Mr B Harper and others v Phoenix Care (UK) Ltd (in voluntary liquidation): 3304843/2018 and others
JUDGMENT
[1]The claims are dismissed on the grounds that they are res judicata. Miss R Stewart[2]The Respondent made an unlawful deduction from Miss Stewart’s wages in the sum of £2,200.00 and is ordered to pay that sum to Miss Stewart. Miss J Williams[3]The claims of breach of contract and unlawful deduction from wages succeed.[4]The Respondent is ordered to pay the sum of £1185.66 to Miss Williams, made up as follows: 4.1. compensation for breach of contract - £660. 4.2. unlawful deduction from wages - £420.66 4.3. unlawful deduction from wages (hours worked of sleep-in shift) - £105. Page 1 of 9REASONS
Claims
[1]Mr Harper advanced a claim for unlawful deduction from wages in the sum of £2,702.00. This related to deductions made from his final salary payment by the Respondent as follows: £2,400.00 for rent, failure to make payment of £129.00 for expenses, and failure to pay his final day’s wages of £173.00.[2]Miss Stewart brought a claim for unlawful deduction from wages in the sum of £2,200.00. This related to a deduction made from her final salary payment for rent. (In the claim form, the deduction is stated to be £2,400.00 but Ms Stewart accepted that the correct figure was £2,200.00, as show on her final pay slip).[3]Miss Williams brought a claim for breach of contract in relation to a failure to honour the hours as specified in her contract of employment. The amount claimed was £660. She also brought claims for unlawful deduction from wages in the sum of £426.66 regarding deductions made from her final salary. The deductions were £300.00 in relation to a training course, £80.00 in relation to her final day of service on 28 February, and £40.66 for pension.[4]Miss Williams also brought an unlawful deduction from wages claim founded on the National Minimum Wage Regulations. She argued that during periods when she conducted a sleep-in shift for the Respondent she was entitled to receive, but did not receive, the National Minimum Wage. She had performed seven such shifts and was paid only only £30.00 per shift. Evidence and procedural issues[5]I heard witness evidence from each of the Claimants. They had not prepared any formal tribunal bundles for consideration but had brought along various documents which I have detailed in my factual findings. They had not produced any witness statements but gave oral evidence by reference to documents that they produced.[6]The Respondent is a limited company. It was originally known as Sahara Care Services Limited (SCS) but, in February 2018, it changed its name to Phoenix Care (UK) Limited. That company is now in creditors’ voluntary liquidation, winding up having been commenced on 11 October 2018. However, there is no court order which operates to prevent the Employment Tribunal proceedings continuing and so I have proceeded with the hearing of this case. Page 2 of 9[7]The Respondent entered a defence in relation to the claims, disputing that sums were owed but it did not attend the hearing or provide any written evidence in support of its position. I have exercised the discretion available to me under rule 47 of the Employment Tribunals Rules of Procedure to proceed in the Respondent’s absence.[8]Ms Williams’ claim founded on the non-payment of National Minimum Wage during “sleep-in shifts” raised issues as to the proper construction of the National Minimum Wage Regulations 2015 which had recently been considered by the Court of Appeal in the case of Royal Mencap Society v Tomlinson Blake and Another [2018] IRLR 932. Ms Williams was not aware of the Court of Appeal’s decision nor of the fact that an application for permission to appeal that decision had been made to the Supreme Court, the outcome of which was still unknown. I therefore provided her with a copy of the Court of Appeal’s decision and gave her 14 days to write in with any representations that she wished to make as to this aspect of her claim, including whether she wished to have it stayed pending determination of the application for permission to appeal by the Supreme Court. Ms Williams wrote, on 9 January, saying simply that having considered matters she still wished to pursue her claim for National Minimum Wage for the sleep-in shifts and to claim £100 for those shifts.Findings of Fact
[9]The Respondent operated a care home with teenage residents who were looked after by the Claimants. I now set out my findings in relation to the situation of each of the individual Claimants. Mr Harper[10]Mr Harper was employed by the Respondent as a manager. He did not sign a written contract of employment but was provided with a blank statement of standard terms and conditions. These record that he was intended to work 40 hours a week and that his role was registered manager. He has produced a pay slip which shows that he earned £3,750.00 per month gross and he began his employment on 4 December 2017 and was dismissed with effect from 28 February 2018.[11]During his employment, he occupied a property which was owned by Ms Khan (a director of the Respondent). He shared that property with Miss Stewart. He understood that he would occupy the property rent-free and could do so for as long as he worked for the Respondent. There was no written agreement between the Respondent and Mr Harper or Miss Stewart permitting the deduction of rent from their salary. Indeed, no rent was ever deducted from Mr Harper’s pay slips until his final pay slip in February when £2,400.00 was deducted for rent, along with the sum of £173.04 for 28 February 2018. Mr Harper did not work the 28 February, which was the last day of his notice period, having been advised by the Respondent that he was not required to do so. However, he was ready Page 3 of 9 and able to work. Mr Harper had also incurred £129.00 in expenses driving between locations because the Respondent’s business. Mr Harper subsequently successfully pursued a claim against Ms Khan in the County Court for recovery of all of the payments that were being claimed in the ET1. He has since been paid in full for these sums after taking enforcement action against Ms Khan. He understands that Ms Khan may be attempting to set the judgment aside and attended today just in case Ms Khan sought to defend the ET proceedings. He was concerned that she might otherwise, in his absence, obtain a judgment from the Tribunal which might undermine the decision that he had obtained from the County Court and successfully enforced. Miss Stewart[12]Miss Stewart was employed by the Respondent as a deputy manager between 4 December 2017 and 28 February 2018 earning £27,000.00 a year for 40 hours’ work a week. She signed a statement of terms and conditions setting out her terms of employment. Miss Stewart shared a property with Mr Harper which belonged to Ms Khan and, like him, her understanding was that she could live rent-free whilst working for the Respondent. No deductions were made for rent from her early pay slips. However, when she received her final pay slip in February 2018, it showed that the sum of £2,200.00 had been deducted for rent. Miss Williams[13]Miss Williams was offered employment by the Respondent by letter dated 22 November 2017. Contrary to the Respondent’s assertion that she was engaged on a zero hours contract, the offer letter shows that Miss Williams was engaged to work as a residential support worker working 30 hours a week and earning £10.00 an hour. She did not receive any other statement of terms and conditions. Miss Williams received pay slips which showed her employer as SCS. Her employment was terminated in February 2018 with effect from 28 February 2018 in a letter which came from SCS.[14]Miss Williams argued that her employer was Ms Khan rather than the Respondent on the basis that it was Ms Khan who had interviewed her, offered her employment and set her rates of pay. There was, however, no documentation suggesting the existence of a contract of employment between Ms Khan and Miss Williams. The only contractual documents in existence show that Miss Williams was employed by the Respondent.[15]In addition to her obligation to work 30 hours a week, Miss Williams also worked some “sleep-in” shifts for which she received £30.00 per shift. She would usually work a full daytime shift from 4.00 pm to 11.00 pm and follow this with a sleep-in shift between 11.00 pm and 8.00 am. Two members of staff were required to sleep-in at the care home because the teenage residents could not be left unsupervised overnight. Page 4 of 9[16]There were no separate bedrooms for staff who were sleeping in. There was a sofa in the living room on which one individual could sleep and there was also a pull-out bed in the staff room. Miss Williams did not have any regular duties that had to be performed overnight; she was not required to patrol the premises regularly or make records at particular intervals. However, she was expected to deal with any disturbances or anything else that arose during the period 11.00 pm to 8.00 am and to provide any support or assistance that the teenage residents required during that period. If there was no disturbance, then Miss Williams could sleep but her evidence, which I accepted, was that it was usual for her to be disturbed at least once in every shift. Sometimes she would need to intervene if the young people were upset or arguing, sometimes they would abscond and she would be waiting for a police officer to bring them home. The causes of disturbance were different on each occasion but her recollection was that of the seven sleep-in shifts she performed, she was disturbed at least once during each shift. She was told that she could record separately the hours during which she had been disturbed and be paid for them at a rate of £10.00 an hour. However, she never was paid for these hours. Mr Harper and Miss Stewart both gave evidence that Ms Khan sought to minimise the occasions when staff would be paid for being disturbed overnight.[17]Miss Williams claimed £100.00 in compensation because she believes that she was paid below the National Minimum Wage in receiving only £30.00 for the sleep-in shifts. However, I have calculated that, applying the National Minimum Wage at the time (£7.50 an hour) she would have received £67.50 per shift. If the National Minimum Wage were payable, Miss Williams suffered a shortfall of £37.50 per shift and a total shortfall of £262.50[18]Miss Williams gave evidence, which I accepted, that in the run up to February, the hours set out in her contract of employment had not been honoured: in Week 2 of January, she had been 9 hours short; in Week 3 of January, 9 hours short; in Week 1 of February, 23 hours short; in Week 2 of February, 16 hours short; in Week 3 of February, 9 hours short. A total of 66 hours amounting to £660.00. She did not consent to this reduction in hours and her contract was never varied to reduce her hours of work.[19]Miss Williams’ final salary slip shows that deductions were made as follows: £40.66 for “pension”; £300.00 for training course; and Page 5 of 9 £80.00 in relation to her final day of service.[20]Before beginning work for the Respondent, Miss Williams attended a training course. There was no prior written agreement that the cost of that training course would be deducted from her salary should her employment with the Respondent come to an end.[21]Miss Williams had booked annual leave on 28 February but there was no reason why pay should have been withheld for that day. Amongst the documents shown to me shown was a letter dated 16 August 2018 from the National Employment Savings Trust which indicated that the Respondent was being reported to the Pensions Regulator for nonpayment of pension contributions. There is therefore no evidence that any pension contributions were paid on by the Respondent and no basis therefore for the deduction of pension contributions. (It is also notable that it was only in the February pay slip that pension contributions were ever deducted.) Relevant Principles of Law[22]Section 13 of the Employment Rights Act 1996 provides as follows : “Right not to suffer unauthorised deductions. (1)An employer shall not make a deduction from wages of a worker employed by him unless— (a)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 (b)the worker has previously signified in writing his agreement or consent to the making of the deduction. (2)In this section “relevant provision”, in relation to a worker’s contract, means a provision of the contract comprised— (a)in one or more written terms of the contract of which the employer has given the worker a copy on an occasion prior to the employer making the deduction in question, or (b)in one or more terms of the contract (whether express or implied and, if express, whether oral or in writing) the existence and effect, or combined effect, of which in relation to the worker the employer has notified to the worker in writing on such an occasion. (3)Where the total amount of wages paid on any occasion by an employer to a worker employed by him is less than the total amount of the wages properly payable by him to the worker on that occasion (after deductions), the amount of the deficiency shall be treated for the purposes of this Part as a deduction made by the employer from the worker’s wages on that occasion.” Page 6 of 9[23]The National Minimum Wage Regulations 2015 provide that the National Minimum Wage is payable for all hours of time work.[24]Regulation 32 provides a gloss on the way in which the hours of work are to be calculated “(1) Time work includes hours when a worker is available, and required to be available, at or near a place of work for the purposes of working unless a worker is at home. (2) In paragraph (1), hours when a worker is ‘available’ only includes hours when the worker is awake for the purposes of working, even if a worker by arrangement sleeps at or near a place of work and the employer provides suitable facilities for sleeping”[25]The Mencap case sets out the Court of Appeal’s approach to the definition of “availability for work” under the NMW Regulations. The Court’s conclusion is that persons who “sleep-in” by arrangement and who are provided with suitable facilities for that purpose are to be regarded as “available for work” rather than engaged in “actual work” for the duration of the sleep-in shift. As such the NMW is payable during a sleep-in shift only for the hours in which work is actually performed and not for the whole shift. Conclusions Mr HarperConclusions
[26]Although it is clear that the deduction from wages complained of was made by the Respondent, it is also clear that this matter has been determined by the County Court and is therefore res judicata. For that reason, I dismiss the claim. Miss Stewart[27]It is clear that a deduction from wages in the sum of £2,200.00 was made from Miss Stewart’s final wages. There was no contractual provision or prior written agreement allowing for the deduction of this amount in rent. The deduction is therefore unlawful within the meaning of section 13(1) of the Employment Rights Act. Miss Williams[28]I have concluded that Miss Williams was employed not by Ms Khan herself but by SCS (later Phoenix). An employment relationship with SCS is consistent with the contractual documents, i.e. the offer of employment Page 7 of 9 letter which Miss Williams accepted and also with the other documents that she has produced such as pay slips. There is nothing to suggest that these documents did not reflect the reality of the situation. The mere fact that Miss Williams was interviewed by Ms Khan (a director of SCS) and that Ms Khan set rates of pay and hours of work does not establish a relationship of employment with Ms Khan in the face of clear contractual documents to the contrary.[29]Miss Williams’ contract was for 30 hours a week at £10.00 an hour. It was not a zero hours’ contract as the Respondent has at various points asserted. Miss Williams’ hours were unilaterally reduced by 66 hours in total during January and February. She did not consent to this. She was ready and available to work her contracted hours. I therefore find that the Respondent was in breach of contract in failing to provide work and remuneration for the full contracted hours. I therefore award her the sum of £660.00.[30]I also find that unlawful deductions were made from her wages in relation to the £300.00 that she was charged for a training course; the nonpayment of £80.00 in relation to her final day’s employment on 28 February and in relation to £46.66 deducted in relation to pension contributions.[31]As regards the deduction of costs of a training course, there was no contractual provision or prior written agreement allowing for the deduction of this amount. The deduction is therefore unlawful within the meaning of section 13(1) of the Employment Rights Act. Ms Williams was on annual leave on 28 February 2018 and was due to be paid for that day. The Respondent’s failure to make payment is a further unlawful deduction. The Respondent does not appear to have made payment of any pensions contributions in to a pension scheme and therefore there is no legal basis for the deduction of pension contributions.[32]As regards the claim for National Minimum Wage in respect of sleep-in shifts, Ms Williams does not invite me to stay this aspect of her case pending any decision of the Supreme Court. It is not yet clear whether the Supreme Court will grant permission to appeal in the Mencap case. Unless and until permission is granted and any appeal succeeds, I have to apply the approach set out in the Court of Appeal’s judgment. The mutual expectation was that Miss Williams would be on the premises and available to intervene and provide support to the teenage residents if required but that, if this was not necessary, she could simply sleep. She had no other regular duties to perform which would have required her to remain awake during the sleep-in shift. On that basis, I consider that Miss Williams is to be regarded as a sleeper in working a shift during which she was required to be “available for work” rather than to engage in actual work. She was therefore entitled to be paid the National Minimum Wage only during the hours when she was providing support and assistance rather than for the entirety of the shift. However, I also accept Miss Page 8 of 9 Williams evidence that she was woken at least once on each of her seven shifts. She should have received £10 per hour for the time during which she was awake and working. Although it is not possible to say with precision how many hours she worked, I consider it likely that if disturbed she would have needed to be awake and working for an average of at least an hour and a half on each occasion. I have therefore awarded her a further £105 (10.5 hours at £10 an hour).