays Limited Heard at: Ashford On: 9 October & 4 December 2020 Before: EMPLOYMENT JUDGE CORRIGAN Sitting Alone Representation Claimant: In person Respondent: Ms C McCann, Counsel Remedy Judgment Under S117 Employment Rights Act 1996 1. The Claimant was awarded compensation for unfair dismissal of £10,471.04. 2. This consisted of: basic award £1471.14 (£1730.75 reduced by 15%) compensatory award nil additional award £8,999.90 (26 weeks’ pay) 3. Recoupment does not apply to the award. 4. The Claimant’s application for costs for the preliminary hearing dated 26 November 2018 was refused.
Conclusions
[1]It was agreed that the Respondent had failed to re-engage the Claimant following the Re-engagement Order dated 10 January 2020. The Respondent did comply with the order in respect of payment of the arrears ordered under s115(2) (d), though they were not paid through the payroll meaning the Claimant had the benefit of at least part of the award tax-free.[2]This was therefore a somewhat unusual situation. Neither I nor the Respondent’s Representative had come across such a situation before.[3]It was agreed I had to consider an award of compensation for unfair dismissal in the usual way and to consider whether to award an additional award of not less than 26 weeks’ and not more than 52 weeks’ pay under s117(3) Employment Rights Act 1996. Such an award is not made where the employer satisfies the Tribunal that it was not practicable to comply with the reengagement order. S123 provides that the amount of a compensatory award shall be such amount as the Tribunal considers just and equitable in all the circumstances having regard to the loss sustained as a result of the dismissal in so far as that loss is attributable to action taken by the employer. S124 applies to the compensatory award. Instead of the usual cap of 52 weeks’ pay (£23,288.88 in this case) the cap is increased to such extent that the compensatory award and additional award combined can fully reflect the arrears ordered to be paid as part of the re-engagement order.[4]Initially I had considered with the parties that the payment of arrears was potentially an ex gratia payment (as the statute only envisages it be paid in the event of compliance with the re-engagement, so in a sense the payment was made voluntarily by the Respondent despite the decision not to re-engage) and should be deducted from the compensatory award prior to application of the statutory cap, meaning the Claimant’s substantial claim for the loss of free flights and similar which were not part of the s115(2) (d) order could be considered.[5]However at the resumed hearing the Respondent’s Representative produced the case of Parry v National Westminster Bank plc [2005] ICR 396 in which it was held by the Court of Appeal that the compensatory award under s 117 (3) included any amount awarded to cover arrears of pay as part of the reemployment order [in that case it was a reinstatement order and the amount was awarded under s114(2)] and was subject to the statutory cap, as extended by section 124 referred to above. The case of Selfridges Ltd v Malik [1998] ICR 268 was cited and the principle set out there that the section [115] loss is not a free-standing head to be awarded whether or not re-employment is complied with and “in the event of non- compliance, it forms part of the compensatory award made under section 117(3) (a). That award, calculated in accordance with s123, will include the [s115] loss and any future loss post the date ordered for [re-employment]. However the gross loss ...is limited to the maximum provided for in section 124(4)....”. In Parry the Court of Appeal clarified that s 124 allows an extension of the cap to ensure a Claimant receives the amount ordered under s114 (2) (or s115 (2)) but, where the cap is reached, other elements of the compensatory award will be irrecoverable, including any future loss as a result of the failure to compy with the order. As a result of Parry I was satisfied that the sum paid by the Respondent should not be treated as an ex gratia payment and should not be deducted from the compensatory award prior to application of the cap.[6]It was agreed by the Respondent that the Claimant was entitled to a basic award of £1471.14 (£1730.75 minus a 15% reduction for contribution).[7]The Respondent having already paid £30,351.49, which exceeded the statutory cap and equalled the amount due unde s115(2), I found that, whether or not I was bound by the case of Parry not to make any further compensatory award in circumstances where the amount under s115(2) had already been paid, in any event it was not just and equitable to make any further award and the compensatory award in these circumstances should be nil.[8]With respect to the additional award, the Respondent did not satisfy me that it was not practicable to re-engage the Claimant as ordered. It was practicable and the Respondent did not genuinely consider it, but sought advice about avoiding it. There was no intention to reinstate and the Respondent decided to take the statutory consequences. I was not asked to provide written reasons for this aspect of my decision.[9]I was therefore obliged to make an additional award. I was referred to Mabirizi v National Hospital for Nervous Diseases [1990] ICR 281 where there was reference to general principles in respect of additional awards, including that the Tribunal has a wide discretion in respect of what additional award should be made within the parameters set down in the statute. It was said in Mabirizi that the award is not intended to equate to financial loss, but to be a “solatium” for the failure to re-engage, with the most obvious factor to take into account being the employer’s conduct in the refusal to re-engage, notwithstanding that it was practicable. In Mabirizi it was observed that a finding of a deliberate refusal without any reasoned justification to support it will “doubtless in most cases warrant an award at or near the top of the scale”.[10]I considered the starting point in this case should be well within the top half of the range of the additional award due to the fact the failure to re-engage was intentional and the Respondent had not given any real consideration to compliance. However, I also considered credit should be given to the Respondent for minimising the impact on the Claimant, including ensuring she was informed that the Respondent was not going to re-engage prior to her giving notice in her existing employment, and nevertheless paying her the arrears so that she received the compensation more promptly than if she had waited for this further remedy hearing. The Respondent was not obliged to pay the arrears in the event that there was no re-engagement. The Claimant also received the gross sum (which exceeded the statutory cap) outside of the payroll, so received more than if she had been awarded a compensatory award at this hearing. As a result I considered the lowest additional award appropriate in all the circumstances (26 weeks’ pay).[11]I considered this to be the appropriate way to give the Respondent credit for paying the arrears, rather than making any deduction from the additional award to reflect the amounts the Respondent had paid.[12]The Claimant made an application for costs in respect of the Preliminary hearing dated 26 November 2018 but I agreed with the Respondent that it was not appropriate to award costs, as it was the Claimant who did not concede that the Respondent was the correct employer and wanted the Tribunal to adjudicate on the correct employer. The application was decided in the Respondent’s favour. ... ......................................................... Employment Judge Corrigan 18 June 2021 Note: Public access to Employment Tribunal Judgments All judgments and reasons for the judgments are published, in full, online at www.gov.uk/employmenttribunal-decisions shortly after a copy has been sent to the Claimant(s) and Respondent(s) in a case.