Ms J Dholakiya v Mrs C Arora T/a Wink Spa Hair & Beauty: 3301722/2024
EMPLOYMENT TRIBUNALS
Case No 3301722/2024
Between
Ms J DholakiyaClaimantMrs C Arora T/a Wink Spa Hair & BeautyRespondent
Before
Employment Judge S MooreIn person for claimantMrs C Arora for respondentDate 24 October 2024
JUDGMENT
The claim is dismissed on grounds of illegality.
REASONS
[1]The Claimant was employed by the Respondent as a beautician and hairdresser from June 2023 (the precise start date is disputed) until 4 November 2023.[2]ACAS Conciliation took place between 13 December 2023 and 24 January 2024.[3]On 11 February 2024 the Claimant brought a claim for unpaid wages under s.[13]Employment Rights Act 1996 (ERA) and/or for breach of contract. 1 of 4 4. The Claimant says she logged all she hours she worked, and she should have been paid a total of £4,755.83. However, she only received £2,337.87. The claim is therefore for the balance, £2,417.96 5. I heard evidence from the Claimant and from Mrs Arora, and from two employees of Mrs Arora, Ms Coral Angus and Ms Sandeep Kaur. A number of documents in the form of WhatsApp messages, pay slips, letters and timesheets were also before me. 6. The Claimant’s case is that it was agreed with the Respondent she would be paid £13 per hour and would work 2-3 days per week, although that increased to 4-5 days per week. She said, at least initially, she expected that money to be recorded in her pay slips and paid into her bank account in the normal way. (Later in her evidence she suggested it was Mrs Arora who wanted to pay her cash for the hours not recorded on her pay slips.) 7. Mrs Arora says the Claimant wanted to be employed for 10 hours per week at a rate of £13 per hour and for any hours she worked above 10 hours per week to be paid cash in hand and not be recorded on her pay slips. The Claimant told Mrs Arora she would account for that income on a self-employed basis. The cash-in-hand rate was agreed to be £10 per hour. 8. I prefer Mrs Arora’s evidence: 9. First, there is an exchange of messages on 7 July 2023 in which Mrs Arora asks the Claimant for her account details to pay her wages, and the Claimant replies “Yes doing but just do for 10 hrs per week in account rest will sort out later”. 10. Secondly, there is no evidence of the Claimant challenging the hours recorded as having been worked and the amount recorded as having been earned in her pay slips at the time. For example, the August pay slip states the payment was for £508.25, being 40 hours work plus tips, and the parties agree the Claimant worked at least another 40 hours in August, which means the pay slip only records half the Claimant’s worked hours. The fact the Claimant appears to have made no complaint about that at the time suggests the pay slip was as she expected. (I note here in passing the Respondent stated that some of the Claimant’s pay slips were calculated on the wrong rate of £10.42 per hour instead of £13 per hour.) 11. Thirdly, the Claimant’s own evidence contains a message she sent Mrs Arora after her employment terminated which states, “And I still have some payments for the June and August cash that you still have to calculate and give to me…” which implies the Claimant was receiving or expecting to receive regular cash payments. 12. Fourth: - On the Claimant’s time sheet for June 2023 the total number of hours worked is recorded as being 56 hrs and underneath it is written “35 hours pay slip”. - On the Claimant’s time sheet for September 2023 the total number of hours worked is recorded as being 65hrs and underneath it is written “40 hours pay slip 25 hours cash in hand £250”. 2 of 4 - Also at the bottom of the September time sheet is written “£884.50” with a box around the figure and beside it is written “£200 paid before. Today £685 cash.” Mrs Arora said this payment was a settling up of the cash payments owed to the Claimant. 13. The Claimant disputed receiving any cash payment other than £200 in June 2023 and stated that the annotations on the September time sheet were simply Mrs Arora working out how much she was owed. However regardless of whether the payments were made or not the annotations are clear evidence of the payment arrangement claimed by Mrs Arora. For the sake of completeness I would add that I find it more likely than not that the cash payments were made as claimed by Mrs Arora as her evidence was more consistent and compelling than that of the Claimant and the annotations on the September timesheet are clear: “Today £665 cash…”[14]Fifth, there is a formal letter written by Mrs Arora at the behest of the Claimant (addressed to “To whom it may concern”), stating the Claimant has been employed by the Respondent since 3 June 2023 and “working in her position as a Beauty Therapist for 10 hrs per week since her start date”.[15]Sixthly, the Claimant’s evidence was confused and frequently contradictory and I did not find her to be a credible witness.[16]I am therefore satisfied that the parties agreed the Claimant would be paid on the basis that 40hrs per month would be recorded on her pay slip and her other hours would be paid cash in hand.[17]Further there is no reason to consider the Claimant worked those additional hours in a self-employed capacity; she was working from the Respondent’s premises, she was providing services to the same clients, those clients were booked in by the Respondent, the Claimant was using the Respondent’s equipment, and she did not submit any invoices to the Respondent. In addition, even if, which I do not accept, the Claimant was working on a self-employed basis in respect of those additional hours, there is no reason why she would have to be paid cash in hand.[18]I find that this was disguised employment, and the payments of cash were no doubt intended to keep that part of the Claimant’s employment under the radar for tax evasion and potentially social security purposes too.[19]I consider this is an instance of a contract being performed in an illegal way and in these circumstances, in accordance with Patel v Mirza 2017 AC 467 SC, I have to consider whether relief should be given, and the Claimant should be entitled to enforce the contract.[20]The primary consideration is the underlying purpose of the law that has been breached and whether that purpose would be enhanced by the claim being refused. Here, the tax system is of the utmost importance to the integrity of the legal system, and to society as a whole, and it is of utmost importance that individuals pay appropriate taxes on their earnings, which, amongst other things, support the administration of the tribunal system and allows cases like these to be brought. I therefore consider it would undermine the integrity of the legal system to allow the Claimant’s claims to succeed. 3 of 4[21]Further, I consider that denying the claim is a proportionate response to the illegality.[22]First, I consider it more likely than not that the Claimant instigated the arrangement. This was Mrs Arora’s evidence and the clear implication of the WhatsApp message of 7 July 2023. I therefore consider she was the more culpable party and, in any event, not an unwitting or unwilling participant in the arrangement.[23]Secondly, the arrangement with respect to pay was central to the contract and a serious matter. It appears that approximately one third to one half of the Claimant’s working hours were paid cash in hand. That had significant implications not only in respect of the parties’ respective tax liabilities but potentially also in respect of the Claimant’s entitlement to social security benefits.[24]Thirdly, the arrangement with respect to pay is central to the dispute before me today. In this respect, while there appeared to be some dispute about whether the Claimant received her tips as well as her salary, the rate of pay used to calculate the pay on her pay slips, and what payments the Claimant was entitled to in respect of the 1-4 November 2023, a very significant amount of the dispute has focused on whether the cash payments in question had been made, as Mrs Arora claimed, and whether the Claimant was due any further cash payments.[25]In these circumstances, I consider that allowing the Claimant to enforce her right to pay under her contract of employment would be an affront to public conscience.[26]I therefore find the Claimant cannot enforce her rights to pay and the claim is dismissed on grounds of illegality.