Mr N Gjini v MBS Stoneworks Ltd and Stone Cut Ltd: 3307801/2023
JUDGMENT
[1]The complaint of unauthorised deductions from wages is well-founded. The respondent made an unauthorised deduction from the claimant's wages in the period 1 May 2023 to 22 May 2023.[2]The respondent shall pay the claimant £1359.00 which is the gross sum deducted. The claimant is responsible for the payment of any tax or National Insurance.[3]The complaint of wrongful dismissal in relation to notice pay is well-founded.[4]The respondent shall pay the claimant £5436.00 being his statutory entitlement to notice pay. This figure has been calculated using gross pay to reflect the likelihood that the claimant will have to pay tax on it as Post Employment Notice Pay.[5]Under section 163 Employment Rights Act 1996 it is determined that the claimant is entitled to a redundancy payment of £12,457.50[6]The respondents are joint and severally liable for the total sum of £19,252.50.[7]The complaint of unfair dismissal is dismissed upon withdrawal. Approved by:REASONS
[1]The claimant issued a claim against MBS Stoneworks Ltd on 9 July 2023. A response was submitted on 19 November 2023 which in summary simply stated that the company was no longer trading. The case was therefore listed for a final hearing on 11 April 2024. This was postponed due to a lack of judicial resources and re-listed on 27 June 2024.[2]On 27 June 2024 the case came before Employment Judge Mathews. The respondent MBS Stoneworks did not attend. Having heard submissions from the claimant, Employment Judge Mathews directed that Stone Cut Ltd be added as a respondent on the basis that it appeared that there had been a Transfer of Undertakings from the first respondent to the second respondent.[3]The order adding Stone Cut Ltd was dated 5 August 2024. It was sent to Stone Cut Ltd on 5 August to their registered office Unit 5, 220 Uxbridge Road, Southall, England UB1 3DZ. According to information on Companies House, this is the registered address for Stone Cut since 27 May 2023. A copy of the claim form and response pack was sent at the same time.[4]No response was received and therefore on 28 January 2025, again to the registered address, Stone Cut Ltd were sent notice as to their participation pursuant to Rule 22 of the Employment Tribunal Rules of Procedure 2024.[5]The matter was then listed for a final hearing on 1 April 2025, notice of which was sent to both respondents at their registered office address.[6]Neither respondent attended that hearing, and no explanation was provided as to the non-attendance. The tribunal did not have any telephone contact number for either party to make any further enquiries but noted that the first respondent appeared to have ceased trading, and the second respondent had not presented a response. The tribunal was satisfied that notice of the hearing had been properly sent, and the hearing therefore proceeded in the absence of both respondents.[7]The claimant did not produce any witness statements or additional documents. English was not his first language, and he stated he had not understood this requirement. I considered adjourning for this to be obtained, but the claimant said he did not seek to produce anything else and relied on his ET1. I therefore took his ET1 as his statement and he answered any additional questions as required under oath. I also heard submissions from his lay representative.[8]The evidence of the claimant at that hearing was that the day after his dismissal Stone Cut Ltd moved into the premises and began to operate the same business as MBS Stoneworks. This business was undertaken with the same contractors and the same customers. The claimant confirmed that the previous company secretary of the first respondent continued to work for Stone Cut Ltd.[9]The claimant’s employment ended on 22 May 2023. From Companies House information, the tribunal noted that Stone Cut Ltd registered office changed to that of MBS Stoneworks shortly after the dismissal on 27 May 2023.[10]On the claimant's evidence and in the absence of anything to the contrary by the respondents, the tribunal concluded that there has been a relevant transfer of undertaking. This was also supported by the claimant’s ET1 and his account that on going to the premises after presenting his ET1 he was told to withdraw his claim, and he would be paid. It appeared therefore that the second respondent was aware of the claim and assumed some responsibility in that they indicated they would pay him.[11]The tribunal was satisfied that there had been a transfer to another person namely Stone Cut Ltd. The Tribunal was satisfied that an economic entity transferred and that it retained its identify after transfer. Stone Cut Ltd moved into the same premises as MBS Stoneworks, retained the same contractors and customers and carried out the same business. The entity is situated in the United Kingdom.[12]The Tribunal was satisfied that the first respondent had received notice of the hearing and had not attended. The tribunal were satisfied that the second respondent had been properly served with the proceedings and had provided no response and then had not attended the hearing. Therefore, there was no evidence before the tribunal to rebut the claimant’s evidence, and the tribunal was satisfied on the claimant’s evidence. The tribunal then went on to look at each complaint brought by the claimant as discussed below. The Law TUPEThe Law
[13]Transfer of Undertakings (Protection of Employment) Regulations 2006 SI 2006/246 (‘TUPE’) provides protection for employees where there is a ‘relevant transfer’ under Reg 3. For this purpose, Reg 3(1)(a) and (b) defines two types of relevant transfer: the first is the transfer of an undertaking, business or part of an undertaking or business situated in the UK involving the transfer of an economic entity; and the second is a ‘service provision change’.[14]In relation to Reg 3(1)(a) there are four questions that must be answered in the affirmative in order for there to be a ‘business transfer’ under that provision: 1. was there a transfer ‘to another person’? 2. did an ‘economic entity’ transfer? 3. did the economic entity ‘retain its identity’ after the transfer? And 4. was that entity ‘situated immediately before the transfer in the United Kingdom’?[15]In relation to legal transfer or merger, Foreningen af Arbejdsledere i Danmark v Daddy's Dance Hall A/S (324/86) supports that there does not need to be a direct relationship between transferee and transferer. There, IC’s lease of a restaurant/bar came to an end and the landlord concluded a new lease with DDH. As a result, DDH took over the business previously run by IC. The ECJ held that those employed by IC at the restaurant/bar transferred under the Directive to DDH, rendering IC the ‘transferor’ and DDH the ‘transferee’, even though there was no direct relationship between them.[16]In Cheesman and ors v R Brewer Contracts Ltd the EAT set out the following guidelines for tribunals when determining the question of whether there is an ‘economic entity’ in existence.[17]Firstly, there needs to be a stable economic entity, which is an organised grouping of persons and of assets enabling (or facilitating) the exercise of an economic activity that pursues a specific objective. There will not be such an entity if its activity is limited to performing one specific works contract. It has been held that the reference to ‘one specific works contract’ is to be restricted to a contract for building works.[18]Secondly, in order to be such an undertaking, it must be sufficiently structured and autonomous but will not necessarily have significant tangible or intangible assets.[19]In certain sectors, such as cleaning and surveillance, the assets are often reduced to their most basic and the activity is essentially based on manpower and an organised grouping of wage-earners who are specifically and permanently assigned to a common task may, in the absence of other factors of production, amount to an economic entity.[20]Finally, an activity is not of itself an entity; the identity of an entity emerges from other factors, such as its workforce, management staff, the way in which its work is organised, its operating methods and, where appropriate, the operational resources available to it.[21]In Spijkers v Gebroeders Benedik Abattoir CV and anor 1986 2 CMLR 296, ECJ, the ECJ stated: ‘The decisive criterion for establishing the existence of a transfer within the meaning of the Directive is whether the entity in question retains its identity.’ In its view, ‘it is necessary to consider whether, having regard to all the facts characterising the transaction, the business was disposed of as a going concern’. This ‘will be apparent from the fact that its operation is actually being continued or has been taken over by the new employer with the same economic or similar activity’. Furthermore, in order to decide whether such retention of identity has occurred, ‘it is necessary to take account of all the factual circumstances of the transaction in question’.[22]This would include, the type of business or undertaking, the transfer or otherwise of tangible assets such as buildings and stocks, the value of intangible assets at the date of transfer, whether the majority of the staff are taken over by the new employer, the transfer or otherwise of customers, the degree of similarity of activities before and after the transfer, and the duration of any interruption in these activities. However, the ECJ confirmed that these are merely factors in the overall assessment and ‘cannot therefore be considered in isolation’. Notice pay[23]Section 86 Employment Rights Act 1996 states: (1)The notice required to be given by an employer to terminate the contract of employment of a person who has been continuously employed for one month or more— (a)is not less than one week’s notice if his period of continuous employment is less than two years, (b)is not less than one week’s notice for each year of continuous employment if his period of continuous employment is two years or more but less than twelve years, and (c)is not less than twelve weeks’ notice if his period of continuous employment is twelve years or more. Redundancy[24]Section 135 Employment Rights Act 1996 states: (1)An employer shall pay a redundancy payment to any employee of his if the employee— (a)is dismissed by the employer by reason of redundancy, or (b)is eligible for a redundancy payment by reason of being laid off or kept on shorttime. (2)Subsection (1) has effect subject to the following provisions of this Part (including, in particular, sections 140 to 144, 149 to 152, 155 to 161 and 164). Section 162 Employment Rights Act 1996 states: (1)The amount of a redundancy payment shall be calculated by— (a)determining the period, ending with the relevant date, during which the employee has been continuously employed, (b)reckoning backwards from the end of that period the number of years of employment falling within that period, and (c)allowing the appropriate amount for each of those years of employment. (2)In subsection (1)(c) “the appropriate amount” means— (a)one and a half weeks’ pay for a year of employment in which the employee was not below the age of forty-one, (b)one week’s pay for a year of employment (not within paragraph (a)) in which he was not below the age of twenty-two, and (c)half a week’s pay for each year of employment not within paragraph (a) or (b). (3)Where twenty years of employment have been reckoned under subsection (1), no account shall be taken under that subsection of any year of employment earlier than those twenty years. Unauthorised deduction from wages[25]Section 13 of the Employment Rights Act 1996 states that an employer shall not make a deduction from wages of a worker employed by him unless the deduction is authorised.[26]Subsection 3 of that Act states that 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 wages properly payable by the worker on those occasions (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 workers wage on that occasion.Conclusions
[27]By way of ET 1 dated 9 July 2023, the claimant brings complaints of unfair dismissal, notice pay and also a redundancy payment. Mr Gjini had a lengthy period of service from June 2004 until his dismissal with immediate effect on 22 May 2023. He is now aged 59 years.[28]In exploring the complaints today, the claimant’s complaints are for his notice pay, redundancy pay and unauthorised deduction from wages in respect of his final month of pay. The claimant confirmed that he does not seek to pursue an unfair dismissal complaint but rather seeks his unpaid wages, notice pay and redundancy payment. The unfair dismissal complaint is therefore dismissed upon withdrawal.[29]In respect of the unauthorised deduction from the claimant’s wages, this relates to the period 1 May 2023 to 22 May 2023 for which the claimant stated he was not paid. The claimant’s gross salary per month is £1,963. I calculate therefore that the gross salary per week is £453.00 (£1,963 x 12 gives me a total figure of £23,556 divided by 52 weeks in the year equals £453 per week). The period 1 May 2023 to 22 May 2023 is a three week period. Three weeks x the weekly sum of £453 gives a total of £1,359.00[30]Separately there is a complaint in relation to a failure to pay notice pay. The claimant did not provide any details of a contractual right to notice pay, and I have therefore calculated the claim on the basis of statutory notice pay as outlined above. The claimant was employed for a period of 19 years. You are entitled to one week’s notice for each continuous year of employment but that is up to a maximum of 12 weeks and so the maximum I can make is 12 weeks at £453 which is a total of £5,436.[31]There is then the complaint in relation to redundancy payment. The claimant was 39 years old when he started at the respondent’s employment. He is therefore entitled to two years redundancy payment at a rate of one weeks pay. For the remainder of the years, he was over the age of 41 and therefore is entitled to one and a half weeks pay for those remaining years which is a total of 17 years. Therefore he is entitled to two weeks pay at £453 per week which totals £906. He is then 17 weeks at 1.5 x pay, which I calculate to be £679.50 gives a total of £11,551.50. Adding those two sums together gives £12,457.50 as the award for redundancy.[32]In total therefore that is a figure of £19,252.00 and I issue a judgment for that amount. Addendum[33]The Judgment issued in this matter was done so on a joint and several basis against both respondents. On reflection, given that I found there was a relevant transfer of undertaking, I consider that the second respondent was the employer as the transferee. On that basis I consider that the Judgment should have been against them alone. I have separately written to the parties to indicate that on my own motion I am considering re-consideration of that decision, namely to remove the words joint and several from the Judgment and issue this against the second respondent alone. Parties have separately been directed to respond to this.[34]That is on the basis that once regulation 4(2) of the TUPE Regulations has operated to transfer rights and duties to a transferee (Stone Cut), I consider it is not possible for the transferring employee to bring a claim against the transferor (MBS) in respect of them.[35]This is supported by the Court of Session in Stirling District Council v Allan and ors 1995 ICR 1082, Ct Sess (Inner House) which confirms that the effect of regulation 4(2) is that the rights and liabilities transfer to the transferee such that the transferor is no longer liable. Although a decision of the Court of Session does not strictly bind the lower courts in England and Wales, the decision in the Allan case was followed by the EAT in Secretary of State for Employment v Mapstone and ors EAT 1060/94, which noted that the Court of Session’s decision was ‘manifestly right’ and ‘whether or not that is binding upon us we should not dream of departing from such authority unless we were satisfied that it is wrong’. Approved by: RECONSIDERATION JUDGMENTConclusions
[1]It is in the interests of justice to vary the Judgment made on 1 April 2025.[2]The Judgment is varied such that it will be against the first respondent only on the basis that there was no relevant transfer of employment to the second respondent. The Judgment of 1 April 2025 is enforceable against the first respondent alone. Approved by: