Mrs H Kim v True World Foods (UK) Ltd: 3306127/2023
EMPLOYMENT TRIBUNALS
Case No 3306127/2023
Between
Mrs H KimClaimantTrue World Foods (UK) LtdRespondent
Before
Employment Judge YoungMr Panev (husband (instructed by the Claimant, lay representative)) for claimantMr S Park (instructed by Solicitor) for respondentDate 14 February 2024
REASONS
[1]The Claimant was employed by the Respondent an importer and distributor of premium Japanese consumable products, as a Sale Representative from 16 November 2015 until her resignation with notice on 31 January 2023. The Claimant contacted ACAS for early conciliation on 3 April 2023. The ACAS early conciliation certificate was issued on 15 May 2023. The Claimant presented her claim for unlawful deduction of wages on 11 June 2023. Hearing[2]The matter was heard in 3 hours. The Claimant was represented by her husband Mr Stefan Panev who was a school teacher. Mr Panev had no legal training. The Respondent was represented by Mr Sungjin Park a solicitor. I received an agreed bundle of 78 pages. The Respondent also provided late disclosure in the form of 21 pages by 2 emails, the first dated 13 February 2023 at 19:27 and the second email dated 14 February 2024 at 08:55. The 13 February 2023 at 19:27 email was labelled A1-A16. Mr Panev did not object to the inclusion of these additional documents. The second email dated 14 February 2024 at 08:55 was labelled B1-B5. Mr Panev said that he had not had sufficient time to consider the documents and that he had only received those documents that morning. I asked the Claimant if she had seen the emails before at B1-B5, the Claimant accepted that she had. In those circumstances, I considered that there was no prejudice to the Claimant regarding the late disclosure and the documents were relevant to the issues to be determined and permitted their admission.[3]I heard evidence from the Claimant who did not have a witness statement and so with agreement by the parties her ET1 stood as her witness evidence. I also received a written but unsigned witness statement from Mr Mitchell Drijver, who gave evidence on behalf of the Claimant. I received 2 witness statements from the Respondent, Mr Bongjin Jung, Managing Director of the Respondent and Mr Beng Hooi Chan, Operations Manager, both of whom I also heard oral evidence from.
Findings of fact
[4]Only findings of fact relevant to the issues, and those necessary for the Tribunal to determine, have been referred to in this judgment. It has not been necessary, and neither would it be proportionate, to determine each and every fact in dispute. The findings of fact are made on a balance of probabilities. All numbers in square bracket are page references to the bundle and additional documents.[5]The Claimant was employed by the Respondent as a Sales Representative beginning on 16 November 2015 under a contract of employment dated 20 November 2015 (‘Employment Contract’). The contract of employment was signed by the Claimant on 20 November 2015. Although the contract of employment states the employer as Sun Ocean Ltd. This was a former name of the Respondent.[6]Clause 6 of the Employment Contract states that ‘The company is authorised to deduct any sums due to it from your salary’. [39][7]The Claimant was a home worker when she worked for the Respondent. The Respondent had a home working policy which applied to the Claimant. The Home working policy said at clause 4.1.1 (b) that the company will provide a business telephone line [48]. The Claimant accepted in evidence that the phone line belonged to the company.[8]In 2021, it was agreed between the parties that the Claimant would buy what was then a brand-new phone, Samsung Galaxy S21+, directly from the manufacturer and in turn the Respondent would reimburse the phone cost to the Claimant subject to the limit of £800. Mr Chan’s evidence was part of that agreement was for the Respondent to pay for the phone for the Claimant to use during her employment and for it to be returned back to the Respondent on termination of the Claimant’s employment because the phone belonged to the Respondent. However, this arrangement was disputed by the Claimant. The Respondent had an asset register of mobile phones and had the Claimant’s phone on that list [58]. The Claimant gave evidence that she paid an extra £400 on top of the £800 reimbursed to her and that is why she believed that the phone was hers. It was not disputed by the Claimant that the Respondent reimbursed the Claimant for the phone to the tune of £800.00. I find that the Respondent would not have reimbursed the Claimant for the phone unless the phone belonged to them. Coupled with the fact that the Claimant’s phone was on the Respondent’s asset register, I find the phone belonged to the Respondent.[9]The Claimant resigned by email dated 29 December 2022. The resignation was accepted by the Respondent the next day on 30 December 2022. By email dated 31 December 2022, Mr Chan, the Head of Sales and Operations, emailed the Claimant with a request to return the company work phone [B2-B3]. The Claimant did not respond to this email as she was unwell. I accept the Claimant’s evidence on this point. Mr Chan sent another email dated 3 January 2023 offering to have the mobile phone amongst other things collected from the Claimant’s home if necessary [B1]. Mr Chan received no response from the Claimant. However, the Claimant did respond to a request to fill in a form. Yet, at no point did the Claimant ever challenge Mr Chan’s email regarding the return of the phone because it belonged to her. I find that the Claimant was well enough to fill in a form she could have responded to Mr Chan’s email about the mobile phone. I find that the Claimant did not challenge Mr Chan’s email because she knew that the phone belonged to the Respondent. This was further supported by the Claimant’s attempt to challenge the proprietorship of the phone by saying that it wasn’t true that there was no additional arrangement for the Claimant to keep the phone. The Claimant would not need to challenge this if the phone belonged to her and she believed that it did.[10]The Respondent disputed that it was never agreed with the Claimant that the Galaxy S21+ was her phone to keep beyond her employment. However, the Claimant did not give any evidence of such an arrangement. I accept Mr Jung & Mr Chan’s evidence that there was no arrangement at all. Mr Drijver gave evidence that he was allowed to keep his phone but accepted also that he had this arrangement because his phone number and the phone belonged to him and that he had an allowance in relation to the standing charge for the phone line. He knew nothing of the arrangements between the Claimant and the Respondent. I find that Mr Drijver had a different arrangement, and his circumstances were not similar to the Claimant’s. The Claimant did not dispute that she did not return the mobile phone on termination of her employment, but she now had a different phone number to the one she had at work. I find that the Claimant did not return the mobile phone.[11]Clause 6 of the Claimant’s contract of employment states under renumeration “Your entitlement to salary accrues on a daily basis payable monthly in arrears on the last day of the month….Payment will be made by direct credit transfer to your nominated account” [39].[12]On 31 January 2023, the Respondent deducted £800 from the Claimant’s final monthly salary [65].
The Relevant Law
[13]The general prohibition on deductions from wages is set out at section 13 Employment Rights Act 1996 (“ERA 1996”) which provides, as far as is relevant: “(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.” 7. Under section 13(3) ERA 1996 any shortfall of the wages properly payable to the worker, amounts to a deduction, unless there is an exclusion by statute. 8. By section 27 ERA 1996, ‘wages’ means any sums payable to the worker in connection with his employment and covers any fee, bonus, commission, holiday pay or other emolument referable to the employment. 9. For a payment to fall within the definition of wages properly payable, there must be some legal entitlement to the sum in question (New Century Cleaning Company Limited v Church [2000] IRLR 27, CA). To determine whether any sum is properly payable to an employee as part of an unlawful deduction from wages claim, the Tribunal can resolve any dispute as to the meaning of the contract relied on (Agarwal v Cardiff University and anor [2018] EWCA Civ 2084). 10. A claim under section 23 ERA 1996 for unauthorised deductions from wages must be submitted to the Tribunal before the end of the period of three months beginning with the date of payment of the wages from which the deduction was made. Analysis & conclusions[14]The contract of employment at pages 37-43 did apply to the Claimant. Mr Panev sought to argue in submissions that the contract of employment did not apply to the Claimant because the employer was Sun Ocean Ltd and that the Claimant had many promotions since she signed the contract of employment. However, at page 61-64 of the bundle, Mr Panev submitted a defence note that does not mention this argument at all. Mr Park submitted that the Claimant was TUPE transferred to the Respondent as some point before 2022. Mr Park came back after I was ready to give judgment to correct himself and say that Sun Ocean was a name change and that he checked this with companies’ house. I had checked myself with Companies House to verify the point. I noted that there was a name change in 2016 from Sun Ocean Ltd to True World Foods (UK) Ltd. In those circumstances, as a matter of law the Respondent can rely upon the contract as applying to the Claimant. That being the case, clause 6 of the Employment Contract “The company is authorised to deduct any sums due to it from your salary” did authorise the Respondent to make a deduction from the Claimant’s salary in relation to sums owed to them. The sum was owed to them of £800 because the Claimant did not return the phone which belonged to the Respondent.[15]The Claimant’s wages for the month of January 2023 were properly payable to her under her contract of employment. The amount of £800 was a deduction because it meant that the amount of the Claimant’s monthly salary fell short of the amount properly payable. However, the deduction was an authorized deduction because the arrangement of reimbursement of the phone coupled with clause 6 of the Employment Contract “The company is authorised to deduct any sums due to it from your salary” fell within section 13(1)(a) ERA 1996.[16]I was not convinced by Mr Park’s submission that there was no deduction under s13(3) ERA 1996, because the amount properly payable to the Claimant did not include £800 because the Claimant was never entitled to it because of clause 6 “The company is authorised to deduct any sums due to it from your salary”. As already determined, the amount properly payable to the Claimant was her monthly salary and that £800.00 was a deduction that was authorised by clause 6 of the contract of employment “The company is authorised to deduct any sums due to it from your salary” and the reimbursement arrangement under section 13(2) (b) ERA 1996. The Claimant offered no evidence to contradict the efficacy of the contract of employment or the clause relied upon. I found that neither Mr Jung or Mr Chang made any agreement with the Claimant. For those reasons the Claimant’s claim fails and is dismissed. COST JUDGMENT 1. The Claimant is ordered to pay the Respondent £172.00 in costs. 2. The Claimant must pay the costs no later than 28 days from the date of judgment. JUDGMENT been issued by Employment Judge Young and written reasons having been requested by the Claimant on 7 October 2024 in accordance with Rule 62(3) of the Employment Tribunals Rules of Procedure 2013, the following reasons are provided:
Introduction
[1]The Claimant presented her claim for wages on 11 June 2023. The claim was heard on 14 February 2024 and was found to be not well founded and dismissed. Judgment was sent to the parties on 8 March 2024 and written reasons following a request by the Respondent was sent to the parties on 4 March 2024. On 27 March 2024 the Respondent submitted a costs application with a schedule of costs amounting to £5,750. In that application, the Respondent requested a 2 hour hearing to determine the costs application. By email dated 9 May 2024, the Employment Tribunal requested dates to avoid between July- December 2024.[2]The Claimant’s husband responded to that request on 10 May 2024 to state that the Claimant would not be able to attend between 1 July-30 September 2024.[3]The Employment Tribunal sent the notice of hearing dated 24 May 2024 to the parties listing the hearing for 4 October 2024. By email dated 10 September 2024, the Claimant’s husband wrote to the Employment Tribunal that the Claimant could not attend the hearing on 4 October due to family issues abroad and that the Claimant would be available on any other date after 10 November 2024. By letter dated 20 September 2024 the Claimant was asked to provide evidence that she would be out of the country on 4 October 2024. The Claimant did not provide any evidence that she was out of the country. On 27 September 2024 the Respondent provided an updated costs schedule amounting to £11,100. The Claimant applied for a postponement on 29 September 2024 on the grounds that the cost schedule had doubled and she needed to retain a lawyer. The Claimant’s application for a postponement was refused that the application was made less than 7 days before the cost hearing and there were no exceptional circumstances to grant the application. Hearing[4]I had before me the Respondent’s application, appendices containing documents that were already contained in the bundle except the judgment and the written reasons (which included those documents) and case law as referred to in the Respondent’s application. I also had the parties and Employment Tribunal’s correspondence regarding the Claimant’s application for postponements.[5]The basis of the Respondent’s written application are 2 findings of fact made by the Employment Tribunal that firstly the Claimant offered no evidence to challenge the Respondent’s evidence that the mobile phone which was the basis of the £800 deduction was the property of the Respondent, and secondly that the Claimant knew that the mobile phone did not belong to her as she challenged the Respondent’s position that there was no other arrangement than what was set out in the Respondent’s home working policy which stated that the mobile phones used by employees but paid for by the Respondent (up to £800) were the property of the Respondent.[6]As the Respondent had raised the issue of the Claimant’s means in the response to the Claimant’s postponement application on 29 September application, I indicated to Mr Spector that it was the Claimant’s choice whether she wanted to provide evidence of her means.[7]I considered the Respondent’s written submissions and heard oral submissions from Mr Park which are in summary that the grounds of rule 76(1) (a) and (b) are inextricably linked. The Claimant brought the claim out of spite and that the Claimant although had limited English did have representation from her husband whose English was of a sufficient level. The Claimant did not argue that the deductions were not lawful but that the phone belonged to her and that is why the deductions were not lawful and that is why the claim had no reasonable prospects of success from the start. Furthermore the Claimant’s behaviour regarding her applications for postponement must also be considered, in particular the Claimant’s now changed reasons for postponement. The Claimant had 4 months to seek legal help. Mr Park explained that the Respondent’s costs were fixed by Keystone Law providing a fixed amount to be paid in respect of the costs’ application. I was referred to the case law provided as part of the appendices. Mr Park referred me to authorities of E.T Marler Ltd v Robertson [1974] ICR 72, Barnsley Metropolitan Borough Council v Anna Poornamma Yerrakalva [2011] EWCA Civ 1255 and Opalkova v Acquire Care Ltd (2021) UKEAT/0056/21/RN (EA-2020-000345-RN). Mr Park said that E.T Marler was relevant at paragraph e, to the issue of his submission that the Claimant was brought out of spite and to harass the Respondent.[8]Mr Spector was not legally qualified but appeared before me as the brother in law of the Claimant and a friend of the Claimant who had a law degree. However, Mr Spector’s current role was as a managing director of his own company.[9]Mr Spector argued on behalf of the Claimant that Employment Tribunals are not to be a place where costs are awarded on a regular basis otherwise that would scare claimants from bringing claims where Respondent are represented by large silver circle firms and firms like Mr Park’s law firm. The Claimant’s English was limited and that she and her husband did not know what they were doing. Mistakes were made in applying for an adjournment without providing evidence. Mr Spector explained that the Claimant’s mother had Alzheimer’s which had gotten worse hence the application for a postponement on 9 September but got better which is why the application on 29 September was for a different reason. But that there was no spite in bringing the claim, the Claimant was angry and upset but she had a genuine belief that the deduction was unjustified. There was a big falling out, because she put in £400 of her own money towards the phone. The Claimant believed that the same arrangement applied to her, she was stressed and the reason she did not mention the arrangement was because of her English. The cases referred to by Mr Park prove the case for the Claimant. Yerrkalva is distinguished on the facts. In respect of ET Marler the Claimant is not a managing director she worked for company for 7 years. It is extraordinary the size of the fees. Mr Spector had tried to find lawyers to represent the Claimant for this hearing, the quotes he received were approximately between £8-9K and £5-6 K.
The Law
[10]The rules regarding the circumstances where in costs are awarded are contained at rules 76-84 of the Employment Tribunal Rules of Procedure (‘ETR’). The relevant parts of Rule 76 ETR state: “76.— When a costs order or a preparation time order may or shall be made(1) A Tribunal may make a costs order or a preparation time order, and shall consider whether to do so, where it considers that— (a) a party (or that party's representative) has acted vexatiously, abusively, disruptively or otherwise unreasonably in either the bringing of the proceedings (or part) or the way that the proceedings (or part) have been conducted; (b) any claim or response had no reasonable prospect of success (c) a hearing has been postponed or adjourned on the application of a party made less than 7 days before the date on which the relevant hearing begins.(2) A Tribunal may also make such an order where a party has been in breach of any order or practice direction or where a hearing has been postponed or adjourned on the application of a party.”[11]When determining an application for costs, the Employment Tribunal should apply a three stage approach:(i) Is the relevant jurisdictional threshold in rule 76 met?(ii) If so, should the ET exercise its discretion in favour of making a costs order?(iii) If so, what sum of costs should the ET order?[12]For the purposes of rule 76(1)(a) the word “unreasonable” is to be given its ordinary English meaning and is not to be interpreted as meaning something similar to vexatious (Dyer v Secretary of State for Employment UKEAT/0183/83).[13]The Tribunal should consider the nature, gravity and effect of the unreasonable etc conduct, but it is appropriate to avoid a formulaic approach and have regard to the totality of the relevant conduct. As Mummery LJ explained in Yerrakalva v Barnsley MBC [2012] ICR 420, CA at paragraph 41: “The vital point in exercising the discretion to order costs is to look at the whole picture of what happened in the case and to ask whether there has been unreasonable conduct by the claimant in bringing and conducting the case and, in doing so, to identify the conduct, what was unreasonable about it and what effects it had […]”[14]It should, however, be noted that the Tribunal is not confined to making an award limited to those costs caused by the unreasonable conduct. As Mummery LJ confirmed in McPherson v BNP Paribas (London Branch) [2004] ICR 1398, CA:[15]Where the argument is that the party has acted “vexatiously, abusively, disruptively or otherwise unreasonably” then the only conduct that is taken into account is either the bringing of the proceedings or the way that the litigation has been conducted. It is possible to establish this ground even where the paying party has been successful in the litigation. The precise details of the conduct in question will be relevant both to(a) whether the criteria in Rule 76(1)(a) are met and/or(b) whether, in all the circumstances, the Tribunal should exercise its discretion to make a costs order.[16]In circumstances where the Tribunal finds that the jurisdictional threshold in rule 76 is met, the Tribunal retains a broad discretion as to whether to make a costs order and the amount of any costs awarded. Whilst there is no closed list of factors relevant to the exercise of the Tribunal’s discretion, the following factors are relevant in this particular case:[17]Firstly that costs orders are intended to be compensatory, not punitive (Lodwick v Southwark LBC [2004] ICR 884, CA). Therefore, the extent of any causal link between the unreasonable etc conduct and the costs incurred will normally be a relevant discretionary factor (Yerrakalva), albeit there is no requirement to establish a causal link between the unreasonable conduct and the costs incurred before an order can be made (McPherson).[18]Secondly, whether a party is legally represented may be a relevant factor. unrepresented litigant may be afforded more latitude than a party who has the benefit of professional legal advice and representation (AQ Ltd v Holden [2012] IRLR 648, EAT).[19]Thirdly, if costs are awarded, there is no requirement to limit costs to the amount the paying party can afford (Arrowsmith v Nottingham Trent University [2012] ICR 159, EAT). Analysis & Conclusions[20]I considered the oral submissions from Mr Park and Mr Spector, which I have summarised above and the case law provided and referred to above.[21]I do not consider that the Claimant’s claim had no prospects of success. The Claimant’s claim form challenged the deduction on the basis knowledge of the deduction. It was a matter of evidence to determine whether the Claimant had notice of the deduction at all.[22]However, I do consider that Claimant’s conduct in the proceedings was unreasonable, for the Claimant to argue that there was an arrangement that the mobile phone belonged to her for the first time at the hearing when she knew that that the phone belonged to the Respondent was not reasonable. There was no evidence provided by the Claimant in this respect. It required the Respondent to consider the argument and for Mr Bongjin Jung to address it in his evidence when the Claimant knew that the argument had no basis in fact. The threshold has been met, and I exercise my discretion to make an award for costs on the basis of the Claimant’s unreasonable conduct in the litigation.[23]Costs are the exception not the rule, and there was no evidence that the Claimant’s bringing of the claim was out of spite. It is clear from the claim form that the Claimant misunderstood the situation believing that a reimbursement of £800 meant that she did not have to pay the £800 back as opposed to the £800 being for the cost of the phone. The Claimant’s English is limited and whilst the Claimant was represented by her husband whose English was excellent, he is not a lawyer and has no legal qualifications at all. The Claimant’s applications for postponements were not helpful as they provided no evidence and did not explain the situation regarding the Claimant’s mother but as the Respondent’s costs were fixed there was no additional costs of the Respondent dealing with the Claimant’s applications in any event.[24]The costs of the Respondent were wholly disproportionate to the case, which was worth £800. The Respondent did not need on any analysis to instruct solicitors at all to defend the case. The Respondent’s managing director Mr Bongjin Jung and operations director Mr Beng Hooi Chan may not have English as a first language either but could have asked for interpreters if they were not confident about defending the case themselves. It was not a case where the Respondent needed legal representation for the hearing.[25]However, it was not unreasonable for the Respondent to have made an application for costs but it really should have been the Respondent making an application for a time preparation order not a lawyer. The Claimant provided no evidence of her means and did not ask for her means to be taken into account. Taking this into account that application should really have been for a time preparation order. The rate for a time preparation order is £43 for the relevant time. I assess that the preparation for the application and costs and for the full merits hearing is 4 hours. I award £172.00 in costs payable within 28 days of the judgment sent to the parties.