Mr L P D Prior v Reliable Renewables Ltd: 2409317/2023 and 2400711/2024
EMPLOYMENT TRIBUNALS
Case No 2409317/2023, 2400711/2024
Between
Mr L P D PriorClaimantReliable Renewables LtdRespondent
Before
Employment Judge AinscoughIn person for claimantDate 26 June 2024
JUDGMENT
The claimant's claim of ordinary unfair dismissal is struck out because the claimant does not have two years’ continuous employment.
REASONS
[1]The claimant initially made a complaint of unfair dismissal but that was struck out prior to this hearing because the claimant did not have two years’ service. The remaining complaints the Tribunal have to deal with are: breach of contract in relation to failure to give notice of termination (wrongful dismissal); breach of contract in relation to relocation expenses; failure to pay holiday pay; unauthorised deduction from wages in respect of pay for the period 1 to 18 July 2023; and, if one or more of those complaints succeeds, a complaint under Section 38 of the Employment Act 2002 in respect of failure to provide written particulars of employment.[2]There was also an employer’s contract claim which was about the relocation fee and whether the claimant was obliged to repay to the respondent part or any part of that relocation fee on termination of his employment.[3]The complaints had been discussed and a brief set of issues set out in the case summary of the preliminary hearing held previously in this case. We had a further Case Nos. 2409317/2023 2400711/2024 2 discussion about the issues. In relation to the complaint of wrongful dismissal or breach of contract about notice, the parties agreed that there had been no discussion when the claimant started employment about what his notice period was to be. I explained that the legal position was, therefore, that the claimant was entitled to reasonable notice, subject to this being no less than statutory minimum notice. Mr Prior said he accepted that the notice to which he was entitled would be the statutory minimum notice, which was one week because of his length of service. The claimant’s gross salary was agreed to be £36,000. The only issue in relation to the breach of contract (notice pay) complaint was whether or not the claimant was in fundamental or very serious breach of contract or committed an act of gross misconduct which would have entitled the respondent to dismiss the claimant without notice.[4]In respect of unauthorised deduction from wages, it was agreed that the claimant had not been paid wages for the eighteen days he worked in July and that the amount in respect of that period was £1,714.29 gross. The issue in dispute was whether the respondent was entitled to deduct that amount because they say an amount was due to them from the claimant for repayment of relocation expenses.[5]In relation to holiday entitlement, the parties agreed that the holiday year to be used was the calendar year beginning on 1 January. There was some dispute as to which days the claimant had taken as holiday and, therefore, whether he had any accrued days remaining. The claimant was not arguing that he was entitled to any more than statutory holiday entitlement which is 5.6 weeks or 28 days on the basis of a five day working week. The issues in relation to holiday pay were: whether the claimant had any accrued but untaken holiday as at termination of his employment; and, if he did, whether the respondent was entitled to deduct that amount because of the alleged obligation to repay relocation expenses.[6]The claimant’s complaint of breach of contract in relation to relocation expenses was that the claimant said he was entitled to £10,000 in total and had been paid £7,500 so the respondent was in breach of contract by not paying an additional £2,500. The respondent disputed that there had been an agreement to pay £10,000. I had to decide: whether there was an agreement that the claimant would be entitled to £10,000 of relocation expenses; whether there were any circumstances in which that was repayable; and, if there was an agreement, whether it was a legally binding agreement.[7]It was agreed by the parties that the claimant had not been provided with a written statement of employment particulars. If the claimant succeeded in one of the other complaints then, under Section 38 of the Employment Act 2002, I am required by that section, unless there are exceptional circumstances why I shouldn’t do so, to award an extra two or four weeks’ pay depending on what I think appropriate.[8]The employer’s contract claim was that the respondent says there was a legally binding agreement that the claimant was required, if he left employment within the first year, to repay a proportion of the relocation expenses paid. The respondent contended that half of the £7,500 which had been paid was repayable so that the claimant owed £3,750 less the amounts which the respondent had accepted were otherwise payable for wages. Case Nos. 2409317/2023 2400711/2024 3
Facts
[9]The respondent is a company which deals with the installation of renewable energy sources such as solar panels and air source pumps. The company was established by Michael Bates who is the Managing Director of the company. His brother, Callum Bates, became a director of the company in February 2023. Callum Bates was, at relevant times and remains, the Operations Director. Michael Bates was married to the claimant’s half-sister, Holly Prior. Holly Prior was a director of the respondent until January 2023.[10]In the summer of 2022, the claimant was in discussions about moving to Ireland from South Africa for a job there. On 23 August 2022, Michael Bates messaged the claimant saying that, if the Ireland job did not work out, he might have a proposition for him. At some time after that, the job in Ireland fell through and the claimant had discussions with Michael Bates, conducted orally, mostly through What’s App and video calls, about joining the respondent. Discussions between them included a proposal to make a payment to the claimant to assist him with the costs of relocating from South Africa to England. There was a dispute whether the amount discussed was £7,500 or £10,000 and whether repayment of part or all of this by the claimant was discussed. Michael Bates described, in his witness statement, discussion of a loan on a “loose basis” and described it as a “gentleman’s agreement” for the loan to be repaid through one year’s continued service and/or sales commission. The claimant disputes that anything was said about repayment. Nothing was recorded in writing about the loan or payment to be made in respect of relocation expenses.[11]I prefer the claimant’s evidence, supported by that of Cheryl and Holly Prior, in finding that a figure of £10,000 rather than £7,500 was mentioned. This is consistent with what the claimant wrote in his letter of 18 July immediately after being dismissed. I prefer Holly Prior’s evidence to that of Michael Bates in finding that, around the summer and autumn of 2022, Michael Bates was still discussing business matters with her. Holly Prior was still a director of the respondent company at this point and her marriage to Michael Bates had not yet broken down. I consider it more likely than not that Holly Prior and Michael Bates would discuss business matters, particularly involving Holly Prior’s brother, the claimant.[12]I also prefer the claimant’s evidence in finding that there was no discussion about the terms on which relocation expenses paid would be repaid by the claimant to the respondent. I consider that the claimant’s evidence that Michael Bates said they were a small company, this would be a big payment for them and he expected the claimant to work hard for them, to be more likely to be true than an agreement on specific terms of repayment if the claimant left in a year with a deduction of 25% for every three clear months of service, as asserted in the letter of 28 July 2023. Given the family connection at the time and the loose basis of the payment, I consider it more likely than not that Michael Bates and the claimant did not discuss the possibility of the claimant leaving within a year and what would then happen about the relocation expenses.[13]Even if I am wrong as to the contents of the discussion, I find that Michael Bates and the claimant did not intend there to be a legally binding agreement relating to the relocation costs to be paid and any repayment terms. A legally binding agreement Case Nos. 2409317/2023 2400711/2024 4 would be inconsistent with Michael Bates description of the agreement as a gentleman’s agreement and his description of this as a loan on a loose basis. A gentleman’s agreement is one which is not enforceable in law but in honour only. The lack of evidence that the claimant sought payment of a further £2,500 after the last payment of the £7,500 paid had been made prior to his dismissal also suggests to me that the claimant did not view the agreement as a legally binding agreement. Payment of relocation expenses to a new employee is, in my judicial experience, unusual. I think it likely the arrangement reached had more to do with the family connection than the respondent’s desire to secure the claimant’s services, particularly given the fact that it was not a very high paying role (the salary was £36,000 per annum). Had Michael Bates and the claimant intended this to be a legally binding agreement, I also consider it more likely than not that they would have put the terms in writing.[14]Nothing was discussed between the claimant and Michael Bates about holidays or notice entitlement. The claimant accepts that his holiday entitlement was in line with that of other employees in being the statutory minimum i.e. 5.6 weeks or, on the basis of a five day working week, 28 days per annum. The respondent’s holiday year runs from 1 January each year. The claimant’s salary of £36,000 per annum was agreed.[15]In November 2022, the claimant and his family moved to the UK. They stayed initially with Michael Bates until they rented a house.[16]On 22 December 2022 the first payment to the claimant for relocation was made, being a payment of £4,000.[17]Over the Christmas period in 2022, the marriage of Michael Bates and Holly Prior broke down and Holly Prior left the marital home.[18]The claimant says his employment with the respondent began in November 2022 but no payment was made directly to him for salary because he did not yet have his National Insurance number. The respondent says his employment began on 1 January 2023 and the claimant has agreed to use this date for the purposes of the holiday pay claim. The claimant was not issued with a statement of employment particulars. No terms of employment were put in writing. Other employees at the time had also not been given statements of employment particulars. The respondent had been a corporate business since 2016.[19]The claimant was reimbursed a total of £7,500 for relocation expenses. This was made in four instalments, the first in December 2022 and the last on 13 April 2023. The claimant provided evidence of costs incurred for the respondent to be able to include these as business costs. There was no evidence that the claimant sought payment of a further £2,500 prior to his dismissal.[20]The claimant’s wife, Cheryl Prior, reached an agreement with the respondent to give some HR assistance to the respondent. There was an intention that she should produce contracts of employment but she did not. She says it was because she was not comfortable with Michael Bates’s approach to various matters which would need to be included in the contracts. There is no need for me to make a finding of fact about this. Case Nos. 2409317/2023 2400711/2024 5[21]The respondent appeared, at the time, to have a casual approach to the booking of holidays. The claimant said he would just speak to Michael Bates. The respondent says holidays were recorded on a google calendar by the claimant. The claimant disputes this and the respondent has produced no holiday records. Michael Bates says that absences were recorded as holiday on time sheets but none of these have been produced in evidence.[22]I find that the respondent did have some concerns about the claimant, triggered by a call Callum Bates received from Nicola Hayes, a sub-contractor working for them, about a conversation she had had with the claimant. She reported that the claimant had said the respondent was taking advantage of her and gave her some personal details about Michael Bates’s life. By this time, Michael Bates and his wife, Holly, had been separated for some months. The call may have been a couple of weeks before the claimant’s dismissal although Mr Callum Bates was unable to give me a date for this. I accept Mr Callum Bates’s evidence that a client had mentioned to him that the claimant had been on site and had not been painting a good picture of the respondent. I accept Michael Bates’ evidence that he spoke to the claimant informally on a few occasions about the way that the claimant spoke to clients and also to Callum.[23]Callum Bates gave evidence of an investigation by their IT Consultant of the respondent’s server and company emails associated with Lee Prior. He asserts that this suggested the deletion of business data by the claimant. I have been shown no supporting evidence for such an allegation and, based on Callum Bates’s oral evidence and the termination letter, it does not appear to have been a reason for dismissal. The respondent has not satisfied me that the claimant was guilty of deletion of business sensitive data. The respondent’s concern referred to in the dismissal letter about use of company devices during normal working hours was not discussed with the claimant before the decision to dismiss him. Callum Bates explained in oral evidence that his concern was about the claimant being on Zoom meetings which were not connected with the respondent and spending time on YouTube whilst in the office.[24]Callum Bates’s witness statement and oral evidence did not refer to time spent in job searches as a reason for dismissal, although Michael Bates referred to this in his witness statement. The claimant accepted in evidence that he had been searching for jobs on the office computer but said this was during lunch breaks. He said he couldn’t deal with working there any more with what was going on with Michael Bates and the claimant’s sister and I accept this was his reason for looking for other work. The respondent has not satisfied me that the claimant was searching for jobs during what should have been his work hours.[25]The claimant denied working on any work other than the respondent’s work during working hours, except for completion of some projects on which he had been working in South Africa in the early weeks of his employment. He said Michael Bates had agreed to this. When given the opportunity to cross examine the claimant further, Ms Lee did not challenge the evidence that Michael Bates had permitted the claimant to complete those projects. The respondent has not satisfied me that the claimant did work other than for the respondent (except for finishing these projects) or search for jobs during working time. Case Nos. 2409317/2023 2400711/2024 6[26]The respondent’s witnesses say that the decision to dismiss the claimant was taken by Callum Bates. Michael Bates said he distanced himself from this because of a conflict of interest, although this did not stop him then being involved in the appeal stage.[27]I consider that Callum Bates’ reasons for dismissal lack clarity. There are inconsistencies between his witness statement, oral evidence and the termination letter. The claimant was dismissed on 18 July 2023. The fact of, and expressed reasons for, his dismissal were given in a letter sent to him by email on 18 July 2023 by Callum Bates. The claimant had not read that email when he attended for work on that day. He was met when he arrived for work by Michael Bates. Michael Bates handed him a copy of the letter which he did not read whilst he was with Michael Bates. Michael Bates told him that he was being dismissed. Michael Bates gave evidence that he did not go through any of the reasons for the dismissal at the meeting but the claimant gave evidence that Michael Bates said it had come to light that he had been disrespectful and was saying stuff to Nicola Hayes. It is not necessary for me to make a finding as to what exactly was said about the reasons for dismissal but I find that no detail was given. It is common ground that the claimant got upset and that he apologised to Michael Bates. The claimant says he was apologising for looking for other work. The claimant hugged Michael Bates; they had been close.[28]In the letter of dismissal, Callum Bates wrote as follows. “Over the course of the last few days certain information has come to light relating to your use of company devices during the normal working hours. The nature of the usage is considered by the company to be a major breach of trust and confidence. I write now to confirm that the company deems this conduct to be as serious as a gross misconduct offence therefore I am left with no other option but to summarily dismiss you from your role at Reliable Renewals effectively immediately”. The letter also included the statement that his final salary would be calculated up to and including his final working day inclusive of any accrued holidays. Mr Bates wrote “however your repayable relocation costs still remain owing to the company totalling approximately £4,000. It is fair to assume that after any associated reasonable deductions you will continue to owe the company monies which shall be confirmed to you in due course”. The letter informed the claimant that he had a right of appeal.[29]The claimant wrote to the respondent the same day, heading his letter “appeal re dismissal of employment” although the claimant did not appear to be seeking reinstatement to his job. In this letter, the claimant said he totally disputed the accusations that had been made, he sought payment for the whole month of July and his accrued holiday pay and asserted, saying he had discussed this with ACAS, that the company had to give him a further five days, one week, in lieu of notice. In relation to relocation costs, he asserted that no “so called” relocation cost could be deducted by the company from his salary. He wrote “the relocation costs were an agreement between myself and you, a figure of £10,000 was agreed which was not fully paid by the company not to mention other matters. At no time was there any discussion verbally or written agreement that if I left the company that the payments made to date were to be repaid”. He asked for payment of his final salary plus other funds by 28 July, writing that failure to do so would result in him bringing a legal case against the company for outstanding funds that had not been paid. Case Nos. 2409317/2023 2400711/2024 7[30]Callum Bates acknowledged this letter on 19 July, writing that the claimant should not attend the office. He wrote that they would respond to the appeal letter in due course. The claimant emailed again on 20 July asking them to detail monies owed for work and the notice period and separately for holiday pay owed.[31]On 23 July 2023, a fact finding interview with Nicola Hayes subcontractor was conducted by Robin Lee, HR Consultant.[32]On 25 July 2023, Mr Bates wrote to the claimant with the appeal outcome. He wrote that, since the decision had been reached, “further information had come to light surrounding your vocal opinions on the company, its leadership and comments that you have made about other contractors payment arrangements expressed by yourself both directly to a subcontractor and in a public place during the course of your employment”. He attached a copy of the note of the interview on 23 July 2023 with Nicola Hayes He wrote that this further supported the cited reasons for termination: serious and irreparable breakdown of trust relationship. He confirmed that the appeal had not been upheld by the company.[33]In relation to payments, he asserted that the termination of employment was for gross misconduct so the claimant was not entitled to payment beyond the date of dismissal. In relation to relocation expenses, he expressed disappointment to deduce that the claimant did not feel that his significant relocation costs should be repaid. He asserted the initial sum was verbally agreed to be repayable through service to the company over twelve months with the balance reducing by 25% each full three months of service to the company.[34]In a further letter to the claimant on 28 July 2023, Michael Bates wrote about the status of the claimant’s final salary. In relation to relocation costs, he wrote that as he asserted had been verbally agreed, this sum would reduce as a total by 25% for every three clear months of service. He wrote that the claimant’s service length reduced the monies owed by 50%. He wrote that the initial sum was £7,500, the total of the amounts which had been paid to the claimant for relocation expenses, and he said that the outstanding value i.e. the amount he asserted was owed by the claimant to the respondent, was half of that, being £3,750.[35]Michael Bates set out what the company asserted that the claimant had taken in terms of holiday. The respondent calculated, based on a list of dates which they asserted the claimant had taken as holiday, that the claimant had one day’s accrued but untaken holiday. Michael Bates then wrote “however with the information that has come to light during the course of investigations it is reasonable to assume that you took time off to pursue personal endeavours on the following days.” There was then a list of eight dates. I was told in evidence that these were dates where the respondent, having looked at the claimant’s search history on his computer, thought he had been spending significant amounts of time during the day not on work for the respondent. Michael Bates wrote in that letter that they would apply 0.25 days of annual leave against each of those days, concluding that additional annual leave of 2 days had been taken outside of process and this resulted in the respondent’s calculation being that the claimant had taken one more day than he was entitled to. Under the heading “final calculation” he wrote that payment accrued for salary for 1 to 18 July was £1,714.29 Case Nos. 2409317/2023 2400711/2024 8 and deducted from that one day’s holiday of £138.46 and repayable relocation costs of £3,750, arriving at the conclusion that the claimant owed them £2,174.17.[36]I make the following further findings relating to holiday. The claimant set out in an email which it appears was sent to ACAS, information about the dates the respondent says were used as holiday. Working through the dates on the respondent’s letter on page 58, the dates where the respondent says that the claimant took leave are largely agreed but there are disputes about the 21 and 22 March and 17 July 2023. I find that, on 21 March 2023, the claimant was absent to take his son to the hospital. There is no evidence before me that this was treated as annual leave at the time. In relation to the 22 March, I accept the claimant’s evidence that he was working from home to look after his son, so it was not annual leave. I also find that 17 July was taken as sick leave and not annual leave. Although Michael Bates may subsequently have had doubts about whether the claimant was really ill, that did not convert that day to holiday. There is no evidence that it was treated as annual leave until the calculation done post dismissal.[37]In relation to the dates which the respondent treated as totting up to an additional two days’ holiday post dismissal, I find that this was not annual leave. There was no statutory or contractual basis allowing the respondent to convert days where they considered the employee had not been working enough to part annual leave after the event. Bank holidays were included on the respondent’s list other than they admitted there was an extra bank holiday for the King’s Coronation on 6 May 2023 which should have been credited. The claimant, incorrectly in his email, put this down as being the 21 March. Taking into account those adjustments to the figures, I find that the claimant had taken eleven days of his accrued entitlement, including bank holidays. In my conclusions, I will come back to the calculations.[38]The claimant engaged in early conciliation 1 to 16 August 2023 and he presented his claim in September.
Law
[39]The relevant law I have to apply includes the provisions about unauthorised deduction from wages in the Employment Rights Act 1996. Section 13(1) of that Act 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 a 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. In relation to a deduction authorised by a provision of the worker’s contract, the provisions state that that must be either in a contract in writing or the relevant term must have been notified in writing to the employee. An employee has a right to complain to an Employment Tribunal of an authorised deduction from wages pursuant to Section 23 of the Employment Rights Act 1996.[40]Section 38 of the Employment Act 2002 provides that, if the claimant succeeds in a complaint which is listed in Schedule 5 of that Act, which includes complaints of unauthorised deduction from wages, and the Tribunal finds that the respondent has not provided a written statement as required by law, the Tribunal is required to make Case Nos. 2409317/2023 2400711/2024 9 an additional award of either two or four weeks’ pay unless there are exceptional circumstances which would mean that it was not appropriate to make any award.[41]The legal provisions relating to breach of contract complaints are a matter of common law. Formation of a contract requires, amongst other things, the intention to create legal relations. A person can lose the right to complain about a breach of contract if they affirm the contract. Affirmation may, in some cases, be deduced from them not taking any action about alleged breach for some time. Conclusions Wrongful dismissal
Conclusions
[42]I deal first with the complaint of wrongful dismissal or breach of contract relating to the notice period. The burden is on the respondent to satisfy me, on a balance of probabilities, that the claimant was in fundamental breach of contract, for example by committing an act of gross misconduct which entitled them to dismiss the claimant without notice. For the reasons I have given in my findings of fact, the respondent has not satisfied me, on the evidence before me, that the claimant was guilty of gross misconduct. I have accepted that the respondent had some concerns about the claimant but they have not satisfied me that the matters causing concern were so serious that the claimant was guilty of gross misconduct.[43]I conclude, therefore, that the respondent was in breach of contract by dismissing the claimant without the one week’s notice to which he was entitled. I order the respondent to pay to the claimant one week’s gross wages by way of damages, this being on a gross basis because the claimant is likely to be liable to tax on that payment. One week’s pay is £36,000/52 = £692.31. Unauthorised deductions from wages – holiday pay[44]The claimant worked from 1 January to 18 July 2023 which is a period of 199 days. His pro-rata entitlement up to the date of termination is therefore 199/ 365 x 28 (the number of days holiday leave entitlement for a full year). That arrives at a figure that he had accrued 15 days’ holiday by the date of termination. He had taken eleven of these days. This means there were four days accrued but untaken as at termination, the equivalent of 0.8 of a week for a five day week. There was no right to deduct these wages even if the claimant did owe the respondent for repayment of relocation expenses, which I have found is not the case. There would have to be some authorisation in writing for that deduction, either in the employee’s contract, notified them to the claimant either in a written contract or notified him of that term in writing or some other authorisation in writing. It is common ground that there was nothing in writing about this so there can be no right to deduct what was due for holiday pay. The amount due to the claimant for holiday pay was 0.8 of a week’s gross pay. A week’s gross pay was £692.31. 0.8 of this is £553.85. Unauthorised deductions from wages – arrears of pay[45]In respect of wages for the 1 to 18 July 2023, this was agreed to be £1,714.29 gross. For the same reasons I gave in relation to not being able to make a deduction of holiday pay, the respondent was not entitled to deduct these wages even if the Case Nos. 2409317/2023 2400711/2024 10 claimant did owe the respondent for a repayment of relocation expenses, which I have found that he did not. Breach of contract – relocation expenses[46]As I stated in my findings of fact, I preferred the claimant’s evidence that he and Michael Bates had discussed a figure of £10,000 for relocation expenses rather than £7,500. However, I found that they did not intend the agreement between them about expenses to be legally binding. I conclude, therefore, that there was not a contractual agreement under which the claimant was entitled to be paid £10,000 for relocation expenses. The respondent was not, therefore, in breach of contract by not paying the claimant the full amount which had been discussed.[47]Even if I had decided that there was a contractual agreement, which I did not, I would have concluded that the claimant had lost his right to complain about the breach i.e. he had affirmed the contract. This is because there is no evidence of him seeking reimbursement of any further expenses after the last instalment of the £7,500 was paid in April 2023, some three months before his dismissal and many more months after the claimant had relocated and, presumably, incurred any of the relocation expenses for which the payment was intended.[48]I conclude for these reasons that the claimant’s complaint of breach of contract is not well founded. Failure to provide a written statement of employment particulars[49]It has been common ground that the respondent failed to provide the claimant with a written statement of employment particulars. The claimant has succeeded in his unauthorised deduction from wages complaints so that means that, under Section 38 of the Employment Act 2002, I must make an award of two or four weeks’ pay, unless I consider there are exceptional reasons why I should not do that. No particulars at all were provided in writing so there is a complete failure in this case. I do not consider that the proposed involvement of the claimant’s wife in the drafting of employment contracts detracts from the seriousness of the default. The respondent has been in business since 2016. Although a small business, it should have been aware, from long before the claimant joined, of its legal obligation to set out certain employment particulars in writing for employees and so should have been in a position to provide the claimant with a written statement of employment particulars when he began, even if a more detailed contract of employment was subsequently to be drafted by the claimant’s wife and approved by Michael Bates.[50]I conclude, therefore, that an additional award of four weeks’ pay rather than two weeks’ pay would be appropriate. The claimant’s gross weekly pay was £692.31 but, for these purposes, a week’s pay is capped at the amount in Section 227 of the Employment Rights Act 1996. The cap on a week’s pay at the relevant time was £643.00. The award is £643 x 4 = £2,572.00. The employer’s contract claim[51]I found that there was no agreement for repayment of relocation expenses. The employer’s contract claim must, for this reason, fail. However, even if there had been Case Nos. 2409317/2023 2400711/2024 11 a discussion about repayment before employment began, which I did not find on the facts, I concluded that any agreement was not intended to be legally binding. There was no contractual agreement for repayment of relocation expenses so the claimant was not in breach of contract by not repaying a proportion of the amounts received for relocation expenses.