Miss K Liberdova v RSB Couriers Ltd and Mr R S Balan: 3202124/2023
EMPLOYMENT TRIBUNALS
Case No 3202124/2023
Between
Miss K LiberdovaClaimant(1) RSB Couriers Limited (2) Mr Raul Sebastian BalanRespondent
Before
Employment Judge S ImanNeither present nor represented for respondentDate 20 May 2024
JUDGMENT
Employment Tribunals Rules of Procedure 2013 – Rule 21.[1]The claim was issued in the East London Employment Tribunals on 15 November 2023. The First and Second Respondent failed to present a valid response on time.[2]The matter was listed for a final hearing on 23 and 24 April 2024. The First and Second Respondent did not attend. The Judge decided that a determination can properly be made of the claim, or part of it, in accordance with rule 21 of the Rules of Procedure.[3]A “relevant transfer” from RSB Couriers Limited (The First Respondent) to Mr Raul Sebastian Balan (The Second Respondent) in accordance with The Transfer of Undertakings (Protection of Employment) Regulations 2006 occurred on the 21 February 2023.[4]The claimant’s complaint of unauthorised deductions from wages is wellfounded.[5]The Second Respondent made an unauthorised deduction from the Claimant's wages in the period 03 April 2023 – 20 August 2023, namely: Case Number: 3202124/2023 a) Failed to pay the National Minimum Wage to the sum of £441 b) Failed to pay wages for the period 26 June 2023-23 July 2023 and 24 July 2023 to 20 August 2023 to the sum of £1750 (Gross) (£4200 less £2450 paid to Claimant).[6]The Second Respondent shall pay the Claimant (£1750 +£441 ) £2191. The Second Respondent is responsible for deducting and paying any tax or National Insurance at source in respect of 2(b).[7]The Second Respondent was in breach of contract (by Article 4 of The Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994) by: a) Failing to repay monies owed to the Claimant by virtue of loan agreements to the value of £4000; b) Failing to pay a delivery fee owed to the Claimant to the value of £240.[8]The Second Respondent shall pay the Claimant (£4000 +240) £4240 in respect of breach of contract.[9]The Second Respondent unreasonably failed to comply with the ACAS Code of Practice on Disciplinary and Grievance Procedures 2015 and it is just and equitable to increase the compensatory award payable to the claimant by 25% in accordance with s 207A Trade Union & Labour Relations (Consolidation) Act 1992.[10]The Respondent is therefore ordered to pay the claimant the total sum of £8038.75 which consists of £2191 unauthorised deduction of wages + £4240 breach of contract + £1607.75 (25% ACAS uplift).[11]Having considered the application further, the Claimants application to stay proceedings in respect of the Tax and National Insurance contributions owed to His Majesty’s Revenue and Customs is refused. The Tribunal does not have jurisdiction in respect of any contributions owed.[1]These written reasons are produced at the request of the claimant. having been requested in accordance with Rule 62(3) of the Employment Tribunal Rules of Procedure 2013.[2]These reasons are produced at the request of the claimant. An oral judgment was issued in respect of this claim on the date the matter was listed for a final hearing with a judgment being issued on 21 May 2024 specifying the gross amount of £8038.75 and refusing the claimant’s application to stay part of the claim in respect of deductions made and contributions owed to His Majesty’s Revenue and Customs.[3]The claimant requested that I reconsider only part of the decision in accordance with Rule 70 of the Employment Tribunal Rules of Procedure 2013 namely the decision to refuse the claimants application to stay proceedings relating to the unlawful deductions made and contributions owing to His Majesty’s Revenue and Customs. Following the re- consideration hearing, I further ordered an additional amount owed of £9644.07 10.1 Judgment – no hearing - rule 60 February 2018
REASONS
[1]The claim was issued in the East London Employment Tribunals on 15 November 2023. The first and second respondent failed to present a valid response in time. The matter was listed for a final hearing on 23 and 24 April 2024 and partial reconsideration 23 July 2024.
The Claims
[2]The claimant brings this claim against RSB Couriers Limited and Raul Sebastian Balan. Mr Balan was the sole director of RSB Couriers Limited. The claimant’s employment started on the 18 October 2021 and ended on the 20 August 2023.[3]Her claim form sets out that she seeks to recover £4000 which she loaned to the company to cover the driver salaries. This is made up of 2 loans £700 and £3300 both paid in February 2022.[4]She also explains that the employer didn’t provide payslips and further that sums owed to her in her salary were not paid and/or underpaid. She also claims that amounts were deducted from her salary on the assurance that the monies were owed to His Majesty’s Revenue and Customs, yet no contributions were made.[5]Mr Balan as Director for RSB couriers has failed to engage with proceedings. The Tribunal has no ET3 from him and neither the claimant or the Tribunal has heard from him. The Tribunal satisfied itself that the ET1 and the notice of hearing had been appropriately served and that it should proceed in the first and second respondents absence and due to their failure to respond the proceedings, the Judge decided that a determination can properly be made of the claim, or part of it, in accordance with rule 21 of the Rules of Procedure.
Issues
[6]There were a number of issues that had to be determined in this case. The claimant brought a claim in respect of unlawful deduction of wages and breach of contract and therefore the following matters required determination: 6.1 The issues for the Tribunal to determine were: i) Did the Employment Tribunal have jurisdiction to consider the claims against the first and second respondent in light of the first respondent’s dissolution? ii) Was the clamant an employee? iii) Was there an employment contract in existence? iv) What date did the claimant’s employment commence? 10.1 Judgment – no hearing - rule 60 February 2018 v) What date did the claimant’s employment end? vi) What was the claimant’s salary? vii) Had the first and/or second respondent carried out any unlawful deduction of wages? viii) Was the claimant entitled to claim back a loan of £4000? ix) Was the tribunal able to consider a statutory wages claim for sums deducted from the claimant’s wage in order to pay income tax and national insurance, but not paid to HMRC? x) Had the claimant adequately particularised her claim for £260 fee for delivery work carried out by her in May 2023 and does the Tribunal have jurisdiction to consider this aspect of the claim? Evidence and Tribunal conclusions[7]The first respondent carried out a delivery business which operated several DPD franchises. It was subject to compulsory strike-off from the Register at Companies House on 21 February for a failure to file company accounts, before being dissolved on 28 February. The effect of strike-off was that the first respondent was no longer a legal entity.[8]The claimant initially commenced her employment on 18 October 2021 as a driver delivering Parcels for RSB couriers. On 17 January 2022, she was promoted to the role of second-in-command and that role involved planning routes for drivers, resolving signature disputes with customers, office paperwork such as filling out contracts for drivers in effect she dealt with the day to day operations of the business. I have seen documentary evidence, namely payslips and a resignation letter dated 14 August 2023 specifying the last working day as the 20 August 2023 which corroborates the claimant’s evidence; therefore I am satisfied that the claimant’s employment commenced on 18 October 2021 and ended on the 20 August 2023.[9]Following the strike-off, the business continued operating the same DPD franchises, and using the same drivers. The claimant continued to work in her role as Second-in-Command, unaware that the legal entity of RSB Couriers Ltd no longer existed. Mr Balan the former director of the first respondent, continued to represent that the limited company still existed: the documentary evidence and the claimant’s evidence demonstrated that Mr Balan continued to send emails using the first respondent’s company email address and invoices continued to be sent using the first respondent’s company name. Payslips continued to be issued under the first respondent’s name.[10]In her evidence to the Tribunal the claimant provided a level of detail that demonstrated a conscientious recollection of events. She remained consistent and reliable throughout. I accept that she had considered Mr Balan to be a good friend and that he had breached her trust. 10.1 Judgment – no hearing - rule 60 February 2018 Was the claimant an employee?[11]I am satisfied that the claimant is an employee. The documentation demonstrates that there were communications between her and Mr Balan regularly in respect of payment of drivers and the raising of invoices in respect of the responsibilities and duties she was expected to complete. I have no reason to doubt her evidence. she explained in detail how she was trained up and expected to regularly work 200 hours a week and was paid sick pay. Further, there were payslips within the bundle demonstrating the regularity in respect of payment of her salary and the hours work. She was very candid that initially her role as a driver there were no guaranteed hours, and she was paid for the hours I worked but that changed when she was promoted in January 2022. Did a contract exist?[12]There was a written contract dated the 18 October 2021. In the bundle signed by Mr Balan and the Claimant which related to the initial role as a driver. However, contracts can also be varied through oral representations and therefore though there are no subsequent written terms in respect of the claimant’s new role, there is documentary evidence such as payslips and requests for the claimant to raise invoices and operational discussions that corroborates the claimant’s account and therefore on the balance of probabilities I am satisfied that an employment contract existed between the claimant and RSB couriers limited. Has the company now been dissolved?[13]A search on companies’ house demonstrated that strike off occurred on the 21 October 2023 and dissolution occurred on the 28 February 2023. Therefore I am satisfied that RSB Couriers Ltd is now dissolved. Did a relevant transfer occur under the TUPE regulations?[14]The Transfer of Undertakings (Protection of Employment) Regulations 2006 state as follows: 3(1) These Regulations apply to – 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…[15]So far as is relevant, Regulation 4 provides as follows:(1) Except where objection is made under paragraph (7), 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 10.1 Judgment – no hearing - rule 60 February 2018 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.(2) Without prejudice to paragraph (1), but subject to paragraph (6), and regulations 8 and 15(9), on the completion of a relevant transfer – (a) all the transferor’s rights, powers, duties and liabilities under or in connection with any such contract shall be transferred by virtue of this regulation to the transferee; and (b) any act or omission before the transfer is completed, of or in relation to the transferor in respect of that contract or a person assigned to that organised grouping of resources or employees, shall be deemed to have been an act or omission of or in relation to the transferee[16]Mr Hallstrom on behalf of the claimant referred the Tribunal to the principles in the following cases as a starting point for analysis as to whether a business transfer has taken place, Cheesman v R Brewer Contracts Ltd [2001] IRLR 144 (EAT), as approved by the Court of Appeal in McCarrick v Hunter [2013] ICR 235. Of particular relevance was the case of Charlton and Charlton v Charlton Thermosystems (Romsey) Ltd and Ellis & others [1995] IRLR 79.[17]The EAT in the latter case held that the ET had not erred in finding that there was a transfer of undertakings under the Transfer of Undertakings (Protection of Employment) Regulations 1981 where an undertaking continued to employ the claimants after the limited company had been struck off the Register, and that they were therefore personally liable to meet the claimant’s claims. Where an undertaking retained its identity in the hands of a new employer, the dissolution of the corporate employer could constitute a transfer within the meaning of the 1981 TUPE Regulations. The Tribunal was persuaded that this analysis also applied to the circumstances in this case as nothing changed in the claimant’s day to day role.[18]The claimant also stated that it was on 30 August 2023, after she had stopped working at the depot that she found out that RSB Couriers Ltd had been struck off from the register at Companies House and then dissolved on 28 February 2023. Her evidence was that the courier business had continued to operate as normal after that date and there was no change in how the business worked day-to-day. Mr Balan continued to use the RSB Couriers email address after that date, and continued to speak about the company as though it still existed and that she had been raised invoices in the name of RSB Couriers Ltd as late as May 2023.[19]Having considered the evidence carefully I am satisfied that a “relevant transfer” from RSB Couriers Limited (the first respondent) to Mr Raul Sebastian Balan (the second respondent) in accordance with The Transfer of Undertakings (Protection of Employment) Regulations 2006 occurred on the 10.1 Judgment – no hearing - rule 60 February 201821 February 2023 rights, and there powers, duties and liabilities under or in connection with any such contract were transferred when the strike-off occurred. constituted a "business transfer" within the meaning of TUPE Regs, reg.3(1)(a), and that the claimant’s employment transferred to the second respondent under TUPE Regs, reg.4(1).[20]The evidence demonstrated that Mr Balan was the sole director of RSB Couriers and he continued to operate in that way after the strike-off. There were also payslips and communication within the documentation that postdate the dissolution and the claimant explained she was sent payments of her salary with the reference “RSB couriers ltd” as late as June 2023.[21]In the alternative, I consider there is merit in the argument that that Mr Balan as the second respondent was the true employer in this case. Unauthorised deduction of wages[22]The claimant’s claim includes a failure to pay the national minimum wage. She maintained that she was paid £10 an hour as opposed to £10.42 an hour from April 2023 To August 2023. Further, that she that received no salary from 26 June- 23 July 2023 and received a reduced salary in August 2023. Mr Hallstrom referred the Tribunal to the relevant pay slips and provided a helpful schedule of loss demonstrating where the deductions occurred. I am therefore satisfied on the evidence before me that there were a series of unlawful deduction of wages made in the manner claimed.[23]The claimant’s complaint of unauthorised deductions from wages is wellfounded.[24]The second respondent made an unauthorised deduction from the Claimant's wages in the period 03 April 2023 – 20 August 2023, namely: a) Failed to pay the National Minimum Wage to the sum of £441; b) Failed to pay wages for the period 26 June 2023-23 July 2023 and 24 July 2023 to 20 August 2023 to the sum of £1750 (Gross) (£4200 less £2450 paid to Claimant).[25]The second respondent shall pay the claimant (£1750 +£441 ) £2191. The second respondent is responsible for deducting and paying any tax or National Insurance at source in respect of 2(b). Breach of contract[26]I am satisfied that the claimant made an initial loan payment on 19 February 2022 of £3300 and that there was a subsequent loan payment of £700.[27]I also consider that the £260 delivery fee was also a contractual agreement between the parties . I am satisfied that this formed part of the claim, while not specifically mentioned in the pleadings, it was pleaded as part of the gross figure of compensation in the claim form and treated as part of the broader claim for salary and I note that the claim specified a claim for other payments. 10.1 Judgment – no hearing - rule 60 February 2018 and I accept the evidence of the claimant that this did not form part of her usual day to day activities and was arranged outside the context of her employment.[28]I am satisfied that liability in respect of the breach of contract claims would have been engaged and the Tribunal would have jurisdiction to determine this aspect of the claim under the Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994 and this liability would pass from the first respondent to the second respondent under TUPE Regs, reg.4(2), as it was one that "in connection with" the contract of employment.[29]There is a loan agreement in the bundle, though not signed, I considered was persuasive and the claimant explained that her recollection was it had been subsequently electronically signed and I note that there are text messages in the documentary evidence in which Mr Balan is explaining that he is struggling to pay the drivers.[30]There are further text messages within the documentary evidence in which Mr Balan is requesting the £700 loan from the claimant and he acknowledges that he owes her £4000. Also, the claimant has been clear that other loans had been paid back to her and therefore I found her credible in this regard.[31]Therefore, I am satisfied on the evidence before me that the second respondent was in breach of contract (by Article 4 of The Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994) by: a) Failing to repay monies owed to the claimant by virtue of loan agreements to the value of £4000 b) Failing to pay a delivery fee owed to the claimant to the value of £240.[32]The second respondent shall pay the Claimant (£4000 +240) £4240 in respect of breach of contract.[33]The second respondent unreasonably failed to comply with the ACAS Code of Practice on Disciplinary and Grievance Procedures 2015 and it is just and equitable to increase the compensatory award payable to the claimant by 25% in accordance with s 207A Trade Union & Labour Relations (Consolidation) Act 1992. The claimant explains that she on 10 October 2023, sent Mr Balan a grievance letter by email highlighting issues with payments, payslips, tax, the unpaid loan, and missing P45s and P60s. Mr Balan did not respond to this grievance letter and stopped communicating with the claimant shortly thereafter.[34]The respondent is therefore ordered to pay the claimant the total sum of £8038.75 which consists of £2191 unauthorised deduction of wages + £4240 breach of contract + £1607.75 (25% ACAS uplift). 10.1 Judgment – no hearing - rule 60 February 2018 Failure to provide payslips[35]The claimant states that she did not receive pay slips for the period June 2023-August 2023. There are no pay slips provided in the documentary evidence and I accept the evidence of the claimant and make a declaration that no pay slips were provided in the period June 2023-August 2023 and a failure to include adequate particulars required such as National insurance and tax contributions. Reconsideration[36]The claimant’s application to stay proceedings in respect of the Tax and National Insurance contributions owed to His Majesty’s Revenue and Customs was initially refused on the 23 and 24 April 2024. However, following an application for reconsideration made by the claimant the matter was listed for a reconsideration hearing. The stay had been applied for to enable the claimant to consider and comment on the tax implications and any jurisdictional issues raised by that aspect of her claim by 7 June 2024. The decision to refuse the application to stay has deprived the claimant of an opportunity to make full submissions on the issues of substance. The Tribunal accepted this and therefore a reconsideration hearing was held on the 23 July 2024 and the claimant was able to make full submissions in respect of this aspect of the claim.[37]I accept that the documentary evidence shows that no tax was paid to claimant between during her employment. The claimant in her evidence stated that she called and was told that HMRC did not hold any information about her being ever employed by RSB Couriers Ltd or Mr Balan. Also, they did not have any record of anyone paying any of her taxes and National Insurance contributions. The documentary evidence contained a letter from HMRC demonstrating that there was no record of the claimant working with the first or second respondent.[38]When confronted by the claimant about the tax issue, the documentary evidence shows that Mr Balan suggested that he had paid £4,938.72 exactly in tax/NI; he separately blames accountants for discrepancies in payments made to HMRC. There is no evidence before me that this payment was made.[39]The claimant’s evidence, borne out by the WhatsApp messages exchanged between her and Mr Balan, is that she was unaware that deductions had not been paid His Majesty’s Revenue and Customs and therefore she did not consent to the deductions as shown on her payslips.[40]Therefore, I am persuaded that the second respondent (and the first respondent previously) did not account to HMRC for employee NI and income tax on the claimant’s earnings. Those deductions were not authorised by statute or ones the claimant consented to, or made pursuant to the claimant's contract, and therefore cannot have constituted lawful deductions under ERA 1996, section.13, nor could they have been excepted deductions under ERA 1996 section.14. 10.1 Judgment – no hearing - rule 60 February 2018[41]I consider that the unlawful deduction of wages claim is well-founded in this regard and the second respondent shall pay to the claimant the monies owed which equated to £7715.26 (period January 2022-September 2023) + ACAS 25% uplift = £9,644.07. The claimant is responsible for paying any tax and national insurance contributions to HMRC.[42]Therefore, the second respondent must pay to the claimant the total sum of £17,682.82 (£9,644.07 + 8,038.75).