Mr W L Bailey v Rydal Communications Ltd: 3305795/2023

EMPLOYMENT TRIBUNALS

Case No 3305795/2023

Between

Mr W L BaileyClaimant

Rydal Communications LtdRespondent

Before

Employment Judge Danvers

In person for claimant

Date 18 March 2024

JUDGMENT

[1]The Respondent’s applications for specific disclosure of the following documents are refused:a. bank statements evidencing the bank account of Mr James from which a loan was made to the Claimant;

b. copy of a partnership agreement between the Claimant and Mr James;

c. bank statements of Your Telecoms and Your EV Charger.

[2]The 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.

[3]The Respondent shall pay the Claimant the following sums: Case Number: 3305795/2023(a) A basic award of £4,282.50.

(b) A compensatory award of £31,176.61 (this is the gross figure and includes the ACAS uplift).

(c) Total: £35,459.11 JUDGMENT having been sent to the parties on 9 April 2024 and written reasons having been requested in accordance with Rule 62(3) of the Employment Tribunals Rules of Procedure 2013, the following reasons are provided:

REASONS

[1]The Claimant was employed by the Respondent from 1 May 2017 until his dismissal on 9 March 2023. He was initially employed as Sales Manager and was promoted to Group Sales Manager in around December 2022.

[2]By a claim form received at the Tribunal on 23 May 2023, the Claimant brought a claim against the Respondent for unfair dismissal. Having heard evidence and submissions on 18 – 19 January 2024, I upheld the Claimant’s complaint and found he had been unfairly dismissed. I also held that:a. No reduction to compensation will be made for the chance that the claimant would have been fairly dismissed in any event for the alleged misconduct had the Respondent followed a fair procedure.

b. The claimant did not cause or contribute to the dismissal by blameworthy conduct nor is just and equitable to reduce the basic award payable to the claimant due to any conduct on his part prior to the dismissal.

[3]An oral judgment and reasons in respect of those matters was delivered on 19 January 2024. This was followed by a written judgment dated 25 January 2024.

[4]It was agreed that there was insufficient time to deal with remedy on 19 January 2024 and Orders were made for preparation for a hearing in respect of Remedy which, was set down for 15 March 2024.

The Issues

[5]The Claimant confirmed at the outset of the hearing that he was not seeking reinstatement or reengagement.

[6]It was agreed between the parties that the basic award payable to the Claimant is: £4,282.50. It was also agreed that the Claimant had been paid notice pay.

[7]The Claimant confirmed he had not received any benefits following his dismissal.

[8]The Issues for me to determine were agreed as follows: a. If there is a compensatory award, how much should it be? The Tribunal will decide: i. What financial losses has the dismissal caused the claimant? ii. Has the claimant taken reasonable steps to replace their lost earnings? iii. If not, for what period of loss should the claimant be compensated? iv. Is there a chance that the claimant would have been fairly dismissed for some other reason (i.e.., at a later date for a reason other than that for which he was purportedly dismissed on 9 March 2023)? v. If so, should the claimant’s compensation be reduced? By how much? vi. Did the ACAS Code of Practice on Disciplinary and Grievance Procedures apply? vii. Did the respondent or the claimant unreasonably fail to comply with it? viii. If so is it just and equitable to increase or decrease any award payable to the claimant? By what proportion, up to 25%? ix. What is the applicable statutory cap (which is lower: fifty-two weeks’ gross pay or £93,878)? Application for specific disclosure and further information Application and background

[9]At the outset of the hearing, Mr Aplin made an application for specific disclosure / information and submitted the hearing needed to be postponed for the further disclosure to take place.

[10]The Claimant submitted a Schedule of Loss on 2 February 2024. A counter schedule was submitted disputing the sums claimed.

[11]The Claimant submitted a further Amended Schedule of Loss on 14 February 2024 and attached his bank accounts to demonstrate his income.

[12]In his ‘rationale’ for his Schedule of Loss the Claimant explained that between April 2023 and September 2023, he worked for his friend, Mr James, during which he was paid a consultancy fee, which the Claimant said was shown in his bank statement. The Claimant then set up a business with Mr James in September 2023, which later became a limited partnership: EV Partnership Ltd. The Claimant stated that in November 2023 the business did not do well and he borrowed some money from Mr James which he would have to repay. The Claimant averred he had not worked for or been involved with Mr James’ other business, Your Telecoms.

[13]On 11 March 2024, the Respondent made a ‘Request for further evidence’ which I treated as a request for specific disclosure and further information.

[14]The request was for the following information / disclosure:a. “Are Your Telecoms and Your EV Charger connected companies controlled by Paul James and WLB [the Claimant]?

b. If a loan was made by Paul James, we need to see evidence of the funds transferring from his personal account, not a company bank account

c. Copy of Partnership agreement is required. Paul James states that himself and WLB have been working together on a self-employed basis.

d. Why WLB didn't provide the company details of the joint venture with Paul James? Ltd company name and number should also be stated

e. Bank statements of all connected companies should be provided as evidence to assess the trading activity

f. What has WLB done to mitigate any losses of income over this period if business was slow. Were any job interviews conducted over this period

g. Why was the loan agreement not shared with Rydal prior to the 7th March 2024?”

Law

[15]Documents are disclosable if they are relevant and necessary for fairly disposing of the proceedings Canadian Imperial Bank of Commerce v Beck

[2009] IRLR 740

(CA).

[16]When deciding whether or not to make disclosure orders or orders for further information to be provided, the Tribunal must give effect to the overriding objective set out in Rule 2 of Schedule 1 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 (the ‘Tribunal Rules’): The overriding objective of these Rules is to enable Employment Tribunals to deal with cases fairly and justly. Dealing with a case fairly and justly includes, so far as practicable—(a) ensuring that the parties are on an equal footing;

(b) dealing with cases in ways which are proportionate to the complexity and importance of the issues;

(d) avoiding delay, so far as compatible with proper consideration of the issues; and

(e) saving expense…

[17]It was agreed that the Respondent was not pursuing (f) above. The Claimant confirmed there was no written partnership agreement and so I decline to Order (c) above.

[18]It was agreed that (a), (d) and (g) above were questions that Mr Aplin could put to the Claimant in cross-examination.

[19](B) above, is a request for evidence of funds transferring from Mr Paul James’ personal account to the Claimant rather than Mr James’ business bank account. I do not consider whether Mr James loaned the Claimant money from his personal rather than business account to be relevant to the matters I must determine. The issue is whether that loan should be counted as income or not. Irrespective of whether the money went from Mr James’ personal or business account, it is still open to the Respondent to argue that the loan agreement is a sham and it was in fact income that will not be repaid. In any event the Claimant accepted it came from Mr James’ business account.

[20]In respect of (e) above, the Respondent averred that bank statements should be provided as evidence of trading activity of all connected companies. Mr Aplin said that he sought disclosure of statements from Your Telecoms and Your EV Charger, but did not assert those companies were owned by the Claimant or set out a basis for suggesting that the income that the Claimant had disclosed was incorrect, or explain how those statements would provide light on the matter. In those circumstances I do not consider that there is a basis for considering that the information therein would provide information relevant or necessary to disposing of the proceedings and in my view the request amounted to a fishing expedition.

[21]Further, the application was made on 10 March 2024, 5 days before this hearing and on Mr Aplin’s account, if granted, would lead to a postponement. Therefore, I do not consider granting it would be in the interests of the overriding objective to deal with matters fairly and justly, including in such a way as to save expense, be proportionate to the issues and avoid unnecessary delay. Legal Framework – remedy for unfair dismissal

[22]The provisions in relation to compensation for unfair dismissal are set out at s.119- 126 ERA 1996. S.119 provides for payment of a basic award.

[23]S.123 relates to a compensatory award and provides as follows:(1) Subject to the provisions of this section and sections 124, 124A and 126, the amount of the compensatory award shall be such amount as the tribunal considers just and equitable in all the circumstances having regard to the loss sustained by the complainant in consequence of the dismissal in so far as that loss is attributable to action taken by the employer.

(2) The loss referred to in subsection (1) shall be taken to include— (a) any expenses reasonably incurred by the complainant in consequence of the dismissal, and (b) subject to subsection (3), loss of any benefit which he might reasonably be expected to have had but for the dismissal.

(3) The loss referred to in subsection (1) shall be taken to include in respect of any loss of— (a) any entitlement or potential entitlement to a payment on account of dismissal by reason of redundancy (whether in pursuance of Part XI or otherwise), or (b) any expectation of such a payment, only the loss referable to the amount (if any) by which the amount of that payment would have exceeded the amount of a basic award (apart from any reduction under section 122) in respect of the same dismissal.

(4) In ascertaining the loss referred to in subsection (1) the tribunal shall apply the same rule concerning the duty of a person to mitigate his loss as applies to damages recoverable under the common law of England and Wales or (as the case may be) Scotland. … (6) Where the tribunal finds that the dismissal was to any extent caused or contributed to by any action of the complainant, it shall reduce the amount of the compensatory award by such proportion as it considers just and equitable having regard to that finding. 24. s.124 provides that the amount of compensatory award shall not exceed whichever is the lower of 52 weeks pay or £93,878, which was the statutory cap in place at the time of the Claimant’s dismissal.

[25]Mr Aplin’s argued that loss of earnings for the compensatory award should be calculated by reference to the average net earnings of the 12 weeks prior to dismissal, in the same way as redundancy payments. While the statutory redundancy pay and basic award are calculated in the same way, I do not agree that there is any position in law which requires the Tribunal to calculate loss of earnings by reference to only the last 12 weeks of average earnings.

[26]As to the impact of any failure to comply with the Acas Code of Practice on Disciplinary and grievance procedures, pursuant to s.207A Trade Union and Labour Relations (Consolidation) Act 1992: (2) If, in the case of proceedings to which this section applies, it appears to the employment tribunal that—(a) the claim to which the proceedings relate concerns a matter to which a relevant Code of Practice applies,

(b) the employer has failed to comply with that Code in relation to that matter, and

(c) that failure was unreasonable, the employment tribunal may, if it considers it just and equitable in all the circumstances to do so, increase any award it makes to the employee by no more than 25%. (3) If, in the case of proceedings to which this section applies, it appears to the employment tribunal that— (a) the claim to which the proceedings relate concerns a matter to which a relevant Code of Practice applies, (b) the employee has failed to comply with that Code in relation to that matter, and (c) that failure was unreasonable, the employment tribunal may, if it considers it just and equitable in all the circumstances to do so, reduce any award it makes to the employee by no more than 25%.

[27]The Claimant is required to take reasonable steps to mitigate the loss he suffers as a result of the unlawful dismissal. He is expected to search for other work and will not recover losses beyond a date by which the Tribunal concludes he ought reasonably to have been able to find new employment at a similar rate of pay.

[28]The burden is on the Respondent to prove a failure to mitigate (Fyfe v Scientific Furnishing Ltd

[1989] IRLR 331

). If the Claimant has failed to take a reasonable step, the Respondent must show that any such failure was unreasonable (Wright v Silverline Car Caledonia Ltd

UKEATS/0008/16

). The question of reasonableness is to be determined by the Tribunal itself; the Claimant’s perception is only one of the factors to be taken into account. Facts relevant to remedy

[29]The Claimant was dismissed for gross misconduct on 9 March 2023. By a separate judgment I found this to be unfair, that he would not have been dismissed fairly in any event, and that there was no contributory fault. January 2023 earnings

[30]The Claimant provided figures for the net earnings he received from the Respondent for the period March 2022 – January 2023. He said these were derived from ‘wages’ payments received into his bank account from the Respondent.

[31]Mr Aplin only challenged that the figure given for January 2023 was correct and referred to an extract from the Respondent’s pay system indicating the Claimant was paid £2,936.68 as against the £3,293.55 claimed by the Claimant. The Claimant in evidence referred to his bank statement for January 2023, which included two payments from the Respondent with the reference ‘wages’ adding up to the total he claimed. Mr Aplin suggested one of the payments was for expenses. The Claimant denied that he received expense payments.

[32]The Respondent did not provide the Claimant’s payslips or any documentary evidence of what the second payment related to in order to support its position that it was not for wages, and did not provide a clear explanation as to why such documents had not been produced.

[33]In those circumstances I find that both payments received in January 2023 were in respect of earnings and that month the Claimant earned £3,293.55, which was, in any event, lower than some other months which had not been challenged. Post dismissal earnings

[34]Following his dismissal, the Claimant started working on a consultancy basis for his friend and former colleague, Paul James, who had two companies trading as Your EV Chargers and Your Telecoms. I accept the Claimant’s evidence that he worked with Mr James under the EV Chargers trading name and that they split profit evenly from deals that they made via that trading name and that the payments he received from EV Chargers were paid into his bank account.

[35]I accept the Claimant’s evidence that the reason he proceeded on this basis (as opposed to applying for other, higher paid, jobs) was due to genuine concerns that, in light of the reason given by the Respondent for his dismissal at the time and his age (56 years), he would struggle to get another job at the same level of earnings as he received from the Respondent.

[36]In September 2023 Mr James and the Claimant set up a limited company EV Partnership Ltd.

[37]In terms of the income received between March and October 2023, the figures were agreed between the parties, save for April 2023 and October 2023. In evidence, the Claimant accepted that he had made an error in relation to April and the sum of £807 should also be included in the income for that month (total £3,031).

[38]In October 2023, the Claimant received £822 from Your Telecoms which he had not included in income. He explained that on this occasion Mr James had loaned him some money, which he then repaid in the subsequent months by giving Mr James a greater share of commission than normal. Accordingly, he agreed that this was effectively earnings, albeit received early, and should be included in the income for October 2023 (total £4,896).

[39]The Claimant and Mr James gave evidence that the company did not earn anything during November 2023 – January 2024. The Claimant in his evidence (which incorporated by reference, his Schedule of Loss and explanatory document) explained this was due to some deals falling through.

[40]The Claimant and Mr James say that as a result, the Claimant was struggling financially and Mr James agreed to lend him up to £8,000 which was interest free for 12 months and thereafter would incur interest of 5% per month. In the event, the Claimant was given £3,500 in December 2023 and £4,200 in January 2024, both paid from Mr James’ Your Telecoms business account.

[41]The Respondent has suggested that this was a ruse and that in fact the sums paid in December 2023 and January 2024 were earnings that the Claimant received and would not have to pay back. When I asked him for the basis of this assertion, Mr Aplin said it was because Mr James and the Claimant were very close and could be in cahoots and because the loan agreement that had been produced was more similar to a promissory note rather than a proper loan agreement.

[42]I accept the Claimant’s evidence that he received no earnings during November 2023 and January 2024 due to a temporary downturn in business and the payments he received from Mr James were genuinely a loan as supported by the loan agreement signed by both on 30 October 2023.

[43]I accept this is not a formal legalistic document, but it seems to me in-keeping with what one might expect where a friend has agreed to lend another friend money. I found Mr James and the Claimant to be credible witnesses both at the remedy hearing and in the liability hearing and consider there was no proper basis for the Respondent to make the assertion that the Claimant had fabricated the arrangement or sought to mislead the Tribunal as alleged. Conclusions Issue (i): What financial losses has the dismissal caused the claimant? Net pay ‘but for’ the dismissal

Conclusions

[44]I accept that the most accurate way to assess the likely losses that the Claimant has incurred is by reference to his average earnings between March 2022 and February 2023. The Claimant’s earnings fluctuated throughout the year, and I see no good reason to limit the period of earnings to take an average from to the last three months prior to his dismissal as suggested by the Respondent. As set out above, I do not accept Mr Aplin’s suggestion that this is required in law and do not accept his suggestion that the last three months were a better indicator of earnings going forward. That assertion was not supported by any evidence.

[45]The Claimant’s relevant net earnings were as follows: Mar-22 £2,590.00 Apr-22 £3,483.70 May-22 £3,510.40 Jun-22 £3,404.85 Jul-22 £3,969.72 Aug-22 £4,834.23 Sep-22 £4,773.75 Oct-22 £3,165.06 Nov-22 £3,335.42 Dec-22 £3,371.35 Jan-23 £3,293.55 Feb-23 £2,931.79 Total: £42,663.82

[46]The figure for February 2023 was not included in the Claimant’s Schedule of Loss but was included in the Respondent’s Counter-Schedule of Loss and that figure corresponded with the income set out in the Claimant’s bank statement and therefore has been included above.

[47]I find that if the Claimant had continued to be employed by the Respondent his earnings in March 2023 to February 2024, would have been equivalent to that set out above (an average of £3,555.32 per month net).

[48]In addition, the parties agree that the Claimant received £110.07 pension contributions per month in his employment with the Respondent.

[49]This amounts to a total average monthly figure for net salary plus pension contributions of: £3,665.39 52 weeks’ gross pay with the Respondent

[50]The Claimant calculated his gross pay by obtaining the figure for his gross pay from HMRC for the tax year April 2022-2023 which he said averaged at £5,207.94. The Respondent averred it was lower: £4,458 based on the last three months of employment. However, they have failed to provide any payslips to evidence gross pay over a longer period. I note that using the tax year April 2022-2023 would exclude the earnings for March 2022, which were lower than some other years. Accordingly, I consider the Claimant’s gross figure to be slightly higher than he would have been likely to receive based on an average.

[51]Taking net earnings average of £3,555.32 and grossing that up for the tax year 2022/23 provides a figure of approximately £4,870 per month. I have therefore adopted that figure as the Claimant’s average gross monthly earnings for March 2022 to February 2023. This means 52 weeks’ gross salary would have been £58,440. Issue (ii): Has the claimant taken reasonable steps to replace his lost earnings? (iii) If not, for what period of loss should the claimant be compensated?

[52]The Claimant started working very soon after his dismissal, earning £2,590 in the remainder of March 2023 and the sums set out below thereafter. The Respondent accepts the Claimant took reasonable steps to mitigate his loss until October 2023. However, they contend that when business took a downturn between November 2023 and January 2024, the Claimant should have sought other work and mitigated his losses further.

[53]I conclude that the Claimant continuing to work on his business, notwithstanding the unexpected downturn was reasonable. I accept his evidence that new businesses do fluctuate in income in the first year and that he had to ‘ride it out’. I also accept his evidence that he would have been highly unlikely to be able to secure a new job that would have had higher average earnings than he received via his consultancy / business given that he had been dismissed for gross misconduct from his former employment and did not have a judgment which found that dismissal to be unfair until January 2024.

[54]The Claimant has claimed future loss of earnings on the basis it will take him a further 12 months to equalise his earnings. I do not accept this is likely to be the case. The Claimant is an impressive individual with a good CV. As of January 2024, he had a judgment confirming he was dismissed unfairly from his employment with the Respondent, which reduces the impact of a dismissal for gross misconduct. I am of the view that in those circumstances he is likely to be able to either obtain employment with an equivalent income to that which he received from the Respondent or build up his own business to a similar level within a further 6 months.

[55]Figures for the Claimant’s income in February 2024 from his business have not been put before me. However, given I have accepted his evidence that the blip in the business earnings in November 2023 - January 2024 was temporary and therefore it was reasonable for him not to look for a new job, I consider it is most likely his earnings going forward would have been the average of those earned in the 7 full months of work preceding the downturn: Apr-23 £3,031 May-23 £2,223 Jun-23 £2,779 Jul-23 £2,223 Aug-23 £2,223 Sep-23 £2,003 Oct-23 £4,896 Total £19,378

[56]This amounts to an average of: £2,768.29 month. (iv) Is there a chance that the claimant would have been fairly dismissed for some other reason (i.e., at a later date for a reason other than that for which he was purportedly dismissed on 9 March 2023)? (v) If so, should the claimant’s compensation be reduced? By how much?

[57]The respondent did not aver the Claimant would have been dismissed for another reason so I have not considered this further. Issues: (vi) Did the ACAS Code of Practice on Disciplinary and Grievance Procedures apply? (vii) Did the respondent or the claimant unreasonably fail to comply with it? (viii) If so is it just and equitable to increase or decrease any award payable to the claimant? By what proportion, up to 25%?

[58]I accept the ACAS Code of practice on disciplinary and grievance procedures (‘the Code’) applied as the case involved a disciplinary situation.

[59]The Claimant averred the Respondent failed to comply with it and referred me to the Code and my previous findings. The Respondent said it did not agree there was such a failing.

[60]When determining liability, I found that the Respondent had:a. carried out a one-sided investigation designed to try to find evidence to support a case against the Claimant;

b. failed to advise the Claimant of the specific allegations for which he was later dismissed with any clarity prior to the disciplinary hearing;

c. failed to explain the allegations in the disciplinary meeting with sufficient detail to allow the Claimant to respond to them and set out his case properly;

d. run a process whereby the decision makers in respect of the Claimant’s dismissal had not been present at the disciplinary meeting and relied on self-evidently incomplete notes of that meeting that had not been checked or commented on by the Claimant when making their decision.

[61]In those circumstances I find the Respondent failed to comply with the following requirements of the Code:a. to provide sufficient information to an employee about the allegations to enable them to prepare properly (para 9 of the Code);

b. to explain the complaint properly in the meeting or allow the Claimant to set out his case (para 12 of the Code);

c. to deal with issues fairly and carry out necessary investigations (para 4 of the Code).

[62]I find such failure was unreasonable and significant in this case and therefore consider it is just and equitable increase the award to the Claimant by 25%.

[63]The Respondent did not seek a reduction in compensation on the basis of a breach of the Code by the Claimant and nor would I have found it just or equitable to make any such reduction. I accept that the Claimant had reasonably reached the conclusion that he could have no confidence that an appeal process would have been conducted fairly given the way in which the rest of the disciplinary process was conducted. Issue (ix): What is the applicable statutory cap (which is lower: fifty-two weeks’ gross pay or £93,878)?

[64]The statutory cap of 52 week’s gross pay: £58,440 applies.

Conclusion

[65]In light of the conclusions set out above, I have concluded the Claimant is entitled to an award calculated as follows: Basic Award £4,282.50 Total Basic Award £4,282.50 Compensatory award Loss of earnings Pay per Start End Months month Sub total Period 1 09/03/2023 31/01/2024 10.7835616 £3,665.39 £39,525.94 Less sums received period 1 09/03/2023

31/01/2024

£21,968.00 Sub-total £17,557.94 Pay per Start End Months month Sub total Period 2 01/02/2024 15/09/2024 7.4630137 £3,665.39 £27,354.84 Less sums received period 2 01/02/2024 15/09/2024 7.4630137 £2,768.29 £20,659.75 Sub-total £6,695.09 Total loss of earnings £24,253.03 Loss of statutory rights. In light of the Claimant’s length of service I conclude a just sum to compensate him for his loss of £500 statutory rights is as follows: Sub-total net compensatory award: £24,753.03 Acas uplift (25%) £6,188.26 Net compensatory award including uplift £30,941.29 Total Gross Compensatory Award* £31,176.61 *Calculated on the basis of £30,000 being paid tax free and the remainder taxed at 20%. GRAND TOTAL: £35,459.11