J Williams v Next2Nowt Ltd (in creditors’ voluntary liquidation) and Steals Ltd: 2406461/2022 and 2407958/2022
EMPLOYMENT TRIBUNALS
Case No 2406461/2022, 2407958/2022
Between
J WilliamsClaimant1. Next2Nowt Limited (in creditors’ voluntary liquidation)Respondent
Before
Employment Judge BattenIn person for claimantDate 4 April 2024
JUDGMENT
[1]The complaint of unfair dismissal is well-founded. The claimant was automatically unfairly dismissed by reason of the transfer of the first respondent’s undertaking to the second respondent and the claimant is awarded compensation in the sum of £500.00. The Recoupment Regulations do not apply;[2]The respondents failed to inform or consult with the claimant about the proposed transfer pursuant to the Transfer of Undertakings (Protection of Employment) Regulations 2006, regulation 12, and are ordered to pay to the claimant the sum of £2,964.00 for such default;[3]The claimant suffered unlawful discrimination and detriment because of pregnancy/maternity. The respondents are ordered to pay to the claimant the sum of £6,867.69 as compensation for injury to her feelings, comprising Case Numbers: 2406461/2022 & 2407958/2022 2 £6,000.00 together with interest of £867.69 on that sum, calculated in accordance with the Employment Tribunals (Interest on Awards in Discrimination Cases) Regulations 1996.[4]All other claims brought by the claimant are hereby dismissed.
REASONS
[1]On 18 August 2022, the claimant presented a claim against the first respondent, Next2Nowt Limited about unfair dismissal and pregnancy/maternity discrimination – claim number: 2406461/2022. The claim was not responded to because the first respondent was by then insolvent (in creditors’ voluntary liquidation).[2]On 25 September 2022, the claimant issued a second claim against the second respondent, Steals Limited, also about unfair dismissal and pregnancy/maternity discrimination – claim number 2407958/2022. On 28 October 2022, a response form was presented. Case Numbers: 2406461/2022 & 2407958/2022 2[3]The claims were combined and, on 22 February 2023, a case management preliminary hearing took place before Employment Judge Martin at which the claims were discussed and confirmed to be: unfair dismissal; automatic unfair dismissal under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”); automatic unfair dismissal for pregnancy/maternity; pregnancy/maternity discrimination; detriment due to pregnancy/maternity; a failure to consult about a TUPE transfer; and for unpaid wages/breach of contract. As a result, a List of Issues was finalised and agreed, as set out below.
The Evidence
[4]The Tribunal was provided with 2 bundles of documents. The parties had been unable to agree on the contents of a combined bundle and so both parties brought their own documents and files, amounting to in the region of 200 plus pages of documents.[5]The second respondent also relied on 2 letters which it presented separately at the beginning of the hearing, being(1) from Anthony Keenan, the second respondent’s accountant at the time, and(2) from Julie Fishwick, the second respondent’s payroll administrator.[6]The Tribunal was given written witness statements: from the claimant; and for the second respondent, from Mr Monk (the owner, director and shareholder of the second respondent at the material time), and Dawn Dorward, the General Manager. All 3 witnesses gave oral evidence and were subject to cross-examination.
The issues
[7]At the outset, the Tribunal reviewed the List of Issues with the parties. It was confirmed that the issues to be determined by the Tribunal were as set out in the case management orders of Employment Judge Martin as follows:- Transfer of employment
The issues
[1]Was there a transfer of the first respondent’s business to the second respondent in accordance with the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE)? If so, when?[2]If so, did the claimant’s employment automatically transfer to the second respondent?[3]If so, was the claimant consulted about the transfer of her employment under TUPE? Unfair Dismissal[4]Was the claimant dismissed? If so, by whom and when?[5]What was the reason for dismissal? Was it for a fair reason? Case Numbers: 2406461/2022 & 2407958/2022 3[6]Was it because of the transfer of the business to the second respondent?[7]Alternatively, was the claimant dismissed because of her pregnancy/maternity?[8]Alternatively, was the claimant dismissed because of redundancy/some other substantial reason (SOSR) of a kind to justify her dismissal?[9]Was there a redundancy situation?[10]Did the respondents act reasonably in dismissing the claimant for that reason? in particular did they warn and consult the claimant about the redundancy? did they have fair selection criteria; was it fairly applied? did they consider suitable alternative employment?[11]Did the respondents follow a fair procedure and was dismissal a sanction within the range of reasonable responses open to the respondents? Pregnancy and maternity discrimination - Section 18 Equality Act 2010 (“EqA”)[12]Did the respondents treat the claimant unfavourably because of her pregnancy/maternity? The unfavourable treatment relied upon is:-a. Not informing the claimant about the redundancy situation when she was on maternity leave;b. Not meeting with the claimant about the potential redundancy situation;c. Not being paid or told she would not be paid her maternity pay whilst other employees were told they would not get their wages;d. Not being requested to provide up to date contact details unlike other employees who were subsequently contacted;e. Not being considered for suitable alternative employment whilst on maternity leave;f. Dismissal. .[13]Did the respondents treat the claimant unfavourably because of:- 1) her pregnancy/and/or maternity; 2) her entitlement to statutory maternity pay; and/or 3) She was seeking to exercise her right to ordinary or additional maternity leave? Protection from detriment - Maternity & Parental Leave Regulations etc 1999/Section 47C Employment Rights Act 1996 (“ERA”)[14]Was the claimant subjected to a detriment by the respondents because she was pregnant and/or sought to take maternity leave?[15]The detriments relied upon by the claimant are those referred to at paragraph 12 (a– e) above. Case Numbers: 2406461/2022 & 2407958/2022 4[16]Was the detriment caused by some act or deliberate failure on the part of the respondents?[17]Was the respondents’ act or omission done on the prohibited ground of pregnancy/maternity?[18]Was the claimant within the protected period? Unauthorised deductions from wages/breach of contract[19]Did the respondent(s) make unauthorised deductions from the claimant’s wages by:-a. Deducting her maternity pay from 24 June 2022 until her employment terminated?b. Deducting monies for her pension contributions which were not paid into the pension scheme from 6 June 2022 until her employment terminated?[20]What, if any, sums are due and owing to the claimant in that regard?
Remedy
[21]Should a recommendation and/or declaration be made?[22]What, if any, sums should be paid to the Claimant's claims by way of compensation for losses sustained and any injury to feelings? Findings of Fact 8. Having considered all the evidence, the Tribunal made the following findings of fact on the basis of the material before it, taking into account contemporaneous documents where they exist and the conduct of those concerned at the time. The Tribunal resolved such conflicts of evidence as arose on the balance of probabilities. The Tribunal has taken into account its assessment of the credibility of witnesses and the consistency of their evidence with surrounding facts. 9. Having made findings of primary fact, the Tribunal considered what inferences it should draw from them for the purpose of making further findings of fact. The Tribunal has not simply considered each particular allegation, but also stood back to look at the totality of the circumstances, to consider whether, taken together, they may represent an ongoing regime of discrimination. 10. The findings of fact relevant to the issues which have been determined are as follows. 11. The first respondent and the second respondent are associated companies, in that the shares in both companies are owned by Mr Monk and his wife. In each case, Mr Monk has a 49% shareholding and, at the material time, Mr Monk was the sole director of both companies, his wife taking no active part. Mr Monk described the arrangement as “the business existing in 2 companies Case Numbers: 2406461/2022 & 2407958/2022 5 which were set up on accountant’s advice ”. In effect, there was a wholesale arm (the second respondent) and a retail arm (the first respondent). 12. Both companies operated together from a warehouse in Blackpool. The business sold clearance items, mainly clothing and shoes, through a shop situated in the warehouse premises and also though a number of shops located across the Northwest of England. 13. The Tribunal was told that all the staff were originally employed by the first respondent. Ms Dorward is the General Manager. She is based in the warehouse at Blackpool and the area sales personnel report to Ms Dorward. As Mr Monk described, in his witness statement, the business was “basically run by Ms Dorward”. 14. The claimant was employed by the first respondent from 20 August 2018 originally as a Store Manager. After the birth of her first child, the claimant’s role was reduced to that of Sales Assistant, contracted to work 24 hours per week, working in the first respondent’s shop in Chorley. The Chorley shop (and the other shops) all traded under the name “Steals”, being the name of the second respondent. 15. The claimant's contract of employment was signed on 25 August 2020, when she became a Sales Assistant. It appears in the claimant’s bundle at pages 37-40. 16. During the course of her employment, the claimant had experienced 2 purported announcements of redundancy: first, in 2019 which appears in the respondents’ bundle at page 54; and later in 2020. However, in each case, the claimant was later told that she was not being made redundant and to carry on working. 17. In 2022, the claimant went on maternity leave. 18. On a date shortly before 16 June 2022, there was a meeting at the respondents’ accountant’s office, attended by Mr Monk, Ms Dorward, the accountant Mr Keenan, and Mr Jason Elliott of Cowgills, who are an insolvency practice. At the meeting, Mr Keenan told Mr Monk that he was calling in liquidators who would take over the business bank account and assets, and that the employees would have to be made redundant, and that an email would go out to all employees on or about 24 June 2022 notifying them of the position. This situation arose because the first respondent was, and had been for some time, trading whilst technically insolvent. The respondents’ business had few assets except the stock, which was located in the shops or the warehouse. The stock was ultimately sold off at £2 per item through the shops, which remained open for that purpose. 19. Ms Dorward objected to the idea that staff would just receive an email. She thought that the staff should be told face-to-face, and the meeting agreed that she be allowed to do so. Case Numbers: 2406461/2022 & 2407958/2022 6 20. The very same day, the claimant gave birth to her second child. It was a difficult birth, and the claimant spent some time in hospital, recovering. 21. On 16 June 2022, Ms Dorward went to the Chorley shop and called a meeting of the employees who were working there that day. Ms Dorward told the Chorley employees that the first respondent was in difficulty and that it had been decided that they would all be made redundant shortly. The employees were told that they would be paid their weekly wage the next day, Friday 17 June 2022, but that they would not be paid for the following week, on 24 June 2022. Nevertheless, Ms Dorward told the staff that they needed to continue to work over the next week (even though they were not going to be paid for that week by the respondents) if they wanted to receive their redundancy pay and notice pay. She also said that employees would eventually get paid by the Redundancy Payments Office. The Tribunal considered that Ms Dorward’s objective was to compel the employees to carry on working for another week. 22. The employees who were present at Chorley agreed to work on. The claimant was not at work, as she was on maternity leave. The claimant was told nothing of what was to happen and when/if she would be paid. Ms Dorward said in evidence that she was concerned that the claimant should not find anything out whilst she was in hospital, recovering from surgery and with a new baby.
Findings of Fact
[23]The next day, the claimant happened to look at the business’ Facebook page, to see an announcement that the Chorley shop will be closing. The claimant was surprised.[24]The following Friday, 24 June 2022, the claimant's maternity pay was not paid, but she did not take action immediately, having experienced announcements of redundancies and closures in the past, which came to nothing. In any event, the claimant was preoccupied with her recovery from surgery and the care of her newborn child.[25]On 29 June 2022, a post appeared on the “Steals” Facebook page: “New delivery gone into Chorley store this morning yes we are still open and everything £2”. A copy of the post appears in the claimant's bundle at page 10. When asked about this, Mr Monk said that he had acquired the stock from the first respondent, for sale at £2 per item, in an effort to recoup some of the losses that were going to be incurred.[26]On 1 July 2022, the claimant contacted Ms Dorward about her maternity pay. Ms Dorward told the claimant that she would not be getting any more money and suggested that the claimant should claim benefits. The claimant was understandably distressed to hear this.[27]On 6 July 2022, the claimant received a letter to inform her that she was dismissed for redundancy. The letter appears in the claimant's bundle at page 20. The letter was posted on 5 July 2022 and was signed by Ms Dorward. Underneath her signature the letter said “Derek Monk, For and on behalf of Next2Nowt Limited”. Despite the date of posting and receipt by the claimant, the letter says the claimant’s dismissal was effective on 29 June 2022 in an Case Numbers: 2406461/2022 & 2407958/2022 7 apparent effort to backdate the claimant’s dismissal. In those circumstances, the Tribunal found that the claimant was dismissed with effect from 6 July 2022, when she received notice of the termination of her employment. In evidence, Ms Dorward sought to blame the accountant, and she suggested that there were earlier letters which had been sent to wrong addresses by the accountant. Ms Dorward also sought to blame the claimant for any delay, suggesting that it was the claimant’s fault for not having told the accountant that she had moved. It was entirely unclear to the Tribunal whether any other letters in fact existed; there was no evidence that the accountant had sent any letter(s) to the claimant, whether to the claimant’s old address or at all. In addition, such suggestions were in contrast to Ms Dorward’s evidence elsewhere, to the effect that the insolvency practitioners, Cowgills, were going to dismiss employees by email.[28]On 9 July 2022, the “Steals” Facebook page announced that the business was not in fact closing down but that they would be closed for a few days because of the law. Despite this announcement, the business continued to trade.[29]On 21 July 2022, the claimant submitted a grievance addressed to Mr Monk and Ms Dorward about unfair dismissal, lack of maternity pay, not being told about her redundancy or dismissal and about her pension monies. The claimant’s grievance went unanswered.[30]The Chorley store closed temporarily on or about 30 July 2022. Up until then, the Chorley store had been staffed by a mix of the Chorley employees and other employees brought over from Blackpool.[31]The claimant commenced early conciliation on 10 August 2022. An early conciliation certificate was issued on 12 August 2022 and the first Employment Tribunal claim on 18 August 2022.[32]On 19 August 2022, the Chorley store reopened, operated by the second respondent and selling off stock from the first respondent. There were some new employees, and employees were brought in from other shops, and at least one of the previous Chorley employees has been retained.[33]On 23 August 2022, the first respondent went into creditor’s voluntary liquidation, as recorded at Companies House; that being the date of the petition being sanctioned by the court.[34]On 31 August 2022, the first Tribunal claim was served on the first respondent. It must have been received on or around 1 or 2 September 2022.[35]Ms Dorward’s evidence was that she was no longer employed by or working for the first respondent due to the insolvency. However, Ms Dorward was at the Blackpool premises when the claim arrived in the post. She opened the Tribunal’s letter and immediately rang the Tribunal to inform the administration that the first respondent was in “liquidation”. Case Numbers: 2406461/2022 & 2407958/2022 8[36]On 3 September 2022, the claimant and 2 other employees who had worked at the Chorley store were offered a return to work and one of four vacancies. The letter appears in the claimant’s bundle at page 26. It is signed by Ms Dorward who describes herself at the bottom of the letter as “Dawn Dorward on behalf of Steals Ltd” and it says: “We are writing to offer you one of four vacancies we have at our Chorley store with our company, Steals Limited, as a valued ex member of staff of Next2Nowt Limited who you now know has gone into liquidation and is no longer trading.”[37]On 20 September 2022, the claimant obtained a further early conciliation certificate naming Steals Limited as the prospective respondent. On 25 September 2022, the claimant presented her second claim, against Steals Limited, as the company which was continuing to run the business.
The applicable law
[38]A concise statement of the applicable law is as follows. TUPE[39]The Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) provide that a relevant transfer is defined in Regulation 3 as follows:(1) These Regulations apply to – (a) a transfer of an undertaking, business or part of an undertaking or business situated immediately before the transfer in the United Kingdom to another person where there is a transfer of an economic entity which retains its identity; ….(2) In this regulation “economic entity” means an organised grouping of resources which has the objective of pursuing an economic activity, whether or not that activity is central or ancillary.[40]In Cheesman and others v R Brewer Contracts Ltd [2001] IRLR 144 guidance was given as to what constitutes an undertaking for the purposes of a TUPE transfer. An economic entity can be an organised grouping of persons and of assets, sufficiently structured, stable and autonomous, so as to enable (or facilitate) the exercise of an economic activity which pursues a specific objective.[41]As to whether there has been a transfer of an undertaking, Cheesman held that the decisive criterion is whether the entity in question retains its identity post transfer, in that its operation is actually continued or resumed. Case Numbers: 2406461/2022 & 2407958/2022 9[42]Whether the entity retains its identity or not depends on the factors to be assessed as listed in Spijkers v Gebroeders Benedik Abattoir CV and another [1986] 2 CMLR 296. These factors include the type of undertaking or business concerned, the tangible assets that transfer, the proportion of employees assigned to the undertaking who are taken on by the transferee, whether customers transfer, similarities between the activities before and after transfer and any period during which the activities are suspended.[43]TUPE Regulation 4 provides: (1) … a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor and assigned to the organised grouping of resources or employees that is subject to the relevant transfer, which would otherwise be terminated by the transfer, but any such contract shall have effect after the transfer as if originally made between the person so employed and the transferee.[44]Whether an employee is assigned to the undertaking which transfers is a question of fact. In Duncan Webb Offset (Maidstone) Limited v Cooper and others [1995] IRLR 633 a number of aspects were identified for consideration including the amount of time spent on one part of the business by an employee, the terms of the employee’s contracts describing what employees could be required to do and how the costs of employees’ services had been allocated. However, if an employee’s role is strategic or directed to the survival and maintenance of the transferor as a whole, it may not be that such an employee was assigned to the undertaking which transfers. The duty to inform and consult under TUPE[45]Regulation 13 of TUPE obliges transferors and transferee to inform and consult in respect of affected employees. The “affected employees” are defined in regulation 13(1) and includes employees of the transferor or the transferee who might be affected by the transfer or may be affected by measures taken in connection with it.[46]Regulation 13(2) provides that the duty to inform must take place long enough before a relevant transfer to enable the affected employees to consult with the appropriate representatives of any affected employees. The employer shall inform those representatives of the following:a. The fact that the transfer is to take place, the date or proposed date of the transfer and the reason for the transfer.b. The legal, economic and social implications of the transfer for any affected employees.c. The measures which the employer envisages he will, in connection with the transfer, take in relation to any affected employees or, if he envisages that no measures will be so taken, to state so. Case Numbers: 2406461/2022 & 2407958/2022 10d. If the employer in question is the transferor, the measures in connection with the transfer must include those which he envisages the transferee will take in relation to any affected employees who will become employees of the transferee after the transfer by virtue of regulation 4 or, if he envisages no measures will be so taken, to state so.[47]The duty to consult arises where measures are envisaged being taken.[48]Under regulation 13(9) employers have an excuse for not complying with the duties to inform and consult if there are ‘special circumstances’ which render it not reasonably practicable to do so. They must, however, take all such steps to fulfil the duty as are reasonably practicable in the circumstances. If the question of reasonable practicability reaches a Tribunal, the burden is on the employer to show that the special circumstances defence should apply (regulation 15(2)). Special circumstances need to be exceptional or out of the ordinary: Clarks of Hove Ltd v Bakers’ Union [197]8 ICR 1076 CA and must exist at the time when the obligation to inform and consult arises rather than as an explanation given in hindsight. For example, in Scott and Ors v Guardian Facilities and anor ET Case No 23340014/08 the Tribunal found that although the transfer happened very quickly, the loss of business at short notice was neither exceptional nor extraordinary - the transferor had been on notice that the contract was at risk for 7 months, such that there were no special circumstances for the purposes of regulation 13(9).[49]The question of who can bring a claim for failure to inform and consult was decided in Howard v Millrise Ltd (in liquidation) and anor [2005] ICR 435 EAT. There it was held that an affected employee had standing to bring a claim for breach of regulation 13 where an employer had failed to invite affected employees to elect representatives or, in the absence of any election, to provide the requisite statutory information to the employee herself. Unfair dismissal[50]Section 98 ERA sets out a 2-stage test to determine the question of whether a dismissal is fair or unfair. First, the employer must show the reason for the dismissal and that reason must be one of the potentially fair reasons in section 98(1) and(2) ERA.[51]Regulation 7 of TUPE provides that where the sole or principal reason for dismissal is a TUPE transfer and there is not an ‘economic technical or organisational reason entailing changes in the workforce’ (“ETO”), the dismissed employee shall be regarded as automatically unfairly dismissed. If the dismissal is for an ETO reason, the employer must show that the dismissal was procedurally fair and reasonable by reference to section 98(4) ERA.[52]If the employer shows a potentially fair reason in law, the Tribunal must then consider the test in section 98(4) ERA: whether in the circumstances including the size and administrative resources of the respondent’s undertaking the respondent acted reasonably or unreasonably in treating that reason as a Case Numbers: 2406461/2022 & 2407958/2022 11 sufficient reason for dismissing the claimant; and the Tribunal must make its decision in accordance with equity and the substantial merits of the case.[53]Redundancy is a potentially fair reason for dismissal. The definition of redundancy is set out in Section 139 (1) ERA: “An employee who is dismissed shall be taken to be dismissed by reason of redundancy if the dismissal is wholly or mainly attributable to … the fact that the requirements of that business for employees to carry out work of a particular kind, or for employees to carry out work of a particular kind in the place where the employee was employed by the employer have ceased or diminished or are expected to cease or diminish”.[54]In many cases, an employer’s liability in respect of a redundancy dismissal will be fully discharged by the payment of statutory or, where appropriate, contractual redundancy pay. However, it remains open to an employee to argue that their “redundancy” dismissal was unfair for several reasons including that although a redundancy situation existed, the dismissal was, nevertheless, unreasonable under section 98(4) ERA.[55]In the case of Polkey and AE Dayton Services Ltd 1988 ICR 142 the House of Lords established procedural fairness as an integral part of the reasonableness test and that a failure to follow correct procedures was likely to make an ensuing dismissal unfair. In assessing the reasonableness of a dismissal for redundancy, the Tribunal must follow the guidelines laid out in Williams and others v Compair Maxam Ltd [1982] ICR 156 and must consider factors such as:54.1 whether employees were warned and consulted;54.2 the pool for selection and whether objective selection criteria were fairly applied;54.3 the manner in which dismissals were implemented; and54.4 whether any alternative work was available.[56]The consideration of alternative employment will often be an important part of a fair and reasonable redundancy procedure. In Thomas and Betts Manufacturing Ltd v Harding 1980 ICR 255 the Court of Appeal ruled that an employer should do what it can so far as is reasonable to seek alternative work. As a general rule, the Tribunal will expect an employer with sufficient resources to take reasonable steps to ameliorate the effects of redundancy, including giving detailed consideration as to whether suitable alternative employment is available.[57]The Tribunal must also consider whether the dismissal falls within the band of reasonable responses available to an employer in the circumstances of the case. Pregnancy and maternity dismissal Case Numbers: 2406461/2022 & 2407958/2022 12[58]Section 99 of the Employment Rights Act 1996 provides that an employee who is dismissed shall be regarded as unfairly dismissal if the reason or principal reason for the dismissal is of a prescribed kind. Section 99(3) (a) and (b) set out the prescribed circumstances to include pregnancy, childbirth, maternity and ordinary, compulsory or additional maternity leave.[59]The Maternity and Parental Leave etc Regulations 1999, Regulation 20, provide that an employee who is dismissed is entitled under section 99 ERA to be regarded as unfairly dismissed, if the reason or principal reason for this dismissal is that the employee is redundant and Regulation 10 has not been complied with. Regulation 10 applies where, during an employee’s ordinary or additional maternity leave period, it is not practicable by reason of redundancy for her employer to continue to employ her under her existing contract of employment. Where there is a suitable available vacancy, the employee is entitled to be offered (before the end of her employment under her existing contract) alternative employment under a new contract of employment which must be such that the work to be done under it is of a kind which is both suitable in relation to the employee and appropriate for her to do in the circumstances, including its provisions as to the capacity and place in which she is to be employed, and as to the other terms and conditions of her employment, so that such terms are not substantially less favourable to her than if she had continued to be employed under her previous contract. Pregnancy and maternity discrimination[60]The Equality Act 2010 (“EqA”) provides that, in order to present a claim of discrimination, a claimant must show that they have a protected characteristic within the categories set out in EqA section 4. Pregnancy and maternity are a protected characteristic under EqA.[61]Section 18 EqA provides that a person discriminates against a woman if, in the protected period set out in section 18 (6) – from when the pregnancy begins and until the end of the additional maternity leave period or such earlier time as she returns to work – she is treated unfavourably because of her pregnancy or because of illness suffered by her as a result of it. Pregnancy and maternity detriment[62]The right not to be subjected to a detriment because of various types of family leave, including pregnancy and maternity leave, is contained in section 47C ERA. The detriment provisions in ERA run parallel to the provisions of EqA. Unauthorised deductions from wages[63]ERA Part II provides that a failure to pay wages owing constitutes an unlawful deduction from wages.[64]Wages are defined in section 27 of the Employment Rights Act 1996. Section 27(1) (a) provides that: Case Numbers: 2406461/2022 & 2407958/2022 13 “wages includes any fee, bonus, commission, holiday pay or other emolument referable to his employment whether payable under his contract or otherwise”.[65]The Employment Rights Act 1996, section 13, governs circumstances in which an employer can make deductions from an employee’s wages. Section 13 provides that an employer: “shall not make a deduction from wages of a worker employed by him unless the deduction is required or authorised to be made by virtue of a statutory provision or relevant provision of the worker’s contract or the worker has previously signified in writing his agreement or consent to the making of the deduction.” Conclusions (including where appropriate any additional findings of fact)[66]The Tribunal has applied its relevant findings of fact and the applicable law to determine the issues in the following way. Was there a TUPE transfer?[67]First, the Tribunal considered that there was an economic entity which retained its identity throughout and which at all material times was engaged in the sale of clearance clothing and shoes. There are a number of Facebook posts by the respondents, in which the business is called “Steals”. The Tribunal found that the first respondent traded under the banner of “Steals”, whilst the second respondent is called “Steals”. There was no apparent or outward difference between them, so far as the Tribunal could discern from the evidence before it and the business was operated through the 2 companies, except that for the fact that the first respondent employed all the staff.[68]Throughout the material time, Mr Monk as director and Ms Dorward as general manager, were concerned to ensure the “Steals” name and brand survived. For example, in the claimant's bundle at page 9, the ‘Steals’ Facebook page announced, on 9 June 2022, that “NO our stores are not CLOSING”, and in the claimant’s bundle at page 10, on 29 June 2022 the ‘Steals’ Facebook page announced “New delivery gone into Chorley store this morning yes we are still open and everything £2”.[69]Mr Monk gave evidence that he took over the stock (that was left in the shops) for the second respondent, thereafter selling it off at £2 per item for the purpose which he described as being “to recover Steals’ losses”. The business had no other assets. The business was run on a shoestring. The respondents did not own any of the buildings from which the business operated. All premises were held on short-term leases. In the interim, Mr Monk sought to renegotiate the leases or, as Mr Dorward said in evidence, negotiate new leases for the second respondent so that it could continue to trade through the shops. Case Numbers: 2406461/2022 & 2407958/2022 14[70]In the circumstances, the Tribunal considered, from the facts as found, that there was a transfer pursuant to TUPE of that part of the “Steals” business contained in the first respondent, to the second respondent. This included the stock in the shops and many of the employees. The business retained its identity as “Steals” throughout. Further, there was no change to the shops’ outward appearances, nor did they close for any significant length of time, if at all. In fact, the identity of the business never changed at all, from one day to the next. What changed was that the proceeds of sales went to the second respondent, and not the first respondent, once the first respondent ceased trading.[71]The transfer took place on a date between 24 and 29 June 2022. The first respondent’s employees were not paid after 16 June 2022, and it appears that some of them were dismissed as redundant at some point thereafter. However, according to the letter which the claimant received on 6 July 2022, it was around 29 June 2022 when some of the Chorley shop employees were made redundant albeit that some employees were retained whilst the shop remained open with the same stock. The Tribunal also found that the General Manager, Ms Dorward, carried on working throughout and that her employment transferred to the second respondent by operation of TUPE as did at least one employee in the Chorley shop, whilst the claimant was not dismissed at the point of transfer.[72]The Tribunal also took account of a letter dated 3 September 2022 (on page 26 in the claimant’s bundle) which is signed by Ms Dorward on behalf of the second respondent, and which offers vacancies at “… our Chorley store with our company Steals Ltd”. The Tribunal considered that this demonstrates that the second respondent was trading on, and indeed recruiting, whilst Ms Dorward was retained in the same position, as General Manager, albeit for the second respondent. Did the claimant's employment transfer to the second respondent?[73]The Tribunal has found that nobody told the claimant anything about her purported dismissal, nor in fact was the claimant dismissed, until the letter to that effect was received by the claimant, on 6 July 2022. Ms Dorward had told those employees who were working in the shop on 16 June 2022, that they would be redundant because she wanted to tell them face to face rather than by email. It was only at that point that Ms Dorward became aware of the claimant as an employee. Ms Dorward was told by the Chorley staff that the claimant was in hospital, having a baby. In evidence, Ms Dorward said that she did not want to tell the claimant that she was dismissed then, because the claimant had just had a baby. Whilst Ms Dorward’s intention was to tell the staff face-to-face, she did not tell the claimant face-to-face. In fact, she did not tell the claimant at all, and she did not follow up on the information about the claimant being in hospital at any time thereafter.[74]The respondents contended that a number of letters had been posted to the claimant, giving her notice of dismissal at an earlier date than 6 July 2022. There was no evidence of the existence of any such letters nor of their posting. The Tribunal considered that, at best, the respondent had failed to Case Numbers: 2406461/2022 & 2407958/2022 15 keep its records up-to-date, and that the claimant could not be blamed for any deficiencies in the respondent’s records, nor should the business’ accountants be so blamed. In any event, there was no evidence that any letter was sent to the claimant before 5 July 2022. In the telephone call on 1 July 2022, when the claimant rang Ms Dorward about her maternity pay, the claimant was not told that she was or would be dismissed. The letter received by the claimant, on 6 July 2022, was the first and official notification of dismissal which the claimant had from the respondents.[75]By 6 July 2022, the transfer of the part of the business operated by the first respondent, to the second respondent, had taken effect – see paragraph 71 above. Accordingly, when the claimant received her letter, her employment had already transferred to the second respondent which was running the shops and trading in the shops to sell off the stock. The claimant was therefore dismissed by Ms Dorward, on behalf of the second respondent. The Tribunal considered that the fact that the letter purported to come from the first respondent matters not; the Tribunal has found that the letter was an attempt to backdate the claimant’s dismissal and apply it to a company that had ceased trading at least a week beforehand and one which had not yet formally become insolvent. Consultation under TUPE[76]The Tribunal found that the claimant was not consulted about anything. Ms Dorward had several opportunities to speak to the claimant, either face to face or to telephone her or communicate via social media messages but she did not do anything at all to inform the claimant or consult with her, whether about redundancy or about the transfer of the business or what was going to happen. The claimant was simply dismissed by letter, on 6 July 2022. In those circumstances, the claim of a failure to inform and consult pursuant to TUPE must succeed. Unfair dismissal[77]The Tribunal has found that the claimant was dismissed on 6 July 2022 when she received Ms Dorward’s backdated letter, purportedly from the first respondent but certainly posted after the first respondent had ceased trading. The Tribunal considered therefore that the claimant’s dismissal was effected by the second respondent. In any event, by the date of its posting, Ms Dorward was working on for the second respondent. The Tribunal considered that the letter on page 20 of the claimant's bundle was an attempt to backdate the claimant’s dismissal - the claimant had been forgotten about and the letter amounted to an attempt to rewrite history.[78]As for the reason for the claimant’s dismissal, the Tribunal found this was not because of redundancy – no redundancy situation arose at Chorley for a number of reasons. First, the Chorley store had not closed, was not closing, and it did not close at the time. Work of a kind for which the claimant was employed had not ceased or diminished nor was it expected to. The second respondent’s consistent announcements were about the business carrying on Case Numbers: 2406461/2022 & 2407958/2022 16 without interruption; to the effect: “we’re continuing on, come and buy some clothes”.[79]The Tribunal also found no evidence that the claimant was dismissed because she was pregnant. She was dismissed like other employees albeit on a later date, after the transfer, but the claimant’s dismissal was nevertheless because of the transfer. What was happening at the time, behind the scenes, was that Mr Monk was trying to renegotiate the leases for the second respondent. Only when his efforts were unsuccessful did the first respondent go into insolvency, which occurred on 23 August 2022, long after the claimant had been dismissed. The second respondent simply did not wish to take the claimant on and so it sought to terminate her employment, calling it a redundancy, whilst the business was reorganised, the stock transferred, and leases were renegotiated.[80]In light of all the above, the Tribunal considered that the claimant’s dismissal was because of the transfer of the part of the business from the first respondent to the second respondent. The claimant was therefore automatically unfairly dismissed by the second respondent post transfer. Pregnancy/maternity discrimination and detriment[81]The claimant contended that there were 6 possible aspects of unfavourable treatment/detriment that she suffered – see the list of issues above at paragraph 7, section 12(a) to (f). The Tribunal found items (a), (b) and (c) to be made out and to constitute unfavourable treatment and also detriment, as follows: (a) That the claimant was not informed about the purported redundancy situation when she was on maternity leave. In fact, Ms Dorward’s evidence was that she had decided not to tell the claimant anything at all precisely because the claimant was absent on maternity leave and had recently given birth;(b) There was no meeting with the claimant about the potential redundancy situation when there could have been, but the claimant was out of sight, on maternity leave and so was forgotten about; and(c) The claimant was not told that she would not get paid her maternity pay, whilst other employees were told that they would not get their wages. The claimant was out of sight and forgotten because she was on maternity leave. She only discovered that she had no money when she checked her bank account. It was clearly a shock to the claimant to discover this and that could have been avoided.[82]The Tribunal did not consider that the lack of any request for up-to-date contact details itself amounted to unfavourable treatment – there was no evidence that other employees had been contacted either; it was apparent that the respondent’s records were inadequate and had simply not been kept up-to-date, but this arguably resulted in the claimant remaining employed until 6 July 2022 and TUPE transferring to the second respondent. Case Numbers: 2406461/2022 & 2407958/2022 17[83]As a fact, the claimant was not considered for suitable alternative employment whilst on maternity leave. However, the claimant was not redundant nor dismissed for such. The fact of her maternity leave and difficult birth of her child mitigated against efforts in this regard and so the Tribunal did not find the claimant to have been subject to unfavourable treatment in this regard. Nevertheless, in the claimant’s bundle at page at page 26, there is a letter which does ultimately offer the claimant a job, back at work in the Chorley shop.[84]The Tribunal has found that the claimant was not dismissed because of her maternity – see paragraph 79 above. Dismissal was not therefore an act of pregnancy/maternity discrimination. Unauthorised deductions from wages[85]The Tribunal heard evidence that the claimant did get her maternity pay, albeit late, and so there is no loss of wages outstanding.[86]The claimant also sought to recover pensions contributions deducted from her pay, which were not paid over to the pension scheme as they should have been. The Tribunal considered these did not amount to unauthorised deductions from wages because the pension deductions were in fact authorised. Having made those deductions, the respondents have not paid the monies over to the pension scheme. Recovery of pension contributions not paid over does not find a claim of unauthorised deductions from wages and is more properly claimable via the pension scheme trustees.
Remedy
[87]In light of the above conclusions, the Tribunal has awarded the following sums:[88]For the unfair dismissal claim, the Tribunal was told that the claimant has had the equivalent of a basic award through the redundancy payment that she received.[89]The Tribunal has awarded £500.00 for loss of statutory rights, to be paid by the second respondent, because it was the second respondent who unfairly dismissed the claimant.[90]The Tribunal heard that the claimant has been paid all her maternity pay and allowances through the Benefits Agency, Then, in early 2023, the claimant found another job, earning more money than she had with the respondents. As a result, no losses of earnings are claimed.[91]For the failure to consult about the TUPE transfer, regulation 16 (3) TUPE provides that appropriate compensation shall be such sum not exceeding 13 weeks’ (gross) pay for the employee in question as the Tribunal considers just and equitable having regard to the seriousness of the failure of the employer to comply with this duty. Case Numbers: 2406461/2022 & 2407958/2022 18[92]The Tribunal has found that there was absolutely no consultation with the claimant; not even when Ms Dorward was reminded of the claimant’s existence on maternity leave. In fact, Ms Dorward’s evidence was to the effect that she made a conscious decision to tell the claimant nothing at all about what was going on. In those circumstances, the Tribunal considered the default to be of the most serious nature and has therefore awarded 13 weeks’ pay.[93]The claimant was earning £228.00 per week and so 13 weeks’ gross pay is £2,964.00. As neither respondent made any effort to inform or consult with the claimant, liability for the award is on a joint and several basis but, as the first respondent is insolvent, the award is effectively payable by the second respondent.[94]In respect of the claims of pregnancy/maternity discrimination and detriment, The Tribunal has already found that the claimant has suffered no losses of earnings.[95]In determining an appropriate level of award for injury to feelings for discrimination and detriment, the Tribunal took account of its relevant findings of fact including the fact that the claimant was not dismissed because of her pregnancy. In those circumstances, the Tribunal considered that this is a case where an appropriate award for injury to feelings falls in the low band of Vento. In determining the precise amount of such an award, the Tribunal also took account of the following matters: the claimant had been at risk of redundancy twice before, so it was not a total surprise to the claimant to hear that the respondents were suggesting the shops might shut and that people might be redundant; the claimant knew how the business operated - through clearance shops, with an element of the business living hand to mouth; the claimant did not react immediately when she learned that dismissals were being mooted; it was only when her maternity pay did not arrive in her account that she then contacted Ms Dorward, on 1 July 2022; it was at that point that the claimant realised the situation might be more serious than previously; the respondent did not involve the claimant in discussions or meetings because the claimant was on maternity leave, and the Tribunal considered that the respondents’ personnel to an extent forgot about the claimant because she was away from work on maternity leave; the lack of money and ensuing uncertainty undoubtedly spoiled the first few weeks of the claimant’s new baby and the claimant was distressed by her sudden financial circumstances. In light of all these factors, the Tribunal considered that the claimant should be awarded the sum of £6,000.00 for injury to feelings.[96]Pursuant to the Employment Tribunals (Interest on Awards in Discrimination Cases) Regulations 1996, regulation 6(1), interest is charged on the award for injury to feelings at the rate of 8% per annum for 94 weeks, being the period from the date of the first act of discrimination (which the Tribunal found was the meeting on 16 June 2022, to which the claimant was not invited nor even informed) to the calculation date: 4 April 2024. Interest at 8% per annum, on £6,000.00, for 94 weeks, is the sum of £867.69.[97]The total award made is therefore £10,331.69, comprised of the following: Case Numbers: 2406461/2022 & 2407958/2022 19•£500.00 for automatic unfair dismissal because of a TUPE transfer.•£2,964.00 for the complete failure of both respondents to inform and consult about the TUPE transfer.•£6,867.69 in respect of discrimination and detriment suffered because of pregnancy/maternity discrimination.