Mrs A Berrington v The Book People Ltd (In Administration): 3301560/2020
REASONS
[1]The claimant claimed unfair dismissal, age discrimination and breach of contract. No response was presented to the claims by the respondent.[2]The respondent is in administration. On 27 April 2020 the administrators provided consent for the claims to proceed.[3]On a full consideration of the file of proceedings it was possible to issue this Judgment under Rule 21 in respect of the claims without a hearing.[4]On the information provided, the Tribunal makes the following findings.[5]The claimant was employed at the Human Resources Manager from 5 September 2014 until 10 January 2020 when her role was made redundant.[6]The claimant’s gross monthly salary was £4166.[7]The respondent appointed administrators on 16 December 2019.[8]The claimant disputed that her role was redundant because it was filled by a new and younger person.[9]The claimant claims age discrimination and compensation for injury to feelings of £12,365.[10]The claimant subsequently made a claim to the Redundancy Payment Service and received payment for accrued annual leave on termination of employment (holiday pay) in accordance with regulation 14 of the Working Time Regulations 1998 and statutory notice pay in accordance with section 86 of the Employment Rights Act 1996 of £1469.30.[11]The claimant was in fact contractually entitled to 3 months notice pay (£12,500) and claims the balance of her notice pay which is £11,030.70.[12]The claimant worked for the respondent for 5 complete years. The claimant’s date of birth is 6 January 1969. In accordance with the Employment Rights (Increase of Limits) Order 2019 the maximum amount of a weeks pay for the purpose of calculating a basic award is £525. In accordance with section 119 of the Employment Rights Act the claimant is, based on her age during her service, entitled to a basic award of £3937.50.[13]If the claimant has received a redundancy payment the amount of basic award payable will be reduced by the amount of redundancy payment paid to the claimant in accordance with section 122(4) of the Employment Rights Act 1996.[14]The claimant has secured alternative employment at a lower wage from June 2020 and has earnt £16 per hour and worked 4 days per week. The claimant claims a gross compensatory award of £25,000. The claimant is entitled to a net compensatory award of £20,833. Grossing Up[15]The claimant is entitled to receive a level of compensation that reflects what she would have received in wages had she remained in employment. It is therefore necessary to perform a grossing up calculation in order that the claimant has sufficient funds to meet any charge for income tax on the award.[16]In the tax year 2021/2022 the claimant will earn £24,576. The personal allowance for this year is £12,750.[17]The current tax bandings are as follows: Up to £12,750 = 0% £12751 - £50,270 = 20% £50,271 - £150,000 = 40% Over £150,000 = 45%[18]The first £12,750 of the claimant's salary is tax free. The next £11,826 is subject to the basic rate of 20%.[19]If an employee earns wages that are subject to the basic rate of 20% tax, they can earn an additional £37,700 that would be subject to this rate. This equates to net earnings of £30,160.[20]In this claimant's case, she will earn £11,826 that will be subject to 20% tax; therefore, the net earnings in this bracket will be £9460.80. When that net figure is deducted from £30,160 it leaves a net figure of £20,699.20 available to the claimant. This is the additional net amount the claimant could earn in the basic rate tax bracket.[21]In accordance with section 401 of the Income Tax (Earnings and Pensions) Act 2003, the first £30,000 of any award on termination of employment is tax free. The injury to feelings award of £12,365 and the basic award of £3937.50 is deducted from this £30,000 tax free amount and leaves £13,697.50 of the tax free sum to be applied to the compensatory award.[22]Once the £13,697.50 is applied to the compensatory award of £20,833 it leaves a figure of £7135.50 which will be subject to tax.[23]It has been established that the claimant has £20,699.20 available in the 20% tax bracket. Therefore, I can determine that the remaining £7135.50 of the compensatory award will be subject to 20% tax.[24]Therefore, in order to ensure that the claimant receives £7135.50, it is necessary to gross up that amount by 20%. When that calculation is performed the gross amount is £8562.60.[25]It is then necessary to add the £8562.60 to the tax free element of the compensatory award of £13697.50, and this equates to a grossed up total compensatory award of £22,260.10.[26]The claimant received Employment Support Allowance for approximately 3 months after the termination of her employment. The Employment Protection (Recoupment of Jobseekers Allowance and Income Support) Regulations 1996 do not apply to compensation paid for breach of contract. As the claimant’s contractual notice period was for a duration of 3 months, the Regulations do not apply to the subsequent payment of the compensatory award.