Mrs C M McLure-Murray v Phone Masters Ltd (in creditors voluntary liquidation): 2401390/2024

EMPLOYMENT TRIBUNALS

Case No 2401390/2024

Between

Mrs C M McLure-MurrayClaimant

Phone Masters Ltd (in creditors voluntary liquidation)Respondent

Before

Employment Judge M Butler

Date 7 January 2025

JUDGMENT

[1]The claimant did not satisfy the requirements of s.164 of the Employment Rights Act 1996 and therefore does not have any right to a redundancy payment.

[2]The claims for a redundancy payment are dismissed in their entirety against both the first respondent and the second respondent.

[1]The claimant did not satisfy the requirements of s.164 of the Employment Rights Act 1996 and therefore does not have any right to a redundancy payment.

[2]The claims for a redundancy payment are dismissed in their entirety against both the first respondent and the second respondent.

REASONS

[3]The claimant presented a claim with the employment tribunal on 07 March 2024. The claimant named both the first and second respondents within the claim form. She brought a claim for a redundancy payment only. And in box 8.2, where the claimant was required to set out the details of her claim, she simply cut and pasted her appeal against the decision of the Insolvency Service to refuse her application for a redundancy payment.

[4]Phone Masters Limited entered Creditors Voluntary Liquidation on 14 November 2023. Although, at present they do not appear to have been struck off the Company House Register.

[5]The claimant’s employment with the first respondent ended on 26 May 2023. The claimant listed her employment as being a Director on her claim form.

[6]Neither the first nor second respondent was present at this hearing. The tribunal benefitted from having seen various documents, including a witness statement prepared by the claimant, the claim form, correspondence between the claimant and the Insolvency Service in relation to her claim for pay from it, the Insolvency Service, the Insolvency Services decision letter of 25 January 2024, the claimant’s appeal against the decision and various financial documents.

[7]The claimant gave evidence on her behalf. And was able to make oral closing submissions.

LIST OF ISSUES

[8]Was the claimant entitled to a redundancy payment in accordance with s.164 of the Employment Rights Act 1996, liability for which had transferred to the Secretary of State?

THE LEGAL FRAMEWORK

[9]Claims for a redundancy payment are governed by s.164 of the Employment Rights Act 1996, and this provides that:(1) An employee does not have any right to a redundancy payment unless, before the end of the period of six months beginning with the relevant date— (a) the payment has been agreed and paid, (b) the employee has made a claim for the payment by notice in writing given to the employer, (c) a question as to the employee’s right to, or the amount of, the payment has been referred to an employment tribunal, or (d) a complaint relating to his dismissal has been presented by the employee under section 111.

(2) An employee is not deprived of his right to a redundancy payment by subsection (1) if, during the period of six months immediately following the period mentioned in that subsection, the employee— (a) makes a claim for the payment by notice in writing given to the employer, (b) refers to an employment tribunal a question as to his right to, or the amount of, the payment, or (c) presents a complaint relating to his dismissal under section 111, and it appears to the tribunal to be just and equitable that the employee should receive a redundancy payment.

(3) In determining under subsection (2) whether it is just and equitable that an employee should receive a redundancy payment an employment tribunal shall have regard to— (a) the reason shown by the employee for his failure to take any such step as is referred to in subsection (2) within the period mentioned in subsection (1), and (b) all the other relevant circumstances. (5) Section 207B (extension of time limits to facilitate conciliation before institution of proceedings) applies for the purposes of subsections (1)(c) and (2).

[10]An application for payment from the Secretary of State is made pursuant to s.166 of the employment Rights Act. And s.166(1) provides that: (1) Where an employee claims that his employer is liable to pay to him an employer’s payment and either— (a) that the employee has taken all reasonable steps, other than legal proceedings, to recover the payment from the employer and the employer has refused or failed to pay it, or has paid part of it and has refused or failed to pay the balance, or (b) that the employer is insolvent and the whole or part of the payment remains unpaid, the employee may apply to the Secretary of State for a payment under this section.

[11]The natural reading of these statutory provisions is that in order to be able to apply for any redundancy payment from the Secretary of State, an individual must first have the right (or not have been deprived of the right) to a redundancy payment and therefore must first satisfy either s.164(1) or 164(2) of the Employment Rights Act 1996. FINDINGS OF FACT I make the following findings of fact based on the balance of probability from the evidence I have read, seen, and heard. My findings were based on all of the evidence. I do not make findings in relation to all matters in dispute but only on matters that I consider relevant to deciding on the issues.

FINDINGS OF FACT

[12]At some point around 2023, Mr Hennessey decided to put the first respondent in some form of liquidation, due to the company having been struggling financially for some time. This was without consulting with the claimant. The claimant was the only staff member to be remaining with the first respondent.

[13]The claimant was dismissed with effect on 26 May 2023.

[14]The claimant, following this decision, took 2 weeks away from the company. She used this to ‘delve into the financial affairs’ of her business partner.

[15]The first respondent entered the Creditors Voluntary Liquidation process on 14 November 2023.

[16]The claimant did not consider applying to the Insolvency Service for a redundancy payment before 14 November 2023 as she considered that she couldn’t as the first respondent had not entered any form of liquidation at that point. Between 14 November 2023 and 30 November 2023, the claimant struggled to complete the relevant Insolvency Service forms as she did not have access to the necessary documents to assist her. The claimant was provided with, and had access to, the relevant documents to complete her application to the insolvency service by the first respondent’s Finance Director on or around 29 November 2023.

[17]The claimant made an application for payment by the Insolvency Service on or around 29 November 2023.

[18]The claimant’s application was acknowledged by the Insolvency Service by letter dated 01 December 2023.

[19]There was correspondence between the claimant and the Insolvency Service on 13 December 2023, where the claimant provided further documents, namely a copy of a director’s questionnaire and copies of her P60s.

[20]The Insolvency Service requested further financial documents on 18 December 2023. However, the claimant replied to explain that she did not have access to the requested documents.

[21]The Insolvency Service rejected the claimant’s application for payment by letter dated 25 January 2024. Relevantly, in respect of redundancy pay, it explains that the claimant was not entitled to payment because: “We believe that you did not make a claim for a payment in writing to your employer, or make a claim to an Employment Tribunal within six months of your employment ending, as required by section 164 (1) of the Act. However, if you write to your employer or apply to an Employment Tribunal within a year of your employment ending, the Tribunal may decide that you can receive a payment if they consider the delay for your claim is reasonable.”

[22]The claimant, by letter dated 26 January 2024, wrote a letter seeking to appeal the decision by the Insolvency Service to refuse her application. The claimant in this appeal letter includes the following:a. I acknowledge the time constraints outlined in the Act but wish to bring to your attention the extenuating circumstances surrounding my situation…

b. I encountered significant challenges in obtaining the necessary information to apply for redundancy funding within the stipulated timeframe. The management's actions, specifically the withholding of crucial information and my concerns about potential fraudulent activities and dereliction of duties by the Managing Director and Company Secretary, significantly impeded my ability to submit a timely application.

[23]The claimant provided no reason as to why she did not present a claim with the Employment Tribunal, or follow that contained the Insolvency Service decision letter, between 26 January 2024 and 07 March 2024. Save for referring to this being a stressful time in her closing submissions.

[24]The claimant had further email correspondence with the Insolvency Service on 06 and 07 February 2022.

[25]On 22 February 2022, the claimant again emails the Insolvency Service. And she explains the following:a. She delayed making any application to the Insolvency Service due to difficulties with obtaining documents and due to issues with her children.

b. That she had discovered that staff, assets and contracts had been moved to Mr Hennessey’s other company.

c. That she had sought legal advice.

d. She had never been provided with a final date by the liquidators as to when she needed to apply for redundancy pay.

e. She started the application with Insolvency Process the day after she received the necessary paperwork.

f. That if her appeal was to fail, she would seek further legal advice.

[26]On 23 February 2023, the Insolvency Service informed the claimant that their decision still stood as the claimant had not provided any written documentary evidence that she a claim was made with her employer within 6 months of dismissal. And the claimant was reminded that if she disagreed with the decision then she had the right to make an application to the employment tribunal.

[27]The claimant on 27 February 2024 emailed the Insolvency Service asking who she would bring a claim against. To which she received a reply on 01 March 2024 to explain that she should name both her employer and the second respondent, along with the relevant details of the second respondent.

[28]The claimant entered ACAS early conciliation on 07 March 2024 with respect both respondents. Early conciliation was ended that same day.

[29]The claimant brought a claim for a redundancy payment by submitting a claim form on 07 March 2024.

[30]The claimant’s intention when completing the claim form was to bring a claim against the Secretary of State only for refusing to pay her a redundancy payment that she considered was owed to her. The claimant was not, and never intended to bring a claim for a redundancy payment against the first respondent. That is why the claimant cut and paste her appeal against the Insolvency Service’s decision in the background section of her claim form. The only reason the claimant included the first respondent in the claim form was following her email discussion with the Insolvency Service and with ACAS, which led her to believe that the first respondent needed to be named on the claim form for background information. This was the claimant’s own evidence under oath. ANALYSIS AND CONCLUSIONS

[31]The first question for this tribunal was to determine whether the claimant had a right to a redundancy payment pursuant to s.164 of the Employment Rights Act 1996 (‘ERA’).

[32]The relevant date referred to in s.164 ERA is 26 May 2023. The claimant took none of the action referred to in s.164(1) before 25 November 2023, that being 6 months after the relevant date. And therefore, the claimant does not satisfy the requirements of s.164(1) ERA.

[33]However, the claimant is not deprived of the right to a redundancy payment if she has done one of the three things listed in s.164(2)(a)-(c) ERA within 12 months of the relevant date and she has satisfied the tribunal that it would be just and equitable that she does receive a redundancy payment. The focus on the remainder of this judgment is on s.164(2) ERA.

[34]The claimant has never made a claim for the payment of redundancy pay by notice in writing given to the employer. Nor has she brought a complaint before the employment tribunal under s.111 ERA. And therefore neither s.164(2)(a) or (c) can apply in this case. The claimant’s claim is brought solely on s.164(2)(b) ERA.

[35]Turning to s.164(2)(b) ERA. The claimant’s own evidence was that her claim form was not used to bring a claim against the first respondent, neither to refer a question as to her right to, or the amount of, the payment. Rather, her evidence was very clear. The claim that she brought was solely to challenge the decision of the Insolvency Service when it refused her application for payment of a redundancy payment. And that she only included reference to the first respondent on her claim form as background to her initial application, and subsequent appeal. In those circumstances, the claimant does not fall within s.164(2)(b) ERA. And therefore, she does not have the right to any redundancy payment, and her claim must fail and is dismissed.

[36]However, the tribunal did turn to consider what its decision would be if it was wrong on that analysis. In short, the tribunal was conscious that the claimant did name the first respondent specifically in her claim form. And considered what its decision would have been had it decided that simply naming the first respondent on the claim form been sufficient to satisfy s.164(2)(b) ERA. In those circumstances, the tribunal would have needed to determine whether it appeared to the tribunal to be just and equitable that the claimant should receive a redundancy payment, as her claim form was presented more than 6 months after dismissal but within 12 months of it. And in determining this, the tribunal is mandated to consider the words contained in s.164(3) ERA. This explains that the tribunal shall have regard to(a) the reason shown by the employee for their failure to take any such step as is referred to in subsection (2) within the period mentioned in subsection (1), and

(b) all the other relevant circumstances.

[37]The tribunal considered that up until 25 January 2024, had a claim that satisfied s.164(2)(b) ERA been brought at that point, the claimant would have satisfied the tribunal with sufficient reason as to why there had been delays in her having made a claim before the employment tribunal. Namely, that the claimant had become suspicious of her business partner and undertook investigations into the affairs of the business following the decision to place the first respondent into liquidation, that the claimant was engaging with the Insolvency Service to understand the process and to ensure that she provided them with the relevant documentation, and the difficulties that she had had with accessing the relevant documents. These would all support that conclusion. However, the claimant did not bring her claim at that stage.

[38]The tribunal was not satisfied that the claimant had provided sufficient reason or provided sufficient evidence of circumstances to support that the delay between 25 January 2024 and the presentation of the claim form on 07 March 2024 should not deprive her of the right to a redundancy payment, and that it would be just an equitable for her to receive such.

[39]On 25 January 2024 the claimant had access to all the documents that she considered she needed to support an application for a redundancy payment. She had the decision from the Insolvency Service that was explicit in explaining why her application for a redundancy payment was refused. And further explained that a tribunal may decide that she was entitled to a payment if she takes one of two steps: writing to the first respondent or applying to the Employment Tribunal. The claimant did neither at the point of receiving this decision letter, or within a reasonable period thereafter. The claimant was candid in her evidence and explained that she was not sure why she did not apply at the point of receiving the decision letter and did not point to any specific reason. The claimant had further correspondence with the Insolvency Service during February 2024, following her seeking to appeal the refusal of her application, and it was made clear to her on 23 February 2024 that the original decision still stood. At this point she was again reminded of her right to make an application to the Employment Tribunal. Again, at this stage, the claimant still did not present her claim form. The claimant then had all the necessary details of the second respondent to fill in a claim form by 01 March 2024, following further correspondence with the Insolvency Service. And again, there was a delay of a further 6 days before the claimant contacted ACAS and subsequently presented a claim form. And during this period of 25 January 2024 and 07 March 2024, the claimant was able to produce a document appealing the original decision, and able to engage in correspondence with the Insolvency Service, showing that there was nothing that would cause an obstacle to her completing a claim form at this time.

[40]In the circumstances, even had the claimant persuaded the tribunal that s.164(2)(b) ERA applied, she has not satisfied the tribunal that it would be just and equitable that the employee should receive a redundancy payment. The claimant had everything she needed to bring an Employment Tribunal claim on 25 January 2024 or shortly after and was able to and capable of completing an ET1, and the tribunal was not satisfied that the claimant had furnaced it with sufficient evidence of reasons or circumstances for the delay such as not to deprive her of her right to a redundancy payment.

[41]In conclusion, the claimant does not have a right to redundancy payment pursuant to either pursuant to s.164(1) ERA. Nor does she fall within s.164(2)(a)- (c) ERA. And even if she had fallen within s.164(2)(b) ERA, it does not in the circumstances appear to the tribunal to be just and equitable that the employee should receive a redundancy payment. In those circumstances her claim fails and is dismissed.