Mr K L Chan v Wah-Ping Chinese Restaurant Ltd and A Lau: 3201705/2020

EMPLOYMENT TRIBUNALS

Case No 3201705/2020

Between

Mr K L ChanClaimant

Wah-Ping Chinese Restaurant Ltd and A LauRespondent

Before

Employment Judge Jones

In person for claimant

Mr O’Callahan (instructed by Solicitor) for respondent

Date 16 December 2021

JUDGMENT

[1]The Claimant was employed by Wah-Ping Chinese Restaurant Ltd.

[2]The Respondent has made an unauthorised deduction from the Claimant’s wages.

[3]The Claimant was paid at the rate of £350 net per week. 4.4.1 the Claimant is owed 1 x £350 = £700

4.2 the Claimant has already been paid for the week 31 March – 5 April

4.3 the Claimant was not allowed to work during this period = 8 x £350 = £2,800

4.4 the Claimant was only paid for the weekends during this period – he is owed approximately half pay for each week = £175 x 5 = £875.

4.5 the Claimant called in sick and was then told that he could not return to work without a certificate confirming that he was well enough to do so – the Claimant was entitled to SSP for those five days. SSP was paid at the rate of £95.85 per week between 5 April 2020 and 4 April 2021. The Claimant is entitled to £95.85.

[5]The Claimant is entitled to a total sum of £700 + £2,800 + £875 + £95.85 = £4,470.85.

[6]The Respondent is ordered to pay the Claimant £4,470.85.

REASONS

[1]The Claimant claimed for outstanding furlough payments from the Respondent as he claimed that he had been asked to stay at home during the Coronavirus pandemic and in accordance with public health measures. The Respondent denied that the Claimant was owed any money.

[2]The 2nd Respondent also denied that he was the Claimant’s employer.

[3]The Tribunal apologises to the parties for the delay in the promulgation of this judgment and reasons, which was due to pressure of work on the Judge.

Evidence

[4]The Tribunal heard from the Claimant in evidence. The Tribunal also heard from Mr Lau. The Tribunal had some documents from the parties in the form of copy text messages from Mr Lau to the Claimant and to staff. The Respondents also provided witness statements from Mr Lau and Ms Li Soe Chan. The Claimant previously sent his witness statement to the Tribunal and the Respondents on 28 March 2021.

[5]The Tribunal made the following findings of fact from the evidence.

Findings of Fact

[6]The Claimant was employed by the Respondent as a waiter at the WahPing Restaurant until he stopped working there on or around 16 July 2020.

[7]The restaurant was initially owned and run by Alan C W Lau. He was trading as the White Swan Restaurant.

[8]In June 2019, Mr Lau was made bankrupt. In January 2020, the restaurant became the Wah-Ping Restaurant and Mrs Susan Lau, Mr Lau’s wife became the director of the company. The staff were not told about the change in business ownership or the change in the formal name of the restaurant. It was not clear to the Tribunal whether the signage on the outside of the restaurant building changed as the Claimant had no idea of the change until he brought these proceedings. He believed that he was employed by Mr Lau trading as the White Swan Restaurant. I did not see the bankruptcy order, but in addition to Mr Lau’s evidence, the Wah-Ping Restaurant has completed an ET3 form and submitted a response to the claim in which it accepted that it was the Claimant’s employer. I accept that the form has been completed accurately. During February 2020, the Claimant was interviewed and employed by Mr Lau on the Respondent’s behalf. The Claimant started working on 9 February 2020. During his employment Mr Lau gave the Claimant instructions as his manager, again on the Respondent’s behalf.

[9]The Claimant worked full-time at the restaurant. His hours were 11am – 10pm, with a 2-hour break, 6 days a week. He was paid £350 net per week. The Claimant was never provided with pay slips but assumed that the Respondent was paying tax and making national insurance contributions on his behalf. He was usually paid with cash from the till at the end of his shift.

[10]After the change of directors of the business Mr Lau continued to manage staff and to run the restaurant and it is unlikely that the staff would have had any awareness of any visible changes in the way that the restaurant was being run. His evidence was that the Respondent did not inform the staff of the change in business ownership or name.

[11]The Coronavirus Job Retention Scheme was announced by the Chancellor, Rishi Sunak on or around 20 March 2020. The national lockdown in response to the Coronavirus Covid 19 pandemic began on 23 March 2020. It is likely that on Saturday 21 March 2020, Mr Lau held a meeting with the three kitchen staff and the three staff members who worked ‘front of house’ - the Claimant, Ms Li Soe Chai and one other person. He told them that due to the national lockdown, the restaurant would be closed to dining and would only be open for the collection of takeaway food. He said that the restaurant had no other option than to rotate the day staff so that they worked one week and did not work for two weeks. The Claimant, Ms Chan and the other member of staff agreed to this plan. The Respondent would need two staff in the evening to work on the takeaway side as it anticipated that it would be busier in the evening.

[12]It is also likely that Mr Lau told them that the restaurant intended to apply for their wages under the Coronavirus Job Retention Scheme as he said that he ‘had no intention of cheating them out of their entitlement’. He discussed with them that he thought that the ‘furlough scheme’ as it was called, would mean that the Respondent could pay all staff 80% of their wages on the weeks when they were not working. The Claimant agreed to be furloughed for the rest of the two weeks that he was not working.

[13]The Respondent only needed one member of wait staff at work during the day during lockdown as they were only there to give customers their takeaway food. Each of the three members of wait staff expected to work one week in three as the plan was to rotate it between them.

[14]The Claimant thought that his colleagues would work the first two weeks and that he would be called on the third week. The Claimant’s week was from Wednesday to Sunday. The restaurant was closed between 5 April 2020 – 21 April 2020 as Mr Lau was unwell. The Claimant was not paid for that period.

[15]It was the Respondent’s evidence that the Claimant worked on week 2, which was likely to have been the week beginning 31 March to 5 April. The Claimant produced a text message in which someone informed Mr Lau that the Claimant was due to work in the second week. It is likely that the Claimant was paid for that week.

[16]For the first six weeks of the lockdown period, the Claimant believed that the restaurant was applying for furlough pay for him. He started to chase Mr Lau about this after approximately six weeks’ time.

[17]The Claimant provided the Tribunal with a text message from Mr Lau to someone called Kath on 20 April 2020 in which he stated that he was ‘ok now’ and that the restaurant would be open from Wednesday 22 April between 5 – 10pm and that it would be closed on Mondays and Tuesdays. Once the restaurant was open again, the Claimant was expecting to be called to work.

[18]The Claimant’s turn to work would have been the week beginning 13 May as the Claimant’s week began on a Wednesday. On the morning of 10 May the Claimant received a text message from Mr Lau. Mr Lau asked the Claimant to take the next three weeks off. Mr Lau’s evidence was that he did this so that he could work in the Claimant’s place as he also needed to earn money as he had bills to pay. He did not tell the Claimant that he had to take holiday or that he was not going to be paid for the time and should look for work elsewhere. The Claimant replied to ask, ‘what about now?’ as he was willing to work that day. Mr Lau did not respond to that message. The Claimant was not paid for May 2020.

[19]As instructed, the Claimant did not contact the Respondent about work during the following three weeks. The Claimant’s evidence was that he did not work elsewhere during that time.

[20]On Tuesday 26 May, Mr Lau texted the Claimant to say that he was in a meeting with his accountant. It is likely that this was a reply to the Claimant calling him. He did not return the Claimant’s calls.

[21]As the Claimant had not heard anything after the text of 10 May, he texted Mr Lau on Wednesday 27 May. He said, ‘Good morning Alan, I come to work on Sunday 31 May 2020’. There was no response until Saturday 30 May, when Mr Lau texted him to say that he had decided that the Claimant should start work on Friday 5 June 2020 and only work on Fridays and Saturdays until further notice. The Claimant agreed and replied with ‘ok’. The Claimant confirmed that he worked Fridays and Saturdays in the restaurant from 5 June until he became ill on 10 July. He did not work that weekend which meant that he worked five weekends in all.

[22]When he was at work and also when he spoke to Mr Lau on the phone, the Claimant frequently raised the furlough issue with the Respondents. He would direct those queries to Mr Lau as it was Mr Lau who told him that the restaurant was going to apply for the furlough scheme so that he could be paid and it was Mr Lau who acted as his line manager. When the Claimant raised that with him, Mr Lau would direct him to the company accountant, Mr Sajid.

[23]On 15 June, the Claimant messaged Mr Sajid to introduced himself and to say that he was contacting him because as an employee at the White Swan Restaurant, he had been promised his wages under the furlough scheme but had not been paid. He told him that Mr Lau had informed him that he applied for the scheme through his accountant and had given him Mr Sajid’s contact details so that he could refer any issues to him. The Claimant asked Mr Sajid to respond and let him know the date that he applied for the scheme and to explain why the payment was taking so long. The Claimant did not receive a response from Mr Sajid. It is highly likely that Mr Sajid is the same person noted as Sajid Iqbal who represented the Respondent at the aborted hearing before EJ Wilkinson on 24 March 2021, which means that at least at that point he was still working with the Respondent.

[24]It is likely that the Claimant was paid for the shifts he worked between 5 June and 10 July. Staff who were on the shifts with him were authorised by Mr Lau to pay him and they did so. They paid him £40 a shift although the Claimant believed that he should have been paid £45 per shift.

[25]On Friday 10 July, the Claimant felt very unwell. Mindful of the need to be careful of spreading any viruses at that time, the Claimant texted a colleague who was going to work and asked her to let Mr Lau know that he was feeling unwell and would not be able to cover his shifts. She did so and Mr Lau messaged the Claimant later that evening. He acknowledged that the Claimant was unwell. He asked the Claimant to inform the Respondent directly when he is unable to attend work due to ill-health. The Claimant had not telephoned Mr Lau because during the previous few months, he had not been taking the Claimant’s calls.

[26]The Claimant did not immediately respond to Mr Lau’s text message as he was sleeping due to being unwell. On the following day he texted him in response and asked if it was possible for him to work ‘tomorrow’, which was likely to be Sunday 12 July. Mr Lau responded to say that he was sorry that the Claimant was unwell and that when he recovered, the Respondent wanted him to get a letter from his GP confirming that his illness had not been Covid-19 related and that he was fit and well to return to work. Mr Lau stated in the message that without that letter from the GP, the Respondent would not be able to allow the Claimant to return to work as he had to think about the well-being of other staff. Although this message came from the phone that had previously been used by Mr Lau, the message on 16 July was signed off as the Wah-Ping Chinese Restaurant (Woodford) Ltd. It was the only message that was signed in that way.

[27]The Claimant did not return to work for the Respondent. He texted Mr Lau on 16 July but received no response. The Respondent confirmed that it did not have testing kits for staff at the restaurant but there was a Covid-19 testing center situated across the road.

[28]The Claimant confirmed that as he had not been paid any furlough pay and as he had not had a response from the Respondent about the furlough pay he decided that he did not want to work for the Respondent any longer. He believed that Mr Lau was a person who did not take his responsibilities as an employer seriously.

Law

[29]I was not referred to any caselaw in submissions by either party. I had regard to the following in coming to a decision on the issues in this case.

[30]Section 13 Employment Rights Act 1996 (ERA) states 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 previously signified in writing his agreement or consent to the making of the deduction. Excepted deductions are in respect of an overpayment of wages or an overpayment or in respect of expenses.

[31]Section 23 ERA gives a worker the right to bring a complaint in the Employment Tribunal that his employer has made a deduction from his wages in contravention of section 13 above. If the worker is successful and the Tribunal finds the complaint well-founded, the Tribunal will make a declaration to that effect and shall order the employer to pay the worker the amount of any deduction made in contravention of section 13.

[32]The contract provides the starting point for any discussion about pay. The employer’s obligation to provide remuneration to the employee is regarded as a fundamental ingredient of a contract of employment (Harvey). In the case of Ready Mix Concrete v Minister of Pensions and National Insurance

[1968] 1 All ER 433

, MacKenna J said as follows: "A contract of service exists [when] three conditions are fulfilled.(i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master.

(ii) He agrees expressly or impliedly that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master.

(iii) The other provisions of the contract are consistent with its being a contract of service."

[33]What happens in a situation where an employee is sick or unable to work or when they are asked to stay away from work by their employer? In the old case of Miles v Wakefield Metropolitan District Council

[1987] IRLR 193

, Lord Templeman outlined in his judgment what has been referred to as the codependency principle: "In a contract of employment wages and work go together. The employer pays work and the worker works for his wages. If the employer declined to pay, the worker need not work. If the worker declines to work, the employer need not pay. In an action by a worker to recover his pay he must allege and be ready to prove that he worked or was willing to work… Different considerations apply to a failure to work by sickness or other circumstances which may be covered by express or implied terms or by custom".

[34]This confirms that the contract of employment is usually the starting point for any analysis, but not the end of the story. If the contract provides for the payment of sick pay in certain circumstances or gives the employer the right to lay off without pay, then that would apply. The employer must be able to show, in circumstances where an employee has not been at work, that he is entitled to deduct pay, pursuant to the express or implied terms of contract, or by reference to custom and practice.

[35]In the Court of Appeal case North West Anglia NHS Foundation Trust v Gregg

[2019] IRLR 570

, LJ Coulson expressed that courts should be cautious when applying the test set out in Miles above. He stated as follows: "I consider that the starting point for any analysis of whether the employer is entitled to withhold pay must be the contract itself...Was a decision to deduct pay for the period in question in accordance with the express or implied terms of the contract? If the contract did not permit deduction then...the related question is whether the decision to deduct pay for the period…was in accordance with custom and practice. If the answer to both these questions is in the negative, then the common law principle - the "ready, willing and able" analysis.... falls to be considered.”

[36]The phrase "ready, willing and able" has been considered in cases such as Beveridge v KLM UK Ltd

[2000] IRLR 765

in which an employee who was ready to return to work after sick leave was prevented from doing so for a period of six weeks by her employer's insistence on getting its own medical report. The contract was silent on the issue of whether wages could be withheld during this time. The EAT held that in the absence of a contractual term to the contrary, wages were payable for the six-week period. It held that the employee was willing to work and had done all she could to perform her part of the bargain.

[37]That decision suggests that the employer remains under an obligation to pay the employee for periods in which the employee is prevented from working by factors beyond his/her control, provided of course that the employee remains ready and willing to serve the employer and there is no contractual term to the contrary (Harvey). There is little judicial analysis on the meaning of what the phrase "ready and willing to work" actually means and Harvey makes references to a distinction between a 'voluntary' and involuntary' inability to work in the case of Miles and the use of the expression 'unavoidable impediment’ by Lord Brightman when discussing this issue.

[38]The period of time covered by this case, March to July 2020 relates to the first iteration of the Coronavirus Job Retention Scheme announced by the Chancellor on 20 March 2020. The scheme only covered those employees who were 'furloughed'. That is defined in the First and Second Treasury Directions as meaning a worker who remains employed but has been instructed by his employer to cease all work for a period of at least 21 calendar days 'by reason of circumstances arising as a result of coronavirus or coronavirus disease' (paragraph 6.1 of the Second Direction). The requirement to cease all work was an essential component of the Scheme as it operated until 1 July 2020, when the concept of flexible furlough was introduced and meant that employees who were put on short-term working between 1 March and 30 June 2020 fell outside of its scope as were employees who were laid off for less than 3 weeks at a time.

[39]In order to be eligible to make a claim, the employer must have a qualifying PAYE scheme. That is defined as a PAYE payroll scheme registered on HMRC's real-time information system, on or before 19 March 2020. For an employee to be covered by the Scheme they must have been included on the payroll and their details notified to HMRC by means of an RTI submission by the same date. This condition was likely to exclude employees who were not hired until late February or early March, especially when they are paid monthly as there would not have been sufficient time for the employer to make the necessary RTI submission on their behalf before the scheme began.

[40]Claims for furlough pay had to be made via an online portal, by the employer and could have been made by any employer, regardless of size. However, there was no compulsion on the employer to use the Scheme and where it decided to do so, it was not necessary for it to furlough the entire workforce. The version of the scheme which operated between 1 March and 30 June 2020 allowed employers to claim 80% of employee’s wage from the government, which was paid through HMRC. Employers could also claim for National Insurance Contributions. In the first iteration of the Scheme, ‘furloughed’ staff had to be instructed to do no work for the employer during the furloughed period. Harvey suggested that under the rules of the Scheme employers were not required to pay employees before receiving a grant from HMRC as paragraph 8.1 of the Second Direction stated that an employer can claim for earnings which it 'reasonably expects to be paid'. Paragraph 7.12 referred to wages which the employer 'intends to pay within a reasonable period after receiving the payment claimed.' However, the Second Direction sits alongside and does not override existing employment law rules. This means that the risk for the employer in adopting such a course is that late payment of wages will amount to an unauthorised deduction from wages. Also, the existence of the furlough scheme does not excuse an employer from paying employees their wages due under the contract.

[41]In the second iteration of the Scheme which operated from 1 July 2020, employers were entitled to use flexible furlough to furlough employees for part of the working week, allowing them to work for the remaining period.

[42]There was no breach of the national minimum wage legislation if the effect of paying 80% of wages is to take the worker below the national minimum wage levels.

[43]The scheme closed to new entrants on 30 June 2020. From 1 July 2020, an employer is only entitled to make a claim for an employee in respect of whom a qualifying claim had already been made in the previous period, where the employee had ceased all work for a period of 21 days or more, beginning on or before 10 June 2020.

[44]The first issue in dispute was the identity of the Claimant’s employer. It was the Claimant’s case that he was employed by Mr Lau. The Respondent’s case was that the employer was the Wah-Ping restaurant.

[45]Having considered the evidence, including the documents, it is this Tribunal’s judgment that the Claimant was employed by the 1st Respondent, Wah-Ping Chinese Restaurant Ltd, as a waiter from 9 February 2020 until his resignation sometime in July 2020.

[46]The Claimant was employed full-time and worked full-time, 11am – 10pm, six days a week, with a 2-hour break. He was paid net wages of £350 per week.

[47]There was no right to lay off in the contract.

[48]The Claimant’s employer was the Wah-Ping Chinese Restaurant. It is this Tribunal’s judgment that Mr Lau was not the Claimant’s employer. The Claimant was employed by the Wah-Ping Chinese Restaurant Limited and Mr Lau was his line manager. It is this Tribunal’s judgment that at the time of his employment, the Claimant was not given the correct or indeed any details of his employer.

[49]Although Mr Lau managed him and the rest of the staff at the restaurant, he did not employ them personally. It is my judgment that he interviewed the Claimant and engaged him, on behalf of the Wah-Ping Chinese Restaurant Ltd. Did the Claimant have a right to furlough pay?

[50]On 20 March 2020, at the start of the national lockdown in response to the Coronavirus pandemic, the parties agreed that the Respondent would furlough members of staff, including the front-of-house staff for two weeks out of three and they would take turns to work on the 3rd week.

[51]The Claimant agreed to be furloughed and expected to be paid from the furlough scheme for the weeks when he was not required to work and then from the Respondent for the weeks when he worked. He had not agreed to forego his pay.

[52]The Respondent’s evidence was that it did not get furlough money and was therefore unable to pay the Claimant furlough pay. Although the Claimant believed that the Respondent received furlough pay from the government under the coronavirus job retention scheme, I did not have any evidence in the hearing which confirmed that.

[53]As the version of Coronavirus Job Retention Scheme which existed in March 2020 was only available where staff were not expected to do any work, it is likely that the Respondent would have had some difficulty claiming for staff, such as the Claimant, who were expected to do some work. Also, I did not have any information as to when the Claimant was included on the restaurant’s payroll and his details notified to HMRC. These factors may have caused the Respondent difficulty in accessing the furlough scheme to cover the Claimant’s wages.

[54]The Claimant would not have known about this as he was a lay person and did not have knowledge of the intricacies of the furlough scheme. If and when the Respondent found out that it could not access the furlough scheme, it did not inform the Claimant. The Claimant was never informed that he was not going to be paid.

[55]In this Tribunal’s judgment, the Respondent never informed the Claimant that it had applied unsuccessfully to take part in the furlough scheme or that it could not access the furlough scheme. Despite the Claimant making calls to Mr Lau’s personal mobile telephone to enquire about furlough pay and when he could expect to be paid furlough pay, the Respondent did not respond to him. Mr Sajid Iqbal failed to respond to the Claimant’s message. Does the Respondent owe the Claimant wages?

[56]It is this Tribunal’s judgment that the Claimant was employed by the Respondent from 9 February – 16 July 2020.

[57]The Claimant was employed as a full-time member of wait staff at the restaurant and worked six days a week, every day until 20 March.

[58]There was no evidence of a lay-off clause in the contract of employment. The parties had an oral contract as there was no written contract provided to the Tribunal.

[59]The parties had an agreement that the Claimant would be paid furlough pay. That agreement was made at the meeting that Mr Lau conducted on 20 March. There was no evidence from the Respondent that it later informed the Claimant that it could not get furlough pay or that it was ineligible for the scheme or any other information. The Claimant continued to ask about furlough pay but was not provided with any information. He was not told that his contract had been terminated. There is no right to sue for furlough pay. The Claimant’s claim is for outstanding wages in the form of furlough pay as he believed that the Respondent had claimed it and failed to pass it on to staff.

[60]If the Respondent was unable to access the furlough scheme or for some reason, accessed it and did not pass it on to staff; the question for the Tribunal is does that mean that the Claimant is not entitled to be paid? The Claimant was employed throughout the period.

[61]It is this Tribunal’s judgment that the Claimant was willing and able to work for the Respondent throughout his employment, until he became unwell on 10 July. It is this Tribunal’s judgment that the Claimant was prevented from working in March and April because the Respondent decided to shut the restaurant. Between 22 April and 4 June, despite making it clear that he wanted to work and even though the restaurant was open, the Claimant was not allowed to work. The Claimant worked between 5 June and 9 July on weekends. He was not paid for the weekdays. The Claimant called in sick on 10 July but was not paid any SSP (statutory sick pay). On or around 16 July, he decided that he no longer wanted to work for the Respondent and stopped asking to come to work. It is likely that the Claimant’s employment terminated around 16 July 2020. Judgment

[62]It is this Tribunal’s judgment that the Claimant was employed throughout that period of time: 20 March – 16 July and that he is owed wages for that period of time. During the weeks where the Claimant worked for some of the time, he was paid some of his wages. He is owed the remainder of his wages for those weeks. In the other weeks where he was prevented from working because he was instructed not to come to work or because the restaurant was closed, he is owed full pay for those weeks.

[63]The Claimant’s complaint of unlawful deduction of wages succeeds.

[64]The Tribunal calculates the remedy due to the Claimant as follows: The following are the periods of time under consideration in this judgment (all dates are in 2020):64.1 23 March – 30 March = 1 week;

64.2 31 March – 5 April = 1 week;

64.3 6 April – 4 June = 8 weeks;

64.4 5 June – 9 July = 5 weeks;

64.5 10 July – 16 July = 1 week.

[65]The Claimant was paid at the rate of £350 net per week. In respect of each of the periods set out above the Tribunal makes the following judgment: -65.1 the Claimant is owed 1 x £350 = £700;

65.2 the Claimant has already been paid for the week 31 March – 5 April;

65.3 the Claimant was not allowed to work during this period = 8 x £350 = £2,800;

65.4 the Claimant was only paid for the weekends during this period – he is owed approximately half pay for each week = £175 x 5 = £875;

65.5 The Claimant called in sick and was then told that he could not return to work without a certificate confirming that he was well enough to do so – the Claimant was entitled to SSP for those five days. SSP was paid at the rate of £95.85 per week between 5 April 2020 and 4 April 2021. The Claimant is entitled to £95.85.

[66]The Claimant is entitled to a total sum of £700 + £2,800 + £875 + £95.85 = £4,470.85.

[67]The Respondent is ordered to pay the Claimant the total sum of £4,470.85 as his remedy for his successful claim.