Mrs D Davies and Mr R Davies v THDD Ltd (in voluntary liquidation) and The Secretary of State for Business & Trade: 2411240/2023 and 2411241/2023
JUDGMENT
[1]The first respondent failed in breach of reg. 15 of the Working Time Regulations 1998 to pay the claimants their holiday pay.[2]In the case of the first claimant, the amount that the first respondent failed to pay in respect of 5 days holiday pay is the total sum of £636.21 which sum the first respondent is ordered to pay her. This is a net sum and the first respondent is responsible for accounting to HMRC for any tax and national insurance due upon it.[3]In the case of the second claimant, the amount that the first respondent failed to pay in respect of 5 days holiday pay is the total sum of £340.69 which sum the first respondent is ordered to pay him. This is a net sum and the first respondent is responsible for accounting to HMRC for any tax and national insurance due upon it.[4]The Tribunal postpones the hearing of the claims for arrears of pay. 1 of 7[5]The claimants are by 19 April 2024 to provide to the Tribunal and the respondents further information as to their case on the date of termination of their employments.[6]Further, they will by that date make and send to the Tribunal and the respondents further witness statements setting out the circumstances of the termination of their employments, in particular the date thereof, and will disclose to the Tribunal and the respondents any further documents relied upon by them in support of their case on the date of termination.[7]The second respondent shall by 13 May 2024 make any further written representations as to the claimants’ claims for arrears of pay as further clarified by the claimants as ordered by the Tribunal.[8]The second respondent shall also by that date indicate whether a further hearing is required to determine the claimants’ remaining claims.[9]No judgment is made against the second respondent, in relation to the awards for holiday pay.REASONS
[1]By a claim form presented on 18 October 2023 the claimants, who are husband and wife, and were both employed by the first respondent until (at least) 14 July 2023, brought claims of failure to pay holiday pay and for arrears of wages.[2]The first respondent is in voluntary liquidation, and has not entered a response. The second respondent was not originally a party, but sent in a response as an interested party. The Tribunal (although this was not expressly stated, which it should have been) joined the second respondent as a party by letter of 12 January 2024, and she has been treated as a respondent ever since.[3]The claimants have made application to the second respondent for payments for which she is responsible, and certain payments (notice pay) have been made. The second respondent, however, has not made payments in respect of the claimants’ claims for arrears of pay, or holiday pay as the information provided by the Liquidator suggested that the claimants had taken all the holiday they were entitled to , and hence no further holiday pay was due to them, and did not provide any information about what arrears of pay may be due to them that established that they had any further entitlements to arrears of pay.[4]The second respondent accordingly could not pay the amounts claimed, and was made a party to these claims. In her response she set out her position, but has taken no further part in the proceedings. The response is treated as her written representations.[5]The claimants have made witness statements and produced a bundle containing quite a lot of documentation. The effect of this has been to demonstrate that the suggestion made by the Liquidator (based upon information provided by Lee Williams, the Director of the first respondent) that the claimants had exhausted their holiday entitlement is wholly incorrect. 2 of 7[6]In particular, the dates and duration of holidays that the claimants took in Italy and Denmark in 2023 were disputed, the claimants contending that they had not been on leave for as long as Lee Williams had claimed.[7]The claimants’ witness statements and the documents that they produced have satisfied the Tribunal that, at the date of the termination of their employments (for these purposes taken as 14 July 2023) , they had an untaken holiday entitlement of 5 days.[8]They are each accordingly entitled to pay in lieu of untaken annual leave, for 5 days pay. The first claimant was paid at the rate of £48,000 per annum, £4,000 per month, gross, which equates to £2,916.00 net per month. That is a net weekly pay £636.21. The first claimant worked (apparently from a contract in which a 39 hour week is provided, but which the Tribunal has not seen) a 5 day week, so her entitlement to pay in lieu of untaken leave for 5 days is £636.21, net, which sum the first respondent is ordered to pay her.[9]The second claimant was paid at the rate of £21,000 per annum, £1,750 per month, gross, which equates to £1,476.36 net per month. That is a net weekly pay £340.69. The second claimant (under a similar contract) worked a 5 day week, so his entitlement to pay in lieu of untaken leave for 5 days is £340.69, net, which sum the first respondent is ordered to pay him.[10]Turning to the claims for arrears of pay, these were less clear. From the Schedule of Loss document , each claimant claims one month’s pay. Payslips have been included in the bundle, and the claimants confirmed that they were each paid up until the end of June 2023. They were paid monthly. From the Schedule of Loss, however, it appeared that they were claiming for the whole of the month of July 2023.[11]It appears as first blush that their employments ended on 14 July 2023, when they were locked out of their workplace. There was, however, the claimants explained, no formal notification of their position, and they were very unclear in the ensuing weeks just what their status was. Work was still being done, particularly by Mr Davies, for Lee Williams, the Director of the first respondent, but in what capacity is unclear.[12]Thus whilst 14 July 2023 might be the date of termination (it is certainly the earliest date, there being no evidence in support of Lee Williams’ claim that they had been given notice earlier) the claimants’ employment may not have ended until later than that date. On their ET1 claim form (there is only one form for both claimants) the claimants have stated 31 August 2023 as the date on which their employments ended. Quite why is unclear. In box 9 the claimants have stated that they seek “unpaid July 2023 wages”.[13]It thus seemed that the claimants were claiming wages beyond 14 July 2023, up until the end of July 2023, and possibly beyond that date, and they confirmed that they were.[14]That may not have been clear to the second respondent, but the details of the claims that the claimants submitted to the second respondent have not been provided to the Tribunal. A copy of their claims would be of assistance. 3 of 7[15]Be that as it may, the problem for the claimants has been that the Insolvency Practitioner for the first respondent has (on false information, the claimants assert, provided by Lee Williams) told the second respondent that the claimants were given notice on 14 June 2023, and their employments ended on 30 June 2023. It is unclear on what basis the second respondent has calculated the notice pay that has been paid, but the date of termination may not have been necessary for that calculation.[16]The position therefore is that , at present, the date of termination of the claimants’ employments is unclear, which affects their entitlement to unpaid wages. This is not their fault, of course, given the complete lack of transparency in the dealings of the first respondent , and it seems, possibly also the Insolvency Practitioner, with the claimants, and the inaccurate information provided to the second respondent by, ultimately, Lee Williams.[17]The Tribunal needs to determine when the employments ended. It would, the Employment Judge considered, be pointless to pick a particular date, and make awards on that basis, only for the second respondent then to seek to have any judgment reconsidered. Rather, it was preferable, which the claimants accepted, that they seek to assemble and present to the Tribunal and the respondents (the first, of course, not being entitled to participate as no response was received from it) their evidence as to the date of termination of their employments.[18]Once that is done, the second respondent can make any further representations about that issue (and provide any evidence of her own, such as the claimants’ applications to the Fund) that she wishes. The Employment Judge can then make a determination of the issues, and make appropriate judgments. Whether a further hearing will be necessary is unclear at present, but will be addressed once each side has presented their further evidence and representations.[19]To elaborate on the date of termination, there are number of possibilities. The first, and earliest, is 14 July 2023, when the claimants were locked out of the workplace. That, however, as a matter of law, without more, would not of itself amount to a termination. There appears to have been no communication with Lee Williams at that time explaining what the position was, but the claimants will doubtless in their further evidence set out what communications, if any , they had with Lee Williams following the lockout, and what, if anything was said about their employment position.[20]The claimants have claimed, it seems , wages up until the end of July 2023. The basis upon which they have done so is unclear. From what was said in hearing this may because they feel that they have a moral entitlement to be paid up until that date, and Mr Davies said that he considered he was still “working for” Lee Williams in that period. A moral entitlement, however, is not a legal one, and the Tribunal will have to determine as a matter of fact and law when the employment ended.[21]Mention was made in the hearing of a letter from the Liquidator, but this was not available to be produced to the Tribunal. Mrs Davies said that she thought this was dated 2 August 2023, and received around 6 August 2023. It is unclear whether this said anything about the termination of the claimant’s employment. Clearly, it would be of assistance for the Tribunal to have sight of that document. 4 of 7[22]Whilst not mentioned in the hearing, from Companies House, it appears that the resolution to wind up the first respondent was passed on 10 August 2023. That may be the date by which, on any view, the claimants’ employments must have come to an end.[23]Without express words of termination , orally or in writing, determining the date of termination is not easy. A termination does not usually take effect until communicated to the employee, but a termination by conduct can be inferred from all the circumstances. The Tribunal needs, therefore, to know as much as possible about the circumstances.[24]To the extent that the claimants are unable to provide any documents or information because the Liquidator has not co-operated, the Tribunal can, of course, exercise its powers to order disclosure against a non – party under rule 29 of its rules of procedure and will do so if this becomes necessary. It is hoped, however, that it will not be, and clarification of the date of termination can be provided, to enable the Tribunal to calculate the claimants’ entitlement to unpaid wages.[25]In relation to the second respondent, whilst she has been joined as respondent, now that the Tribunal has determined the liability of the first respondent to make the payments in respect of holiday pay, it is anticipated that the second respondent will make the payments without being ordered to do so. It is not, therefore proposed to make any judgment against the second respondent. In the event that any issues arise, and the claimants consider that a judgment against the second is required, application can be made by them for a judgment, and the Tribunal will consider any further representations that the second respondent may then wish to make. This, of course, will also apply to the claims for arrears of pay. FURTHER JUDGMENT It is the further judgment of the Tribunal that: 1.The first respondent failed in breach of reg. 15 of the Working Time Regulations 1998 to pay the claimants their holiday pay. 2. In the case of the first claimant, the amount that the first respondent failed to pay in respect of a further 5.6 days holiday pay is the total sum of £712.55 , which sum the first respondent is ordered to pay her. This is a net sum and the first respondent is responsible for accounting to HMRC for any tax and national insurance due upon it. 3. In the case of the second claimant, the amount that the first respondent failed to pay in respect of a further 5.6 days holiday pay is the total sum of £381.57 , which sum the first respondent is ordered to pay him. This is a net sum and the first respondent is responsible for accounting to HMRC for any tax and national insurance due upon it. 4. For the avoidance of doubt, these sums are in addition to those awarded in the Tribunal’s previous judgment sent to the parties on 12 April 2024 1 of 7 5. The first respondent made unlawful deductions from the wages of the first claimant in the sum of £4,453.47 in respect of her pay from 30 June to 17 August 2023, which sum the first respondent is ordered to pay her. This is a net sum and the first respondent is responsible for accounting to HMRC for any tax and national insurance due upon it. 6. The first respondent made unlawful deductions from the wages of the second claimant in the sum of £2,384.83 in respect of his pay from 30 June to 17 August 2023, which sum the first respondent is ordered to pay him. This is a net sum and the first respondent is responsible for accounting to HMRC for any tax and national insurance due upon it. 7. No judgment is made against the second respondent , in relation to the awards for further holiday pay and arrears of pay.[1]On 5 April 2024 the Tribunal heard the claimants’ claims for holiday pay, and deductions from wages against the first respondent , by whom the claimants were both employed until the summer of 2023.[2]The first respondent is in voluntary liquidation, and has not entered a response. The second respondent was not originally a party, but sent in a response as an interested party.[3]The claimants made application to the second respondent for payments for which she is responsible, and certain payments (notice pay) were made. The second respondent, however, did not make made payments in respect of the claimants’ claims for arrears of pay, or holiday pay, in the circumstances set out in the Tribunal’s previous judgment,[4]The second respondent entered a response, but has taken no further part in the proceedings. The response is treated as her written representations.[5]At the previous hearing on 5 April 2024 the Employment Judge considered the witness statements , and the 53 page bundle of documents that the claimants had submitted.[6]The claimants’ witness statements and the documents that they produced satisfied the Tribunal that, at the earliest possible date of the termination of their employments (for these purposes taken as 14 July 2023) , they had an untaken holiday entitlement of 5 days. The Tribunal accordingly issued a judgment against the first respondent for holiday pay due to each claimant on that basis.[7]In terms of their other claims for arrears of pay, these were less clear. From the Schedule of Loss document , each claimant claimed one month’s pay. Payslips were included in the bundle, and the claimants confirmed that they were each paid up until the end of June 2023. They were paid monthly. From the Schedule of Loss, however, it appeared that they were claiming for the whole of the month of July 2023. 2 of 7[8]It appeared at first blush that their employments ended on 14 July 2023, when they were locked out of their workplace. There was, however, the claimants explained, no formal notification of their position, and they were very unclear in the ensuing weeks just what their status was. Work was still being done, particularly by Mr Davies, for Lee Williams, the Director of the first respondent, but in what capacity is unclear.[9]Thus, the Employment Judge considered, whilst 14 July 2023 might be the date of termination, the claimants’ employments may not have ended until later than that date. On their ET1 claim form (there is only one form for both claimants) the claimants have stated 31 August 2023 as the date on which their employments ended. Quite why is unclear. In box 9 the claimants stated that they seek “unpaid July 2023 wages”.[10]It thus seemed that the claimants were claiming wages beyond 14 July 2023, up until the end of July 2023, and possibly beyond that date, and they confirmed that they were.[11]The Employment Judge accordingly did not finally determine the claims, but postponed the hearing for the claimants to produce more evidence from which the Tribunal could more accurately determine the date of the termination of the claimants’ employments.[12]The second respondent was also to be provided with this evidence, and given the opportunity to make any further representations, but none have been received. Whilst it was anticipated that the further hearing would be held in 2024, and was indeed listed, the sickness absence of the Employment Judge from July to November 2024 meant that a further postponement was necessary. He apologises for the further delay that this has caused. The further evidence produced to the Tribunal[13]Accordingly the claimants supplied the Tribunal with further evidence. In particular that comprises of a letter to the Tribunal dated 15 April 2024, another dated 21 July 2024 , signed by both claimants, and another dated 5 November 2024, attaching a copy of a letter sent to the first claimant, dated 15 August 2023 from Bespoke Insolvency Solutions, the Insolvency Practitioners appointed to carry out the voluntary liquidation of the first respondent.[14]The Insolvency Practitioner was appointed on 10 August 2023, the date of the Extraordinary Resolution to wind up the first respondent.[15]This letter contains this paragraph: “As you are aware, the Company is no longer in a position to make payments to you for services rendered under your contract of employment. You should therefore regard your employment as terminated”[16]The claimants had thought this letter was dated , and received , earlier but the date on it is clear, and , as it was posted , the Tribunal finds it more than likely than not that it was received by the first claimant by 17 August 2023. Whilst there is no separate letter to the second claimant, the Tribunal considers it more likely than not he was also 3 of 7 sent a similarly worded letter , dated the same day, 15 August 2023, and received by 17 August 2023. Findings on date of termination of employment[17]This further evidence has clarified the situation. Unlike compulsory liquidation, which operates as a matter of law to terminate the contracts of employment of employees of the company, voluntary liquidation does not do so. Thus it is necessary, as the appointed Liquidator has done in this case, for there to be a termination of the contracts of employment of the relevant employees, and that is what was done in the letter of 15 August 2023.[18]On all the evidence, and regardless of any previous and unsubstantiated suggestions that the employment of the claimants may have been terminated earlier, the Tribunal is quite satisfied that the employment of both of the claimants was not actually terminated until receipt of this letter from the Liquidator. A termination cannot take effect until it is communicated, which the Tribunal finds (applying by analogy CPR rule 6.7) was on 17 August 2023.[19]That means that both the claimants remained employed by the first respondent until 17 August 2023. Effect of the findings on the claims made.[20]The first issue is the claims made by each claimant for arrears of pay. The Tribunal has now determined that they remained employees until 17 August 2023. They were paid up until 30 June 2023.[21]Whilst the claimants have previously claimed, it seems , wages up until the end of July 2023 (see page 53 of the bundle, the Schedule of loss they prepared for the original hearing), now that they have located and produced the letter from the Liquidator dated 15 August 2023, the Tribunal is satisfied that they are in fact entitled to claim arrears of pay up until the date of receipt of that letter, 17 August 2023.[22]The first claimant was paid at the rate of £48,000 per annum, £4,000 per month, gross, which equates to £2,916.00 net per month. That is net weekly pay of £636.21.[23]The second claimant was paid at the rate of £21,000 per annum, £1,750 per month, gross, which equates to £1,476.36 net per month. That is net weekly pay of £340.69.[24]The period of 30 June 2023 to 17 August 2023 is 7 weeks, so each claimant is entitled to 7 weeks’ pay: The first claimant : 7 x £636.21 £4,453.47 The second claimant : 7 x £340.69 £2,384.83 4 of 7[25]A further effect, however, of the finding of the termination date is that the claimants have a further entitlement to pay in lieu of untaken holiday. The previous awards were based on a termination date of 14 July 2023, and the claimants only sought 5 days’ pay on this basis, which the Tribunal awarded.[26]Based on a holiday year from 1 January 2023 to 31 December 2023, each claimant’s pro rata entitlement based on a termination date of 17 August 2023 would be 17.6 days. They took 7 days, and have been awarded , in the Tribunal’s previous judgment, 5 days’ holiday pay. They are each therefore further entitled to an award in respect of 5.6 days untaken holiday, as follows: The first claimant :£636.21 ÷ 5 x 5.6 = £712.55 The second claimant : £340.69 ÷ 5 x 5.6 = £381.57[27]No awards are made against the second respondent.