Ms R L Hawkes v The Home Improvement Studio (Trade) Ltd: 3303686/2024

EMPLOYMENT TRIBUNALS

Case No 3303686/2024

Between

Ms R L HawkesClaimant

The Home Improvement Studio (Trade) LtdRespondent

Before

Employment Judge S Moore

Mr R Ross (instructed by Counsel) for claimant

Date 10 December 2024

JUDGMENT

(1) The claim for unfair dismissal succeeds. The Claimant is entitled to a compensatory award in the sum of £7,599.92.

(2) The claim of unlawful deduction of wages succeeds in the sum of £5000.

(3) The claim for failure to give a statement of employment particulars succeeds in the sum of £1,107.68.

(4) The Claimant’s total monetary award is £13,707.60.

REASONS

[1]The Respondent is a company that provides home improvement services. The Claimant was employed by the Respondent as an accountant and company secretary from 1 July 2020 until 7 November 2023, when she was dismissed on grounds of redundancy.

[2]ACAS Conciliation took place between 31 January 2024 and 7 March 2024. 1 of 8

[3]On 4 April 2024 the Claimant brought a claim for unfair dismissal, unlawful deduction of wages (and/or breach of contract). She also brought a claim for failure to provide particulars of employment.

[4]I heard evidence from the Claimant and from Mr Paul Petrie (PP), owner and director of the Respondent. I was also referred to a bundle of documents. On the basis of that evidence I make the following findings of fact.

The Facts

[5]The Claimant worked on a part-time basis, three days a week. At the time of her dismissal her salary was £18,000 per annum. She had previously earned £30,000 per annum but with the agreement of PP had transferred some of the less skilled tasks to her partner, who was employed by the Respondent on a salary of £12,000. The Claimant is a qualified accountant, but her partner is not. I heard very little evidence about that arrangement.

[6]The Claimant initially worked in the office during her first year of employment but after she moved house to a location about 200 miles away from the Respondent’s premises, she predominantly worked from home.

[7]On 23 August 2021 an assistant accountant, named Michelle Underwood (MU) was hired to assist the Claimant on a part-time basis. MU worked five days a week on reduced hours. She was initially paid £18,000 per annum which was increased to £19,500 per annum.

[8]In June 2023 PP gave the Claimant a handwritten note instructing her to pay herself and the Operations Manager a bonus of £5,000 each, as well as overtime payments to three other members of staff.

[9]The Claimant told PP she wanted to defer payment of the bonus to the following tax year and PP agreed that she could do so.

[10]On 17 October 2023 PP telephoned the Claimant and told her that MU had resigned with immediate effect and was not being replaced. He told the Claimant that her role was at risk of redundancy because he “did not want to be posting things to her”, now that MU had left, and that she would be contacted by Peninsula Business Services, the Respondent’s HR partner.

[11]On 19 October 2023 the Claimant was apparently sent a letter inviting her to a consultation meeting, on 24 October 2023 via Teams. The reason given in the letter as regards why the Claimant’s role was at risk of being made redundant was said to be: “…due to a downturn in work and cost saving to the business. The company has identified the need to implement some major organizational changes because of team changes in the department.”

[12]However, the Claimant did not receive the letter and was not aware of the meeting until she received a notification ten minutes before the meeting was due to start. In the event nothing turns on this.

[13]The Claimant nevertheless attended the meeting on 24 October 2023 which was with Debbie Ramsden (DR) of Peninsula. At the meeting DR reiterated that 2 of 8 the redundancy situation had come about because of a downturn in business, MU handing in her notice and the Respondent deciding to outsource its accountancy function. Another relevant factor was the fact the Claimant lived 200 miles away. DR also explained that that the purpose of the meeting was to see if there was anything the Claimant could think of that the Respondent might want to reconsider or could put in place to avoid making her redundant. In the course of that meeting the Claimant said she had worked remotely without issue for 2 & ½ years, and also offered to take on most of MU’s work for no increase in salary.

[14]On 26 October 2023 the Claimant put forward further proposals by email and reiterated that she was willing to take on as much of MU’s role as possible.

[15]On 29 October 2023 PP sent the Claimant an email saying that he was retracting the bonus promised in June 2023. The reason given was that it had been discovered that another employee, NK, had been diverting money owed to the Respondent and getting customers to pay money for kitchen improvements directly into his personal bank account instead of into the Respondent’s account. PP said he thought that the Claimant had been derelict in her duties in not identifying that problem earlier (namely that invoices were being paid from the company accounts without corresponding payments coming in from customers) and that since the bonus was intended as a reward for doing a good job, she was not entitled to be paid one.

[16]Pausing here, it is necessary to record that the issue with NK had been discovered on or about 28 September 2023. There was an issue between the parties as regards whether the Claimant or MU had identified the problem, but it is not necessary for me to decide that dispute. It is common ground that the police were informed, that they began a criminal investigation and that the police asked PP to provide a statement for the purposes of that investigation in the first week of October 2023.

[17]On 31 October 2023 the Claimant wrote back to PP asserting that she had not been derelict in her duties and challenging his decision to retract her bonus.

[18]Also on 31 October 2023 a second consultation meeting took place with DR. In that meeting DR referred to PP saying he didn’t want to have to post documents to the Claimant (which MU used to do) and referred again to MU leaving and not being replaced, and the significant cost saving the Respondent would achieve by outsourcing the accountancy role.

[19]On 7 November 2023 the Claimant received a letter stating that her role had been made compulsorily redundant. Apparently, the Claimant’s partner was also sent his P45 at about the same time.

[20]On 8 November 2023 the Claimant appealed that decision.

[21]On 23 November 2023 an appeal hearing took place with Gregg Pegg (GP) of Peninsula.

[22]On 17 January 2024 the Claimant received a letter dismissing her appeal.

[23]In the course of giving evidence PP was asked about the Respondent’s outsourcing arrangements. He said that somebody called Cassie from Addicas Accounting now did the Respondent’s accounting for a fee of £235 per month. 3 of 8

[24]He was also asked if MU had returned to work in the business. He said MU had returned in about December 2023 in an administrative role. He said the role had been advertised in house and that she must have been informed about the role by one of the other employees. She had contacted him by phone about the role and he had then made her a verbal offer. PP admitted that MU did some accountancy work, including invoicing.

[25]At this juncture I asked the Respondent to produce any evidence they had as regards MU’s resignation, her employment contract with respect to her new role, and any contract between the Respondent and Addicas Accounting Services as regards the nature of the services provided by them to the Respondent.

[26]The Respondent subsequently produced:(i) A letter from MU dated 13 October 2023 resigning her position with effect from 27 October 2023 (a Friday). The letter gives no reason for her resignation.

(ii) MU’s P45 stating that her leaving date was 27 October 2023.

(iii) A contract of employment between MU and the Respondent stating that MU was employed by the Respondent with effect from 1 November 2023 (a Wednesday) in a full-time role of Company Administrator at a salary of £40,000 per annum. As regards MU’s duties in her new role, the contract simply states that “your duties will be as advised by the Directors”.

(iv) An invoice from Addicas Accounting Services for the period December 2023 to March 2024 in the sum of £1,520. Conclusions Unfair Dismissal

Conclusions

[27]The Respondent asserts the reason for the Claimant’s dismissal was redundancy. It says that its requirements for employees to carry out work of a particular kind, namely accountancy, had ceased or diminished with the meaning of s.139(1)(b) Employment Rights Act 1996 (ERA).

[28]I am not satisfied this was the reason for the Claimant’s dismissal.

[29]First, the driving reason PP gave the Claimant as to why it had decided to outsource its accountancy function has been found to be false. The Claimant was told on 17 October 2023 that MU had resigned with immediate effect. That was not true. Her resignation letter dated 13 October 2023 gave two weeks’ notice making her last day of work Friday 27 October 2023. Moreover, she took up her, supposedly new, fulltime position on Wednesday 1 November 2023. Accordingly, PP’s evidence to the Tribunal that MU did not start working for the Respondent again until December 2023 was also untrue, and I consider that evidence was intended to create a false impression of there having been clear blue water between MU’s period of part-time employment and her new full-time role, whereas in fact the transition was seamless. 4 of 8

[30]Secondly, while the Respondent also relied on a downturn in business over the summer of 2023, and the fact that outsourcing its accountancy function would save costs, the Tribunal has been shown no evidence that substantiates any such downturn. There are no accounts in the Tribunal bundle, no minutes of any meetings discussing the Respondent’s financial situation, and no contemporaneous cost analysis that shows, even in broad terms, what amount the Respondent considered it would save by outsourcing its accountancy function. Moreover, the Respondent’s assertion that the Claimant’s role was made redundant because of a desire to save costs is entirely undermined by the fact that the day after the final consultation meeting with the Claimant on 31 October 2023, MU was reemployed by the Respondent on a salary which is approximately the sum of the salary she was previously earning and the Claimant’s salary at the time of her dismissal.

[31]Thirdly, while the Respondent also relied on the fact that the Claimant lives 200 miles from the Respondent’s premises, the only reason PP gave as regards why this had become a problem was that he would have to post things to her because since MU had left, she was no longer able to do that. However, even leaving aside the thinness of the reason itself, as became apparent, MU had not in fact left the business.

[32]Finally, I am not satisfied that the Respondent has in fact outsourced the accountancy role previously provided by the Claimant to any significant extent or at all. The Tribunal has not been provided with any written agreement between Addicas and the Respondent and I do not consider it credible that accountancy services which previously were provided by the Claimant and MU at an annual salary cost of about £40,000 could be replaced to any significant extent by a single person (Cassie) at an annual cost of less than £3,000 per year. I also note that the invoice produced to the Tribunal at paragraph 26(iv) above bears a striking similarity, in respect of services provided, to an invoice in the bundle from a different firm of Chartered Accountants dated 5 August 2022 which is during the period when both the Claimant and MU were employed by the Respondent. I also note that in evidence PP accepted that MU continues to provide some accountancy services and note that her employment contract, while giving her the title “Company Administrator’ provides no details of her duties, simply stating that “they will be as advised by the Directors”.

[33]Mr Ross submitted the redundancy was a sham because the Respondent had decided it wanted rid of the Claimant because she had failed to notice (at least for a significant period) the fact that NK was defrauding the company. He may well be right about the Respondent’s motivation; however, the question for me is simply whether the Respondent has proved that the Claimant’s dismissal was because she was redundant (or was for some other substantial reason of a kind such as to justify her dismissal) and for the reasons given above I am not satisfied that it has done so.

[34]For the sake of completeness I would add that even if the Claimant was dismissed for redundancy within the meaning of s.139(1)(b) ERA the dismissal was nevertheless plainly unfair given that the entire consultation was predicated on a basis the Respondent knew to be false, namely that MU had left the 5 of 8 business and the whole accountancy function was being outsourced, and there was no effort to made to find the Claimant suitable alternative employment when – given MU’s full time contract which started on 1 November 2023 - there was plainly work available.

[35]It follows that the claim for unfair dismissal therefore succeeds. Unlawful Deduction of Wages (s.13 Employment Rights Act 1996)

[36]It is common ground that the Claimant was awarded a bonus of £5,000 in June 2023, but that having told PP she wished to defer payment of it until the following tax year, on 29 October 2023 he purported to retract that award because of his discovery of NK’s fraud.

[37]Mr Williams submitted that since payment of a bonus was discretionary the Respondent was entitled to retract it at any time before payment.

[38]However, while the Respondent’s decision to pay a bonus may well have been discretionary, so that the Claimant could not have claimed any right to be paid a bonus before June 2023, the legal position changed after June 2023, once the decision to pay her one had been made. In this respect it is clear from the authorities that once a bonus has been declared and qualified it becomes a wage that is properly payable pursuant to s.13 Employment Rights Act 1996 (see Farrell Matthews & Weir v Hansen

[2005] IRLR 160

; Tradition Securities and Futures SA v Mouradian

[2009] EWCA Civ 60

[39]It follows that having declared and quantified the Claimant’s bonus in the sum of £5,000 that sum became part of the Claimant’s wages. Accordingly, since there was no statutory provision, provision of the Claimant’s contract or written agreement from the Claimant within the meaning of s.13(1) ERA which entitled the Respondent to withhold the bonus, refusing to pay it amounted to an unlawful deduction of the Claimant’s wages.

[40]It follows that the claim for unlawful deduction of wages succeeds. Failure to give a statement of employment particulars (s. 38 Employment Act 2002)

[41]It is common ground that the Claimant was not provided with a statement of employment particulars pursuant to s. 1 ERA. Remedy Unfair Dismissal

Remedy

[42]The Claimant is not entitled to a basic award of compensation because she has been paid a statutory redundancy payment.

[43]As regards the compensatory award, the Claimant said in evidence she had been unable to find alternative work since her employment ended, as she had not seen anything suitable in terms of working hours or type of work. Her 6 of 8 situation was made more difficult because she lives in a small town in Somerset. Furthermore, at 73 years of age she did not wish to take on a fulltime job or travel distances to work, particularly during the winter months when she would be driving in the dark. She said that while she hadn’t made any job applications or registered with an employment agency, she had looked for jobs online. She further said that in January 2024 she began to work on an idea of starting her own business which would enable her to work from home most of the time and in fact started such a business in April 2024. She has not yet to receive an income from that business but expects to do so soon.

[44]In submissions Mr Ross stated the Claimant was claiming 52 weeks of loss of income at a net salary of £276.92 (£14,399.84) less three weeks’ notice (£1,038.45), making a total of £13,361.39. She further claimed a sum of £400 in respect of loss of statutory rights.

[45]Mr Williams submitted that the Claimant had not made sufficient efforts to mitigate her loss and that she should be entitled to no more than 6 months’ loss of income. He did not take issue with the sum of £400 claimed in respect of loss of statutory rights.

[46]On this point I broadly accept Mr Williams’ submissions. On the one hand, I accept it may not have been easy for the Claimant to find suitable employment, given where she lives and her desire to only work part-time. On the other hand, the Claimant is a professional accountant, and accountancy is a type of work which can often be done remotely. Further, given the lack of evidence as regards mitigation I am not satisfied the Claimant took reasonable steps to mitigate her loss. Instead, it seems she decided to take a different route and start her own business, which of course was her prerogative. However, looking at everything in the round, I consider that if the Claimant had directed her energies to finding alternative employment it is reasonable to expect her to have done so within 6 months of the expiry of her 3-week notice period.

[47]Accordingly, by way of compensatory award the Claimant is entitled to 26 weeks of net pay, plus £400 for loss of statutory rights: (£276.92 x 26) + £400 = £7,599.92 Unlawful Deduction from wages

[48]In respect of the unlawful deduction claim the Claimant is entitled to £5000. Section 38 Employment Act 2002

[49]As regards the claim for failure to provide employment particulars, I accept the Claimant is entitled to 4 weeks (rather than 2 weeks) pay. The Claimant was not provided with any employment particulars at all, and I do not accept (as Mr Williams submitted) that it was part of her role or responsibility to issue employment contracts. Accordingly, pursuant to s.38 Employment Act 2002 she is entitled to £1,107.68: 7 of 8 £276.92. x 4 = £1,107.68 Total Award

[50]The Claimant is entitled to a total monetary award of £13,707.60: £7,599.92 + £5000 + £1,107.68 = £13,707.60