Mr L Kusy v The Clock House Restaurant Ltd: 3311723/2021

EMPLOYMENT TRIBUNALS

Case No 3311723/2021

Between

Mr L KusyClaimant

The Clock House Restaurant LtdRespondent

Before

Employment Judge George

Ms A Jervis (instructed by advocate) for respondent

Date 27 September 2023

JUDGMENT

[1]The unauthorised deduction from wages claim is well-founded to the extent that it is based on a failure to pay furlough pay in full.

[2]The respondent shall pay to the claimant £4681.62 gross, to be paid after deduction of tax and national insurance contributions.

[3]Save as set out in para.1 & 2 of this judgment, the tribunal has no jurisdiction to consider the unauthorised deduction claim.

[4]The claimant was not dismissed.

[5]The unfair dismissal claim is not well founded and is dismissed.

[6]The claimant was not wrongfully dismissed.

REASONS

[1]Following a period of conciliation which started on 12 April 2021 and ended on 24 May 2021 the claimant presented a claim form on 20 June 2021 by which he complained of constructive unfair dismissal, notice pay and unpaid wages up arising out of his employment as a chef de rang in the restaurant run by the respondent. That employment started on 9 October 2018 and ended, on his account, when he resigned on one month’s notice on 31 May 2021 and then brought that termination of employment forward by resigning during his notice period with immediate effect on 8 June 2021. The respondent defends the claim. The claim was case managed at a hearing on 19 July 2022 which had originally been listed to be the full merits hearing and was converted to a preliminary hearing as explained by Judge Saward in the record of hearing at page 38.

[2]I heard from three witnesses: the claimant, Iain McArthur - director and Serina Drake - managing director. All witnesses had prepared written witness statements which had been exchanged in advance; they adopted them in evidence and were cross-examined upon them. I had the benefit of a file of relevant documents which ran to 172 pages at the start of the hearing. Following the respondent’s application, referred to below, an additional eight pages were added. These were numbered pages 193 to 200. An additional 20 pages were not added following an unsuccessful application by the respondent to adduce them in evidence.

[3]Two preliminary matters were raised by the parties on which I made decisions before hearing evidence for reasons which were given orally at the time and are not now repeated. They may be requested in writing within 14 days of the date on which this reserved judgment is sent to the parties.

[4]The two matters were as follows:a. I concluded that the claimant does not need leave to amend his claim in order to advance the particular complaint of breach of contract that is at paragraph 30.2.2 of the list of issues on page 38 (para.8 below) because it is in the nature of a permissible clarification of the claim that was already brought. In the alternative, if I was wrong about that, I would have granted the application to amend on the basis that there would be more prejudice to the claimant in being unable to advance this claim than to the respondent having to defend it.

b. The second additional matter was a contested application by the respondent to rely on additional documents at pages 1 and 20 of an additional file of documents that were disclosed after 10.00 am on the morning of Day 1. I refused the application for reasons given orally at the time and which are not now repeated.

[5]Those 20 pages were in addition to 8 pages of late disclosure which were added to the joint file of documents for the final hearing by consent, as I say above.

[6]The significance of the national minimum wage dispute and the correct approach to that evidence was something that emerged during the course of the hearing. The claim does not expressly include a complaint of failure to pay national minimum wage under the National Minimum Wage Act 1997 (hereafter the NMW Act), although the respondent confirmed that they had understood from the schedule of loss that this was how the claimant argued his claim. The NMW issue arises because it is argued in support of the claimant’s argument that he was not paid for overtime that he should at least have been paid NMW in accordance with an implied term to that effect. The representatives agreed, when it was put to them during their submissions that, by reason of reg. 24(3)(b) National Minimum Wage Regulations 2015, the reference period in respect of the claimant is 1 November to 31 October. It thus emerged during the course of closing submissions that the payslips for the reference period were not in the bundle.

[7]Therefore submissions could not be concluded on that issue during the oral hearing and I made directions for the respondent to disclose payslips of the claimant from December 2018 to April 2019 inclusive no later than 24 May 2023. I directed that, if the parties wish to make any further written submissions about the relevance of those documents, they should be sent to each other and the tribunal by 30 May 2023. Any necessary response should be sent to the other party by 6 June 2023. This was done and I took account of the additional written submissions from each side.

The Issues

[8]The issues are replicated below for ease of reference. “29. The claimant claims:29.1 Constructive unfair dismissal;

29.2 Unauthorised deductions from wages.

29.3 Notice pay 30. The parties agree that the claimant was employed by the respondent as a Chef de Rang from 9 October 2018 until 7 June 2022 which is the effective date of termination of the claimant’s employment. The agreed issues are: Constructive Unfair Dismissal

30.1 Was the claimant dismissed?

30.2 To the extent this is in dispute, did the respondent do the following things: 30.2.1. Unreasonably require the claimant to work overtime without pay/fail to pay the claimant for overtime worked? 30.2.2 Pay the claimant less service charge than paid to other employees? 30.2.3 Unilaterally change the terms and conditions of the claimant’s employment to include service charge in his basic pay?

30.3 Did that breach the written terms of the Claimant’s contract? Was the breach a fundamental one? The Tribunal will need to decide whether any breach was so serious that the claimant was entitled to treat the contract as at an end.

30.4 Did that breach the implied term of trust and confidence? The Tribunal will need to decide:30.4.1 whether the respondent behaved in a way that was calculated or likely to destroy or seriously damage the trust and confidence between the claimant and the respondent; and

30.4.2 whether it had reasonable and proper cause for doing so.

30.5 Did the claimant resign in response to the breach? The Tribunal will need to decide whether the breach of contract was a reason for the claimant’s resignation.

30.6 Did the claimant affirm the contract before resigning? The Tribunal will need to decide whether the claimant’s words or actions showed that they chose to keep the contract alive even after the breach.

30.7 If the claimant was dismissed, what was the reason or principal reason for dismissal – i.e. what was the reason for the breach of contract?

30.8 Was it a potentially fair reason?

30.9 If the claimant was unfairly dismissed, what is the appropriate remedy?

30.10 Would it be just and equitable to reduce any award because of any blameworthy or culpable conduct on the claimant’s part before the dismissal, and if so to what extent? Unauthorised deductions The claimant’s claim for unauthorised deductions from his wages turns on the same facts as his claim for constructive unfair dismissal. The issues are:

30.11 Did the respondent make unauthorised deductions from the claimant’s wages and if so, how much was deducted? Notice pay The claimant’s claim for notice pay is contingent upon him establishing repudiatory breach of contract by the respondent. It turns on the same facts. Subject to the claim for constructive dismissal being made out, the issues are:

30.12 What was the claimant’s notice period?

30.13 Was the claimant paid for that notice period?” Law applicable to the issues in dispute The Coronavirus Job Retention Scheme

[9]The Coronavirus Act 2020 Functions of HMRC Direction (15 April 2020) established the rules of the Coronavirus Job Retention Scheme (CJRS) which provided for payments to be made to employers in respect of costs of employment for furloughed employees.

[10]Under para.6.1 the terms of the CJRS an employee is a furloughed employee ifa. The employee has been instructed by the employer to cease all work in relation to their employment,

b. The period for which the employee has ceased (or will have ceased) all work is at lease 21 calendar days, and

c. The reason for the instruction to cease work is coronavirus.

[11]However, by para.6.7, an employee has only been instructed by the employer to cease all work if they have agreed in writing that that is the case.

[12]The claimant argues that he was a ‘fixed rate employee’ within the definition of para.7.6 of the CJRS and points to the reference salary for such an employee under para.7.7 being “the amount payable to the employee in the latest salary period ending on or before 19 March 2020 (but disregarding anything which is not regular salary or wages as described in paragraph 7.3)”.

[13]Paragraph 7.3 provides that, in calculating the employee’s reference salary, no account is to be taken of anything which is not regular salary or wages. Regular is further explained in para.7.4 to be so much of an employee’s salary or wages as “(a) cannot vary according to any of the matters described in paragraph 7.5 except where the variation is the amount arises as described in paragraph 7.4(d), (b) is not condition on any matter, (c) is not a benefit of any other kind, and (d) arises from a legally enforceable agreement, understanding, scheme, transaction or series of transactions.”

[14]The reference in para.7.4(a) to paragraph 7.5 is to salary or wages which vary with the performance of the business, the contribution of the employee, the performance of the employee and “any similar considerations or otherwise payable at the discretion of the employer or any other person (such as a gratuity).”

[15]Pension contributions paid on gross earnings which could be recovered under the CJRS were recoverable as the scheme was originally designed up to a maximum of 3% of gross earnings.

[16]The CJRS was to last until 31 May 2020 in the first instance. It finally ended on 30 September 2021 although the rules of the scheme changed over time – particularly as they affected the amount of wages paid to furloughed employees that employers could claim back from the government. The claimant complains that he was not paid the wages payable during that period of furlough, because of the miscalculation of furlough pay during March 2020 to June 2020 (full furlough), July 2020 to December 2020 (when he claims he was on flexible furlough which was introduced in July 2020) and January to 2021 May 2021 (when he was on flexible furlough) – see the additional 32 pages of payslips disclosed after oral evidence concluded.

[17]It was stated by the government at the time the CJRS came into force that it did not affect existing employment law rights and obligations as between employer and employee. What are the terms of the contract?

[18]The task to be carried out by the employment judge when determining the nature of the agreement between the parties is to consider what the party’s intentions were from the available evidence whether that be the relevant documents, evidence of oral conversations or conduct: Carmichael v National Power Plc. [2000] I.R.L.R 43 HL.

[19]Without wanting to over-simplify the Supreme Court authority of Autoclenz Limited v Belcher [2010] I.R.L.R 70 UKSC, it seems to me that the question that Autoclenz invites me to consider first of all is ‘what is the true nature of the agreement between the parties?’ focussing on the actual legal obligations of the parties (if any) and examining all relevant evidence including the written terms in the context of the whole agreement, the parties’ conduct in practice and their expectations of each other. What was agreed might be what is written down but it is not necessarily entirely included in written documents.

[20]The terms of a contract of employment, like other contracts, may be express or implied, may be incorporated into the contract with reference to another source (such as a handbook or collective agreement) or may be statutory terms which are taken to be included into the contract of employment by reason of Statute. Express terms may be oral or written and are the terms which the parties have spelled out in so many words and agreed. Implied terms are terms that they are taken to have agreed because they are too obvious to need recording, to give ‘business efficacy’ to the contract or because they are custom and practice in an industry: are reasonable, certain and notorious. Express terms take precedence over implied terms and cannot contradict them: a term cannot be implied into a contract which would contradict an express term agreed between the parties.

[21]Terms which are commonly implied into a contract of employment include the term of mutual trust and confidence (see below) and the implied term that the claimant would not be paid less than the National Minimum Wage (hereafter NMW) for the hours worked

[22]Some contracts contain an “entire contract” clause which provides that the entire contractual terms are found within the written document. As explained in Autoclenz however, when determining the agreement between the parties the employment tribunal has to scrutinise the reality of the agreement between the parties and satisfy itself that the written agreement does indeed represent the whole of what was agreed between them.

[23]Contractual terms may be changed: the employer and employee may mutually agree to vary the terms and that consent may be express or may be implied from conduct – such as continuing to work after a change has been imposed without protest. However, the tribunal is wary of finding that a unilateral change imposed by one party has been effective to change a term of the contract particularly in respect of changes which do not have immediate effect. Where one part seeks to rely upon conduct as showing consent to change, “The fundamental question is this: is the employee’s conduct, by continuing to work, only referable to his having accepted the new terms imposed by the employer?” Solectron Scotland Ltd v Roper and ors

2004 IRLR 4

, EAT. Constructive Dismissal

[24]Section 95(1)(c) of the Employment Rights Act 1996 makes it clear that a dismissal includes the situation where an employee terminates the contract of employment (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer’s conduct. This is commonly referred to as constructive dismissal and the leading authority is Western Excavating (ECC) Ltd v Sharp

[1978] ICR 221

CA. If the employer is guilty of conduct which goes to the root of the contract or which shows that he no longer intended to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance of it. The employer’s conduct must be the cause of the employee’s resignation and thus the cause of the termination of the employment relationship. If there is more than one reason why the employee resigned then the tribunal must consider whether the employer’s behaviour played a part in the employee’s resignation.

[25]In the present case the claimant argues that he was unfairly dismissed because he resigned because of a breach of the implied term of mutual trust and confidence; a term implied into every contract of employment. The question of whether there has been such a breach falls to be determined by the authoritative guidance given in the case of Malik v BCCI

[1998] AC 20

HL. The term imposes an obligation that the employer shall not, without reasonable and proper cause, conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.

[26]One question for me is whether, viewed objectively, the facts found by me amount to conduct on the part of the respondent which is in breach of the implied term as explained in Malik v BCCI. Whether the employment tribunal considers the employer’s actions to have been reasonable or unreasonable can only be a tool to be used to help to decide whether those actions amounted to conduct which was calculated or likely to destroy or seriously damage the relationship of trust and confidence and for which there was no reasonable and proper cause.

[27]If that conduct is a significant breach going to the root of the contract of employment (applying the Western Excavating v Sharp test) and the employee accepted that breach by resigning then he was constructively dismissed. The conduct may consist of a series of acts or incidents which cumulatively amount to a repudiatory breach of the implied term of mutual trust and confidence (see Lewis v Motorworld Garages Ltd

[1986] ICR 157

[28]Once he has notice of the breach the employee has to decide whether to accept the breach, resign and claim constructive dismissal or to affirm the contract. Any affirmation must be clear and unequivocal but can be express or implied. In Cockram v Air Products plc

[2014] ICR 1065

, EAT where Langstaff P discussed affirmation in paragraphs 11 to 25. Mere delay in resigning is unlikely to amount to affirmation by itself delay can be taken as evidence that the employee has affirmed the contract and decided to carry on working under notwithstanding the breach. Langstaff P also gave the example of a situation where an employee has called for further performance of the contract and that might lead to affirmation being implied from that conduct if it is consistent only with the continued existence of the contract. Cockram involved a situation where the first instance finding of fact was that the employee had given significantly more than his contractual notice period solely for his own financial reasons. The claimant’s counsel had argued that such “post-resignation affirmation” could not be relevant but Langstaff P saw no reason in principle why that should be the case, “Where he gives notice in excess of the notice required by his contract, he is offering additional performance of the contract to that which is required by it. That additional performance may be consistent only with affirmation of the contract. It is a question of fact and degree whether in such circumstances his conduct is properly to be regarded as affirmation of the contract.” (

[2014] ICR 1065

@ para.25)

[29]An authoritative explanation of the last straw doctrine is found in the judgment of Dyson LJ in Omilaju v Waltham Forest London BC

CA. Omilaju is often referred to for the description by Dyson LJ of what the nature of the last straw act must be in order to enable the claimant to resign and consider him or herself to have been dismissed. “The quality that the final straw must have is that it should be an act in a series whose cumulative effect is to amount to a breach of the implied term. I do not use the phrase "an act in a series" in a precise or technical sense. The act does not have to be of the same character as the earlier acts. Its essential quality is that, when taken in conjunction with the earlier acts on which the employee relies, it amounts to a breach of the implied term of trust and confidence. It must contribute something to that breach, although what it adds may be relatively insignificant.” (paragraph 19)

[30]The doctrine was more recently considered by the Court of Appeal in Kaur v Leeds Teaching Hospital

[2018] IRLR 833

CA. Having discussed the development of the authorities in this area, Underhill LJ explained that “there are two theoretically distinct legal effects to which the 'last straw' label can be applied. The first is where the legal significance of the final act in the series is that the employer's conduct had not previously crossed the Malik threshold: in such a case the breaking of the camel's back consists in the repudiation of the contract. In the second situation, the employer's conduct has already crossed that threshold at an earlier stage, but the employee has soldiered on until the later act which triggers his resignation: in this case, by contrast, the breaking of the camel's back consists in the employee's decision to accept, the legal significance of the last straw being that it revives his or her right to do so. I have thought it right to spell out this theoretical distinction because Lewis J does so in his judgment in Addenbrooke which I discuss below; but I am bound to say that I do not think that it is of practical significance in the usual case. If the tribunal considers the employer's conduct as a whole to have been repudiatory and the final act to have been part of that conduct (applying the Omilaju test), it should not normally matter whether it had crossed the Malik threshold at some earlier stage: even if it had, and the employee affirmed the contract by not resigning at that point, the effect of the final act is to revive his or her right to do so.” (paragraph 45)

[31]Lord Justice Underhill then gave the following guidance, “In the normal case where an employee claims to have been constructively dismissed it is sufficient for a tribunal to ask itself the following questions:(1) What was the most recent act (or omission) on the part of the employer which the employee says caused, or triggered, his or her resignation?

(2) Has he or she affirmed the contract since that act?

(3) If not, was that act (or omission) by itself a repudiatory breach of contract?

(4) If not, was it nevertheless a part (applying the approach explained in Omilaju) of a course of conduct comprising several acts and omissions which, viewed cumulatively, amounted to a (repudiatory)6 breach of the Malik term? (If it was, there is no need for any separate consideration of a possible previous affirmation, for the reason given at the end of para [45], above.)

(5) Did the employee resign in response (or partly in response) to that breach? None of those questions is conceptually problematic, though of course answering them in the circumstances of a particular case may not be easy.” (paragraph 45)

[32]Once the tribunal has decided that there was a dismissal they must consider whether it was fair or unfair in accordance with s.98 ERA 1996. “Section 98 Employment Rights Act 1996

(1) In determining for the purposes of this Part whether the dismissal of an employee is fair or unfair, it is for the employer to show- (a) the reason (or, if more than one, the principal reason) for the dismissal, and (b) that it is either a reason falling within subsection (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held.

(2) A reason falls within this subsection if it- (a) Relates to the capability or qualifications of the employee for performing work of the kind which he was employed by the employer to do, (b) Relates to the conduct of the employee, (c) Is that the employee was redundant, or (d) ...

(3) …

(4) Where the employer has fulfilled the requirements of subsection (1), the determination of the question whether the dismissal was fair or unfair (having regard to the reason shown by the employer)- (a) depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee, and (b) shall be determined in accordance with equity and the substantial merits of the case.”

[33]If the tribunal finds that the dismissal was unfair and has to go on to consider whether there should be deductions from compensation then, on the authority of Polkey v A E Dayton Services Limited

[1987] IRLR 503

, compensation may be reduced on the basis that had the employer taken the appropriate procedural steps which they did not take then that would not have affected the outcome. Unauthorised deduction from wages

[34]The right not to suffer unauthorised deductions from wages is found in s.13 ERA which provides that an employer shall not make a deduction from wages of a worker unless it is required or authorised to be made by statute or a relevant provision of the worker’s contract or the worker has previously signified in writing his agreement or consent to the making of the deduction.

[35]Section 13(3) defines a deduction as being where the total amount of wages paid on a particular occasion are less than the total amount of those which are properly payable. The amount of any deficiency is a deduction. I am therefore required to consider what wages would be payable from time to time under the contract of employment.

[36]By reason of the Deduction from Wages (Limitation) Regulations 2014, the tribunal may not consider so much of the claim as relates to a deduction where the date of payment of wages was more than two years before presentation of the claim: s.23(4A) ERA. The claimant only claim from May 2019 as a result.

[37]Furthermore, the tribunal shall not consider a complaint under s.23 ERA of a breach of s.13 unless it is presented before the end of the period of three months beginning with the date of payment of the wages from which the deduction was made. Where a complaint is brought in respect of a series of deductions, time starts to run from the last deduction or payment in the series: s.23(3) ERA. If a deduction has been repaid, that does not affect whether or when the deduction was made.

[38]Whether there is a series of deductions is a question of fact, requiring a sufficient factual and temporal link between the underpayments. As Langstaff J said in Bear Scotland Ltd v Fulton

[2015] ICR 221

EAT (paras 79 – 80) series involves, “two principal matters in the present context, which is that of a series through time. These are first a sufficient similarity of subject matter, such that each event is factually linked with the next in the same way as it is linked with its predecessor; and second, since such events might either be stand-alone events of the same general type, or linked together in a series, a sufficient frequency of repetition. This requires both a sufficient factual and a sufficient temporal, link”

[39]Langstaff P went on to say that he considered that, in context of a three month limitation period, parliament did not intend that jurisdiction could be regained because a later non-payment occurring more than three months later than the first could be characterised as having such similar features that it formed part of the same series. A break of three months between deductions therefore would mean that deductions could not be regarded as a series within the meaning of s.23(3).

[40]In Group 4 Nightspeed Ltd v Gilbert

[1997] IRLR 398

, EAT, the EAT held that there was a series of deductions where claims were made for unpaid commission due in respect of different clients, rejecting the employer’s argument that this meant they were factually dissimilar. They were all claims for unpaid commission under the worker’s contract. National Minimum Wages

[41]Where, in a complaint under s.23(1)(a) ERA that there has been an unauthorised deduction from wages, any question arises as to whether the worker has been paid less than the national minimum wage (the NMW), it shall be presumed that they were remunerated at a rate less than the NMW unless the contrary is established. This has the effect of placing the burden of proving that the worker was paid at least the NMW on the employer. Another matter which can assist the claimant is reg.59 NMW regs 2015 which requires the employer to keep records.

[42]In order to determine whether an individual has been paid at least the NMW, it is necessary to find their average hourly rate of pay over a pay reference period. The pay reference period is a month, or a shorter period if the worker is paid by reference to a period shorter than a month. The average rate of pay over the pay reference period is then calculated by dividing the total gross NMW pay by the total number of hours worked: reg.7 of the NMW regs 2015.

[43]The National Minimum Wage Regulations 2015 set out detailed provisions about which elements of pay and deductions from pay should be taken into account when calculating gross pay for NMW purposes (NMW pay). Reg.10 provides that the following do not form part of a worker’s remuneration for NMW purposes, “The following payments and benefits in kind do not form part of a worker’s remuneration— (a) … (m) payments paid by the employer to the worker representing amounts paid by customers by way of a service charge, tip, gratuity or cover charge; (n) ...”

[44]Work is “salaried hours work” if it is done under the worker’s contract and (reg.21 NMW Regs 2015):a. Under the contract the worker is entitled to be paid an annual salary or an annual salary and one or both of a performance bonus and a salary premium;

b. They are paid in respect of a number of hours in a year whether or not those are specified in their contract;

c. They are not entitled to payment other than by annual salary or annual salary plus performance bonus and/or salary premium.

d. They are paid in installments of at least a week and nor more than a month;

e. This applies whether or not the work works hours in excess of the basic hours and whether or not they are entitled to be paid for those hours.

[45]The hours of salaried hours work in a pay reference period are determined in accordance with re.22 NMW Regs 2015. By reg.22(3), where (as in the present case) the pay reference period is a month, the hours of salaried hours work are the basic hours divided by 12. Those basic hours are to be ascertained in accordance with the worker’s contract (reg.22(5)). If the worker works additional hours in excess of the basic hours and is not entitled to be paid more than annual salary for those additional hours, then regs.24 to 28 apply. A worker works more than the basic hours in a calculation year if all of the following hours added together are more than the basic hours in a calculation year:a. Hours which are part of the basic hours;

b. Hours when the worker was absent from work which form part of the basic hours;

c. Hours worked in the calculation year which do not form part of the basic hours in the calculation year in respect of which the worker had not entitlement to a payment other than annual salary;

d. Hours treated as worked under reg.27 which covers training and travelling and which is not relevant to the present case.

[46]A calculation year is defined in reg.24 NMW Reg 2015 to be, for present purposes, a year beginning on the commencement of the claimant’s employment.

[47]This means in the present case that in order for me to decide whether or not the claimant was paid NMW, I have to make a finding about how many hours he actually worked (adding together the hours set out in reg. 26 set out in para.45 above) in the course of a year starting with 1 November. That would include hours worked for which he was not entitled to be paid in excess of his annual salary.

[48]It is argued on behalf of the claimant that reg.10 (m) mean that sums paid by way of a service charge should be excluded from calculation of NMW. I accept that as a method of calculation NMW. However, the fact that the service charge becomes the property of the troncmaster before distribution means that it is not payment by the employer and should also be excluded from the calculation for that reason: Revenue and Customs Commissioners v Annabel’s (Berkeley Square) Ltd

[2009] ICR 1123

(CA).

Findings of Fact

[49]I make my findings of fact on the balance of probabilities taking into account all of the evidence, both documentary and oral, which was admitted at the hearing. I do not set out in this judgement all of the evidence which I heard but only my principle findings of fact, those necessary to enable me to reach conclusions on the remaining issues. Where it was necessary to resolve conflicting factual accounts I have done so by making a judgment about the credibility or otherwise of the witnesses I have heard based upon their overall consistency and the consistency of accounts given on different occasions when set against contemporaneous documents where they exist.

[50]The claimant started work as the Chef de Rang on 9 October 2018 as he states in his para:2. There he explains that he was initially contracted to earn a salary of £19,000 per annum however, following a discussion with Serena Drake, he moved on to a salary of £24,000 per annum with effect from 2 February 2019. One of the factual matters I need to consider is whether the increase to £24,000 a year was permanent (as argued on behalf of the claimant – CSA para.4) or temporary. The claimant states that he was contracted to work 48 hours a week but in practice worked more than that on a regular basis.

[51]The claimant and the respondent signed the written statement of terms and conditions (page 48) it on 2 February 2019 and 30 January 2019 respectively. It states that the normal hours of work are 48 hours per week Tuesday to Saturday. The salary is said to be £24,000 per annum. As to working hours: “You may be required to work such additional hours as are reasonably necessary for the proper performance of your duties. No extra payment will be made for any additional hours worked unless expressly authorised by your line manager.”

[52]It seems clear that the discussion which led to the increase in basic salary concerned whether the service charge applied to customers’ bills should be remitted to the staff. Ms Drake explains that, at the time the claimant started work, the service charge paid by customers using a credit or debit card went to the business and was used to pay staff. It was not treated as the same way as tips paid in cash which were distributed evenly between the staff (SD para.4). In these reasons I use the terms service charge to mean the percentage paid by the customer using a credit or debit card and tip to mean cash gratuities left by the customers.

[53]The claimant’s position (his para 20) is that he had not previously experienced working conditions where he did not receive a share of the service charge on top of his salary. SD insists that the arrangement is not “illegal or untoward” (SD para.5) and I have no reason to doubt that. Mr McArthur’s evidence was that the respondent decided to offer the claimant £24,000 p.a. “to pacify any concerns he that he may about his wages.” (IMcA para.6).

[54]In June 2019 a tronc system was introduced, the CRTA. The written terms of the tronc were as set out on pages 52 – 57. A troncmaster was appointed and it was operated by Buzzacott. Nothing was sent directly by the respondent to the employees about the introduction of the tronc. The written terms contain the following,a. “Neither your membership of the CRTA nor any payments allocated therefrom form part of your Terms and Conditions of employment with [the respondent] and is operated completely independently of the company. Payments from the [tronc] are discretionary, noncontractual, and in addition to your contractual basic pay” . Note also clause 18 on page 55.

b. “you should expect to receive a minimum monthly payment of £333.33 before deduction of tax”

c. “all award allocations… will be liable for deduction of tax but exempt from employee NIC deduction because I, as an Independent Tronc master, and not acting under the influence of or am I in collusion with your employer. This NIC saving will be passed on to you.”

d. “I reserve the right to review your tronc award allocation value based on your performance and attendance, plus any feedback and advice received from your supervisor.”

e. Paragraph 13 and 14 of the tronc rules set out factors which might respectively need to the award being increased or decreased.

[55]The claimant argues (paragraph 4 of the CSA) that there was no express agreement to vary the claimant’s contract. However the claimant’s evidence (paragraph 20) is that the increase to £24,000 a year arose out of his frustration at not receiving a service charge on top of his salary which meant that he wanted to resign. He raised this with Serina. He is clear in his para 20 and 21 that the service charge issue she agreed that the service charge issue would be sorted out “and that in the meantime my salary would increase” but that it took nine months for her to address the issue.

[56]The claimant’s evidence makes sense on this point and, properly analysed, does not conflict with that of the respondent. I find that the increase to a basic of £24,000 p.a. was expressly on the basis p.a. but rather that his basic pay would be at that level until the service charge issue “was sorted out” – which probably meant until a method of passing on the service charge to the staff was arrived at. The written document at page 48 does not in fact reflect what the parties agreed to the extent that it appears to suggest his basic pay was £24,000 p.a. without any qualification. Further discussion or changes to the method of payment of remuneration were anticipated.

[57]It is argued on behalf of the claimant that the whole agreement clause in Mr Kusy’s contract should be read as excluding any unevidenced oral agreement between the parties (CSA paragraph 4). I do not agree that this was unevidenced since it was something the claimant himself gave evidence of. The whole agreement clause should not be used to supplant an express agreement between the parties: Autoclenz.

[58]However I also find that, at the time the qualified increase to basic pay of £24,000 p.a. was agreed, no agreement was reached about how much the claimant was likely to receive as a proportion of the service charge. The claimant does not give evidence to that effect and neither does the respondent. I am satisfied that the agreement on remuneration as a whole at this time was that the basic pay would be increased, pending setting up of a regular tronc payment. No particular method of dividing the service charge was agreed. No one has stated this in so many words, but I infer that the respondent had conceded the principle that staff should be paid a proportion of the service charge at about this time.

[59]The wording of the tronc letter states that the tronc master expects the claimant to receive a minimum monthly payment of £333.33. If one multiplies that by 12 that suggests an annual payment of £3,999.96. Ms Drake in her witness statement does not appear to link her para.6 with her para.7: in para.6 she states that they decided to increase his salary and, quite separately, in para.7 she says that a tronc system was introduced. She then states that when the tronc system was introduced the claimant requested his salary be reduced and he take some home in cash that that was refused. She does not state that the increase in remuneration to £24,000 p.a. gross was temporary and that is relied on by the claimant’s representative.

[60]In oral evidence, Ms Drake accepted that she did not say in her para.6 that the salary increase was for any other reason than to keep the claimant in employment. I suggested to her that if her recollection had been that there was another reason she might have said at that point. Her answer was that she could not remember. As I explain above, I prefer the claimant’s evidence on this point but I think that weight should be given to Ms Drake’s apparent recollection that the salary increase was to keep the claimant in employment. That aim would hardly be achieved if his remuneration was increased to £24,000 p.a. and then reduced significantly in terms of its value if a substantial proportion was or became discretionary. Mr McArthur’s evidence that the increase was to pacify the claimant was to similar effect.

[61]The payslip for July 2019 on page 152 shows that gross pay and the tronc together amounted to £2000.33 for the month. So, arithmetically, the agreed figure of £24,000 per year seems to be paid part in gross pay and part via the tronc. As Ms Akero-Stueland says in para.5 of her 30 May 2023 written submissions, the further payslips illustrate that this is what happened in practice.

[62]Since the figure of £24,000 p.a. was agreed to try to keep the claimant in employment, it seems to me as though remuneration of £24,000 per annum was, in effect, guaranteed. The amount of the increase over £19,000 p.a. is more than the amount to be paid via the tronc and it is unclear whether it was the troncmaster or the respondent who decided on the figure of £333.33 p.c.m.. I am satisfied there was no discussion with the claimant about that division and there is no quantifiable relationship between that amount and his role and performance or that of the business.

[63]The tronc letter states that it is a discretionary payment but I reject that. It was common ground that the claimant had received an increase in his remuneration. It is completely inconsistent with that for 4/5 of the increase to be discretionary and no such qualification was put on the agreement in the evidence of either party. The amount of the tronc payment never goes below £333.33 p.c.m, indeed never alters from it. The claimant’s expectation that it ought to vary seems to be based upon his previous experience working elsewhere in the restaurant industry and not on any discussion with this employer.

[64]This contrasts with the position for the claimant’s co-worker whose payslips are at page 193 and following. In September 2019 to January 2020 they are more often than not paid the same amount but on one occasion they are paid a tronc of £500 more than in the other months (a total of £875). Three other payslips are provided to showing the tronc of £575.01 and one of £416.67.

[65]In oral evidence, Ms Drake accepted that the payment to the claimant from the tronc did not increase or decrease. It was put to her that it did not vary in accordance with his performance or attendance and Ms Drake accepted that and also that it did not vary according to the performance of the business. Ms Drake said “we decided to maintain the level of people strong on a monthly basis so that when the periods did not decrease putting people in difficulty.” This also suggests that the respondent and not the troncmaster dictated the claimant’s overall remuneration.

[66]It is argued on behalf of the respondent that I should look behind the terms of the written contract at page 48 to find there was an express oral agreement that the increase in basic salary was only until the tronc system was in place. That seems to me to be inexplicably inconsistent with Ms Drake’s unqualified evidence that there was a pay rise to £24,000 in order to retain the claimant. The explanation that makes best sense of both her and IMcA’s evidence and that of the claimant is that there was a legal commitment for the claimant to receive remuneration of £24,000 per annum but this was in part to be achieved by distribution of the service charge. It appears that payments from the tronc are not subject to national insurance contributions as set out in the tronc rules. Whether this finding I have made about what was agreed means that the parties in fact agreed something which was inconsistent with those rules is not something I have to consider. It might be argued that they cannot have intended to agree something which was unachievable under the rules of the tronc but the finding I have made seems to me to best fit the evidence of both the claimant and Ms Drake about what was agreed and the amount of the payments which were actually made.

[67]This appears to me to be another instance where the documents do not reflect the reality. My impression is that these parties spend little, if any, time reading through formal documents to ensure that they reflect what they have agreed to. The increase of basic pay to £24,000 p.a. was, as the claimant said, pending the setting up of the tronc and therefore the intention appears to have been that the tronc would be used as a method of payment of part of the claimant’s agreed remuneration once it was introduced. The description of the tronc payment as discretionary did not reflect the reality of the agreement between the respondent and the claimant nor did the way that the tronc operated in his case.

[68]The claimant puts forward a number of arguments to resist a finding that there was an agreed variation of contract to change his remuneration from basic pay of £24,000 p.a. to basic pay of £20,000 p.a. and tronc payments (CSA paragraph 5 to 10). I accept the argument that the limit of any variation was the method of distribution of the claimant’s take-home pay of £2,000 per month; specifically of the amount to be paid through the tronc. Further, I have found the whole to be a guaranteed amount with no discretionary element. That is consistent with Ms Drake’s evidence about the amount of the agreed to pay rise.

[69]Ms Akero-Stueland also argues that unpaid leave in January led to a deduction in pay of £92 which is more consistent with a monthly basic salary of £2000 and not £1667 (page 158). Ms Drake was unable to comment on that proposition when it was put to her in cross-examination because she did not know how £92 had been calculated. Her suggestion that a per diem deduction should be £96 does not make sense because it was based on a 4 day week when the claimant worked 48 hours spread over 4 long days and 1 short day. Without knowing precisely how the £92 is calculated this is weak but supportive evidence rather than determinative. However if one divides £2000 by £92 one gets 21.7 days and if one divides £1667 by £92 one gets 18.11 days. 21.7 days sounds closer to a 5 day working week in the month.

[70]When the country entered the first lockdown at the outbreak of the coronavirus pandemic in March 2020, the claimant and the other restaurant staff were put on furlough because the restaurant was closed. He received furlough pay of 80% of the sum described as basic pay in his payslip (£1,667) for 11 days in March 2020 and throughout April to June 2020. He explains in his para 24 that the restaurant was open from July 2020 onwards but that he was on furlough again between January and May 2021. Although the restaurant was open during August to December 2020, a curfew was introduced on 24 September 2020 which meant that the restaurant had to close at 10 PM.

[71]Ms Drake explains in her para.14 that she used her accountant to calculate all payments to staff during the Covid 19 pandemic and that the government did not permit tips or tronc payments to be taken into account as earnings when calculating furlough pay in the Coronavirus Job Retention Scheme (CJRS). Neither Ms Drake nor Mr McArthur set out in their witness statements how they went about amending their employees’ contracts to put them on furlough leave or to obtain their consent to the change in contract.

[72]It is argued on behalf of the claimant that there has been a shortfall or deduction from wages payable throughout because the furlough entitlement should have been calculated based on 80% of £2,000 and not of £1,667. Ms Drake could not recall anything being sent in writing to the claimant to inform him that he was going on furlough. In reality it is not argued on behalf of the claimant that he was not placed on furlough leave despite the lack of any formality to record consent to that. It is somewhat surprising because proof of consent was, generally, required when applying to the government CJRS scheme for support with furlough pay but that is the state of the evidence before me.

[73]On the other hand, the respondent argues (RSUB 34) that the claimant was not contractually entitled to furlough. If the claimant was not on furlough leave then, it could be argued, he was entitled to his full salary. The problem with the respondent’s argument here is that their witnesses gave evidence that the respondent claimed support for furloughed employees during the coronavirus pandemic so a submission that he was not on furlough is contrary to their actions and evidence. It was specifically put to the claimant in crossexamination that he was on furlough (e.g. between January and May 2021). I reject that argument.

[74]The only conclusion that makes any sense is a finding that the claimant consented to be placed on furlough leave and that that consent can be implied from conduct. He must have been informed of the arrangements orally, although all of the witnesses were very vague about how it happened. He raised no objection to being on furlough leave and continued to receive furlough pay.

[75]His first objection or concern about pay was raised by his grievance of 3 February 2021 page 128. In that grievance he didn’t complain about having only been paid furlough pay of 80% of his salary (however that was calculated) or of been required to be on furlough. He appears to have worked and then refrained from work as directed to do so from time to time depending upon the government restrictions on businesses operating during the pandemic. In my view, his consent to be placed on furlough can be inferred from those actions when he was receiving furlough pay because those actions are only consistent with him consenting to that variation. He was therefore entitled to furlough pay, the question is whether it was correctly calculated.

[76]Ms Drake’s evidence was that the CJRS did not permit the inclusion of the tronc payments. That may have been on the basis that, on the face of the written document, in respect of the claimant the tronc payment was discretionary whereas, as I have found, in reality, it was not.

[77]Following a challenging period in his personal life, the claimant states that he asked Mr McArthur if he could limit his hours to his core hours which ended at 11 PM. This seems to have led to a conversation on 15 December 2020 and Mr McArthur signed a written confirmation that the claimant wished to work strictly to his 48-hour contract in the future and work the following hours: Tuesday four hours 1030 - 1430 Wednesday - Saturday 11 hours 1030 – 1445 1630 - 2330 (including a 15 minute break 1800 - 1815)

[78]Mr McArthur also reminded him that he may not use his phone or smoke during work hours, that drinking alcohol should not occur during work hours and that the claimant had to be ready for work in uniform at the start times with all ironing and uniform preparation completed in his own time.

[79]According to the claimant, the reason he felt the need to approach the respondent about his hours was that he regarded them as excessive and was concerned that there was no compensation for working beyond his contracted hours. The written contract does state in clause 4.1 that the normal hours were 48 hours a week to be worked Tuesday to Saturday and I find that those set out on the 15 December 2020 agreement were the claimant’s normal expected work hours. The contract also states that the employee will not be paid for any overtime which is not expressly authorised.

[80]The claimant gives a detailed explanation of the duties carried out by him in the restaurant Clock House Restaurant in his para 5 to 18. In summary he states that he would start his shift at 8 AM either cleaning the restaurant or preparing the bar, restaurant and bathrooms for morning service and then prepare butter and cheese and polish plates with other waiting staff before dressing in shirts and aprons at around 11.30 AM. There would be the staff briefing at 11.45 AM before the restaurant opened at noon.

[81]He does not state when the restaurant closes between morning service and the evening service and gives an example of them staying until 5 PM on lunch booking. However, he states that there would usually be a two hour break from around 3 PM on Wednesdays and Thursdays. He states that it was sometimes not possible to have a break between services on Friday or Saturday. Evening service started at 7 PM and he stated in paragraph 14 that the final table would usually arrive around 9 to 9:30 PM. Cleaning the restaurant could only finish when the final guest left and the claimant states that that would be between 10 PM and 1 AM. His evidence was that it would take around two hours to close.

[82]He produces and refers WhatsApp the messages in his para 17 to evidence the time at which he was at work or sending work-related messages. Page 61 shows Mr McArthur asking the claimant if he’s got home alright at 02.08 AM on 20 October 2019; as to page 84, Mr McArthur had a plausible explanation for this in that he stated that the claimant had just returned from Poland and the restaurant was reopening; page 89 - 19 July 2020 the claimant texting to say he got home at 03.50 AM.

[83]Conversely there was some evidence that the claimant was not always punctual (page 88). Other messages put to him as evidence of latemess (page 60) were irrelevant because they concerned work the claimant was doing for Mr McArthur on a farm unrelated to his employment. Overall allegations of lateness do not affect my findings about the hours he worked to a marked extent because it has not been shown to be persistent and excessive and also because there is no evidence that it was monitored or that the respondent made deductions from wages as a result.

[84]As I say, the claimant raised a grievance on 3 February 2021 (page 128). He complained that his pay was not equal to the hours he worked each month, that his pay should vary with the hours worked, that each month his pay went below the national minimum wage and that he wished to meet to discuss his concerns. The grievance was heard by Mr McArthur on 17 February 2021; page 129 is the invitation to the meeting by Zoom. Mr McArthur rejected the grievance for the reasons set out page 130. His findings were that the contract states that overtime is not paid, that the claimant voluntarily stayed extra hours and that his hours had been restricted in any event from 15 December 2020.

[85]In his statement Mr McArthur takes issue with the claimant’s account of the number of hours he worked saying that the start time was 10.30 AM rather than 10 AM and that on one day a week all front of house staff including the claimant had a later start of between 2 to 3 hours after the usual start time. This point was conceded. Mr McArthur makes general points, suggesting that in the claimant’s schedule of loss he has failed to take account of cigarette and meal breaks which should be unpaid, holiday closures and that on Friday and Saturday nights frequently the claimant and colleagues would stay late to socialise. That, in Mr McArthur’s view, would not be working time.

[86]The claimant appealed and the appeal was conducted by Ms Drake. The basis of his appeal (page 131) was that he understood that his overtime was not paid as it was voluntary but his concern was the number of hours he worked compared with what he was paid for. He also stated he would like to know how his basic pay was being calculated. He also still seems to think that he should not be paid for the same number of hours every week. In this his is mistaken. The agreement was never that wages should vary with hours worked but the claimant seemed to think that that should have been the agreement.

[87]The respondent states that the claimant frequently had money issues and the messages produced do support their account that from time to time he was given a cash advance on his wages. They provide a reason why the claimant was particularly anxious when his wages were not as he thought they should be but beyond that does not seem to me to be particularly relevant to the claimant’s credibility on the hours he was working. The messages do show that the respondent advanced the claimant sums to tide him over or loaned sums which were then set off against wages doing a particular month. The payslips are likely therefore to show what the respondent considered to be payable but they do not necessarily correspond with the sum that was paid to the claimant on a particular date. This is likely to have made it difficult for the claimant to seem what he was paid for and several message relate to the claimant apparently not having kept track of how much his pay was going to be.

[88]Ms Drake met with the claimant to hear the appeal on 19 March 2021 and proposed that the accountant carry out further investigations to see whether his wages fell below the national minimum wage. She wrote to him say there may be a delay in providing an outcome (page 133). In her final outcome at page 134 she stated that there was no evidence to suggest that he had worked additional hours that he had not been paid for and there was no contractual right paid overtime. She stated there was in his furlough payment and “you have been paid in your March 2021 salary the amount of £243.91 the shortfall that was due to you for nmw for the tax year 2020/2021 as calculated by my accountants.” She repeated that the strict 48 hours working week had been put in place.

[89]The accountant’s calculation is at page 135 and it appears to work out what the claimant should have been paid in order to receive at least national minimum wage in total over the period November 2018 to February 2020 on the assumption that the information provided to the accountant about the number of working hours in any given month was accurate. They only took into account sums paid by way of official basic pay so once the tronc was introduced the calculation only credits £1,667 towards NMW. There appears to be have been a shortfall which was paid to the claimant.

[90]The claimant was unhappy about this outcome because he considered he had worked a significant amount of overtime (see his para.31).

[91]The accountant’s calculation is some evidence of the hours actually worked by the claimant; presumably it was based upon information provided by the respondent. However it does not appear that records were kept of those in detail. It purports to set out how many working days there were in each month and how many hours in each month. There were two non-working days each week: Sunday and Monday. However it is not clear whether the person who has done this analysis has specifically excluded all Sundays and Mondays and taken account of the fact that there was no evening service on Tuesdays.

[92]I have tried to test this evidence by considering February 2020: there were 29 days in that February, 8 of which were Sundays and Mondays. The accountant has stated 21 working days. If the claimant was strictly working the hours agreed in the 15 December 2019 meeting then 4 Tuesdays @ 4 hours and 17 days @ 11 hours amounts to 203 hours and the accountant has allocated 201.6 hours. This suggests some unexplained formula being used to work out the length of the working day, possibly based upon a 48 hour working week rather than the actual hours worked – taking into account short days. This suggests that the accountant’s calculation for the grievance appeal was based upon an acceptance of the respondent’s case that the claimant, overall, did not exceed 48 hours in a working week on average. To that extent, it is self-serving.

[93]There are general assertions about the claimant not giving his full attention to work-related matters during the hours that he was at work which the respondent argues means that he was not working for all of the hours that he was present on site. Based upon the hours the respondent alleges the claimant was working at that period, any shortfall was rectified to ensure that the claimant had been paid NMW.

[94]Although Ms Akero-Stueland states in CSA para 14 that the claimant kept records of the hours he worked, her reference is to page 143 to 145. Those are tables in which the claimant’s is estimated how many hours were worked in particular months and set out how he has come to the position that he worked, for example 252 hours in May 2019 (see how the claimant describes them on page 143). The tables cover May 2019 to March 2020. He has given credit for holidays and sickness absence but has not taken account of the admitted position that all front of house staff started late one day a week. These appear to be based on his evidence of the length of the normal working day which he claims to have worked. I do not accept that the claimant has kept detailed hours worked on a day by day or week by week basis. It is a calculation done after the event. His oral evidence was of working hours which were far less regular.

[95]My view is that this set of schedules at page 143 to 145 is a rough approximation of the hours the claimant thinks he worked based on what he says was the regular pattern of work. It has been shown to be inaccurate in some respects. Nevertheless it is for the respondent to prove that the claimant has been paid at least national minimum wage. Setting that to one side in general my view is that the respondent’s evidence is probably closer to the true position than that of the claimant.a. The respondent has not shown the claimant was late sufficiently often or by a long enough period of time for that to impact in any meaningful way upon the amount of the wages that they were required to pay him.

b. The claimant has shown a handful of occasions when he was texting so late were the context of the text makes it more likely than not that he left work in the early hours of the morning. However that does not overall seem to be inconsistent with the respondent’s evidence of occasional special events or additional work required when closing the restaurant for the holidays.

c. The claimant has failed to take account of one late start every week.

d. He has asserted in those schedules that he continued to work these long hours even after the 15 December 2019 commitment to limit his hours to 48 hours per week, which was contrary to his oral evidence where he admitted that the agreement that he should strictly work 48 hours was adhered to.

e. The amount of time to finish up claimed by the claimant (of 2 hours) seems improbable to me; the respondent’s 30 minutes is far more likely on a normal evening and it is probable that there was some socialising.

[96]These matters cause me to find that these schedules are an overstatement of the hours worked by the claimant. Nevertheless, he was, contemporaneously, annoyed and stressed about working long hours without being paid overtime. Although he was not contractually entitled to paid overtime, the respondent needs to show that the claimant was paid the NMW which would require him to be paid more than his basic pay if working additional hours caused his hourly rate to fall below the NMW rate at the relevant period.

[97]The claimant returned from furlough in mid May 2021. On 7 May 2021 the respondent held a meeting in preparation for the business reopening. As Ms Drake says in her para 27, (and Mr McArthur in his para 18.) the respondent had decided not to charge a service charge and therefore the tronc scheme would no longer operate. Her evidence is that since they did not know what the government were going to do with the CJRS - which was a time limited scheme - they thought it would be beneficial to the staff if “they got paid the usual basic wage, meaning their full salary would be taken into account for any future furlough payments” while giving them the opportunity to get tips.

[98]The claimant states that this would not have addressed his concerns about overtime and wages falling below the NMW. He alleges, somewhat strangely, that the respondent only did this “to prevent further complaints because of their experience with me”. I do not accept that the decision not to charge the service charges was made for such a reasons. He states that they were told that if the majority agreed with the change it would be followed through regardless of individual concerns (page 136).

[99]According to the claimant, when asking his colleagues why they agreed to the contractual change to increase their basic wages but remove the tronc, one of the chefs said it would be beneficial to him because he was receiving over £800 in service charges. This caused the claimant, he states, to realise that other employees were receiving more by way of service charge than he was himself and he thought that unfair.

[100]The claimant states that he concluded that he could not continue working at the Clock House and put in his notice of resignation on 31 May 2021 (page 138). He gave notice with the intention that his employment would end on 29 June 2021. He does not give a reason for resignation. In his statement he says that he was overworked for working long hours, often with no breaks and exhausted and felt betrayed when he understood that he was not being compensated for the many hours he worked.

[101]When he was cross-examined about the reasons for his resignation it was pointed out to him that part of the grievance appeal outcome was an offer, in addition to the strict 48 hours per week working hours, to vary his pay monthly to accommodate the changing hours from one month to the next rather than paying equal monthly instalments. In other words changing him to being paid for the actual hours worked in the month with payment made every calendar month. He didn’t accept that because he thought it was wrong – in that it was the wrong amount of hours. He seemed fixed on the months which the respondent said only involved 192 working hours but my analysis suggests that, if one accepts the respondent’s evidence about which hours were worked, the fluctuating hours per month are about right with any differences being small and probably due to method of calculation. This was a genuine offer to give the claimant what he was asking for but the issue was the difference in the parties perceptions about how many hours the claimant had worked in the past.

[102]I find that his reasons for resignation were his view that he worked many hours unpaid overtime, which he thought he should be compensated for over and above his basic salary, coupled with the belief that others were receiving a larger share of the service charge which meant that he felt undervalued. Those are the matters which caused him to decide to resign.

[103]The claimant received his next payslip on 7 June 2021 (page 172). It does not show furlough because he had just returned from furlough leave. However it does not show a tronc payment. The last payment of tronc was of £222.22 on December 2020 (page 166). The claimant explains in his para.36 that this seemed to him to be confirmation that the terms of the contract had been changed without his knowledge or agreement and considered he could not stay in employment any longer. He therefore brought forward the date of the end of his employment to 8 June 2021 (page 139). In the letter he explains that he has “no other option but to make it shorter… Due to the change Clock House Restaurant applied without my acceptance and my knowledge, I have not received any official letter regarding changes in the way you would pay me, no official offer or any more details regarding changes. I have not signed any new employment contracts or accepted changes never would. The letter regarding changes should be sent to us four weeks before anything can be changed, and I have not received was well. I can’t continue with my duties as I can’t agree with new wave pay and never agree to it.”

[104]When the claimant was cross-examined about his reasons for the resignation on 8 June, he said that he resigned “only because my basic contract changed and would cause me loads of problems and would be exploited as an employee.”

[105]He seems to have feared that with the restaurant growing there would be more customers and more work and that he would himself have been pressured into working more than 48 hours a week and/or excessive hours. He was obviously aware that the tronc was not counted for calculating national insurance contributions which is why if the service charge is included in the basic pay, employees would basically have less money in hand. However the claimant was clearly of the view that it would enable the respondent to require extra hours of work from him without extra pay.

[106]In reality the claimant knew that the service charge was no longer going to be charged to the paying customers. This meant that the money paid into the business which was sent to the troncmaster for distribution was no longer going to be paid; customers were not going automatically to be billed for service. That was where the money for distribution came from so it is hard to see that any discussion or consultation would have changed that. Furthermore, the claimant knew at the time of his initial resignation that if the majority chose their basic pay to be increased by the amount of their service charge then that would be put in place. Nevertheless, the fact that the change was being imposed upon him was part of the reason that he brought the end of his employment forward. An additional reason was his belief that he could be exploited as an employee if the respondent asked him to work more than 48 hours per week because, with a higher basic pay, they could do that without being in breach of national minimum wage regulations. Conclusions on the issues

[107]I now set out my conclusion on the issues, applying the law as set out above to the facts which I have found. I do not repeat all of the facts here since that would add unnecessarily to the length of the judgment, but I have them all in mind in reaching those conclusions. Unauthorised deduction from wages

[108]What wages were properly payable under the contract over different periods of time? This involves consideration of:a. What was properly payable by way of wages under the contract;

b. Overtime: The claimant argues that he should have been paid overtime by reason of an implied term that should be paid at such rate as is necessary to ensure that he was paid at least NMW for all the hours worked. The respondent says that overtime was unpaid unless expressly authorised;

c. Did the claimant actually work in excess of 48 hours a week?

d. Furlough: was the claimant on furlough leave and what was properly payable to him during periods of furlough.

[109]The claimant was paid on the 7th of each month for the wages payable in the previous calendar month.

[110]The claimant’s case is thata. between June 2019 and the start of furlough on 17 March 20201 he was paid less than NMW;

b. between 17 March 2020 and mid July 2020 he was paid less by way of furlough pay than he should have been because it was not correctly calculated;

c. between his return to work in July 2020 on flexi furlough and December 2020 the furlough pay was incorrectly calculated and he was not paid NMW for hours actually worked;

d. In January to April 2021 when he was fully furloughed again the furlough pay was incorrectly calculated; 1 Based on the claimant’s evidence that he was paid 11 days’ furlough pay in March – 17 to 21, 24 to 28 and 31 March 2020.

e. In May 2021, when he was on flexi furlough, the furlough pay was incorrectly calculated.

[111]The respondent’s case is that the claimant did not, on average, work more than 48 hours per week, was not paid less than NMW and the furlough pay was correctly calculated.

[112]I have found that remuneration of £24,000 p.a. gross was agreed between the parties when the claimant’s pay was increased to encourage him to stay in employment (see, in particular, para.66 & 67 above). There was a legal commitment for the claimant to receive remuneration from his employment with the respondent of £24,000 per annum but this was in part to be achieved by distribution of the service charge and in part by direct payment by the respondent. However, the part to be paid through the tronc system was not stipulated between the claimant and the respondent and was settled upon by a means which are opaque. The intention seems to have been that the tronc would be used as a method of payment of the agreed remuneration and not as an additionally genuinely discretionary element of the remuneration package. Therefore I found that remuneration of £2,000 gross p.c.m. (£24,000 per annum) was guaranteed or contractually payable.

[113]No express terms of furlough were agreed. The claimant argues that the terms of the CJRS should be deemed to apply as between the employer and employee to govern the wages payable during periods of furlough and that, regardless of my finding about whether the tronc payment was discretionary, para.7.4(a) of the CJRS – properly applied in the present case – means that the tronc payment should have been included as regular salary or wages (see the definition set out in para.13 above). This is on the basis that the tronc payment, as actually agreed between these parties, did not vary with the business, the contribution of the employee or his performance.

[114]The respondent’s evidence is that the contribution of the chef who was paid more than the claimant and his performance meant that his tronc payment varied accordingly (see para.64 above). That may be – I do not need to make a finding on the contractual relationship between that chef and the respondent but to the extent that it’s proper for me to comment I see no reason in principle why the agreements reached between an employer and several different employees necessarily have to be the same provided; if they are not then the employer may risk being accused of acting capriciously, breaching the implied term of mutual trust and confidence or of acting on some unlawful grounds.

[115]It seems to me that the claimant’s submissions on the CJRS are predicated on the presumption that it “provides guidance on how furlough payments payable to employees should be calculated” (CSA para.17). The Treasury Directive does not say that it applies as between employer and employee but that it sets out how payments from HMRC to the employer are to be calculated. It does not appear to have been expressly raised in submissions that the CJRS should be regarded as implied into the claimant’s contract of employment.

[116]The respondent argues that the claimant was not on furlough leave because of a lack of agreement that he should be placed on furlough and that he was not, therefore, entitled to claim a contractual entitlement to a shortfall of furlough pay. The logic of not being on furlough was that he was not entitled to furlough pay at all, however it was calculated. I asked the respondent’s representative what the basis was, if that argument was correct, on which the respondent paid the claimant less than 100% of his salary between March 2020 and May 2021; what was the basis on which they had asked him to refrain from working? Ms Jervis argued that that would have been the proper claim for the claimant to make in order to be consistent with the evidence but that that claim was not before the tribunal.

[117]I have found that the claimant was placed on furlough leave and that his consent to that can be inferred from conduct (see para.74 above). His basic pay was, in fact, £2,000 p.c.m. and therefore he should have been paid at 80% of £2,000 p.c.m. for furlough hours.

[118]The claimant argues that there was an implied term of the contract that the claimant should be paid at least NMW for all hours worked and the respondent’s representative confirmed that that was how they had understood the claimant's case - but that that the time period of that claim was limited to prior to December 2020.

[119]There is no implied term that the claimant should be paid overtime since that would be contrary to the express term which precludes it.

[120]I asked Ms Akero-Stueland what would be the impact of the claimant’s argument that he had not been paid the NMW were I to conclude that he was contractually entitled to £2,000 per month, as the claimant argued. She responded that, if the respondent chose to pay part of his contractual entitlement by handing it to a third party for distribution that did not affect the application of the NMW Regs 2015.

[121]In essence, it was argued that there was conflict with the claimant’s case on his contractual entitlement. When calculating the unauthorised deduction of wages with regard to the NMW Regs, the tronc could not be part of that calculation and the parties were bound by the NMW Regs (see para.43 above). The respondent’s had decided to include that element of basic pay in the tronc payment.

[122]In principle, an implied term that the claimant should be paid at least the NMW for hours worked would be a reasonable one to accept was implied by means of business efficacy. However there is provision in s.17(1) NMW which states that an employee who has been paid less than the NMW during any pay reference period shall be taken to be entitled under their contract to additional remuneration which, broadly speaking, would bring them up to the NMW. In other words, it is implied by statute that if the relevant remuneration which falls to be brought into account by reason of the NMW Regs 2015 means that the rate of pay is less than the NMW then the employee should be paid so much as will mean they are paid at least the NMW.

[123]Caselaw is clear that the service charge, since they become the property of the troncmaster prior to distribution are not paid by the employer: HMRC v Annaley’s (Berkeley Square) Ltd. It follows that, once the tronc has come into force, even though the claimant was contractually entitled to be paid the £333.33 element as basic and it was not discretionary and even though he was actually paid it through the tronc, that sum cannot be taken into account for the purposes of considering whether the obligation to pay wages at a rate which was at least the NMW has been met. Had the payment been made directly by the employer then, despite being described as discretionary, the fact that it was not may well have meant that it did not fall within NMW Reg 10(m) (see para.43 above). The fact that the payment was not made by the employer does seem to exclude it from consideration.

[124]Was the claimant paid less than the amount of wages properly payable on any occasion? If so when?

[125]I first consider whether the respondent has shown that the claimant was paid at least national minimum wage for all hours worked. Between June 2019 and the start of furlough the claimant’s relevant remuneration for NMW purposes was £1,667 p.c.m. His evidence is that he worked the hours set out in pages 143 to 145. The respondent’s evidence is that, overall, he did not work more than 48 hours a week. The calculation done by the accountants (page 135) does not provide independent evidence of that but does set out the respondent’s position on how many hours in any given month between November 2018 and February 2020 that would, in their case, amount to. Even on the respondent’s case, there was at the time a shortfall in specific months of July 2019, August 2019, October 2019, November 2019, January 2020 and February 2020. – although not, on their case, because the claimant worked excessive hours. The respondent calculated the relevant remuneration over the whole period of 16 months and paid the claimant the shortfall.

[126]The respondent did not keep any records of the hours worked by the claimant and the burden of proof is on them to show that they paid him at least the NMW. This they have failed to do in respect of some periods and dates.

[127]However, in order to work out the amount of any underpayment, I have to make findings about how many hours the claimant actually worked. I accept, as did the claimant, that as from 15 December 2020 onwards, he worked strictly in accordance with the 48 hour contractual working week, as adjusted when part working was required during periods of flexi-furlough. I have found that the claimant’s account of the hours worked was exaggerated to some extent (see para.95 above). The hours agreed to (para 77 above) seem to me to be the minimum necessary to enable the tasks referred to by the claimant to be carried out to the standard required in a Michelin starred restaurant.

[128]Doing the best that I can with the evidence I have, bearing in mind my criticisms of the claimant’s account and the fact that the respondent bears the responsibility of proving the hours worked by the claimant – but the documentary evidence produced by them and records kept by them were deficient I think that the claimant probably worked an additional two hours on Fridays and Saturdays sufficiently often to say that it was every Friday and Saturday. This was work and not staying on for socialising. I also think it probable that he was only able to take 1 hour break and not 1 ¾ hours break most Saturdays but that once a month, when Mr McArthur went to the farmers market, he was unable to take that break between morning and evening service at all.

[129]This causes me to conclude that the claimant probably worked an additional 5 hours every week and one further additional hour every month above the 48 hours contracted.

[130]However, I reject the allegation that when the claimant returned on flexifurlough he was working excess hours. He claims (page 146) that on the days when he worked from July 2020 to the start October 2020 he worked 12 hours days. At that time there were limitations on customer numbers, at some point there was a curfew and, in oral evidence, the claimant accepted that the respondent had kept to the 15 December 2019 agreement. The respondent has satisfied me that the claimant only worked part-time hours during that period. The recently disclosed payslips which cover the full run of months July to December 2020 include in the November and December 2020 payslips a calculation of gross pay of (28.80 hours x £8.72) and (124.80 x £8.72) respectively. I have not heard direct evidence about this but that figure is the NMW rate for the FY 2020-21. Based on the those and the claimant’s acceptance that he was working part-time hours, I am persuaded by the respondent that the gross pay element of the pay for working hours during July to December 2020 was expressly based upon the NMW multiplied by actual hours worked. Any deduction in wages due to failure to pay NMW must therefore be limited to the period prior to the first lockdown.

[131]Prior to the tronc payment coming in, the claimant was paid at least NMW. From 7 June 2019 (when the tronc payment came in) to 15 December 2019, the claimant, I find, worked, on average, 53 hours a week and one additional hour once a month. From 15 December 2019 to 16 March 2020 (when he was placed on furlough) I find that he worked 48 hours a week. This means that for the months of January and February 2020, the working hours in the month in the accountant’s calculation on page 135 are probably right; those are based on the respondent’s information and I have accepted their explanations for that period. He was fully furloughed until July 2020. For reasons I explain above, the respondent has shown that the claimant was paid at least NMW in his gross pay for working hours from July 2020 onwards until his last working day in June 2021.

[132]The accountant’s figures for the period when I accept that the hours shown on page 135 were probably the actual hours worked are: Month Days Hours NMW Pay Actual Pay Jan 2020 211.22 1,733.953 1,667 Feb 2020 201.6 1,655.14 1,667 Mar 2020 972

[133]It would appear that the claimant was not paid NMW in January 2020 and the respondent has not shown he was paid NMW in the months prior to and including December 2019.

[134]During furlough the claimant was not paid the wages which were properly payable. He was due furlough pay under the contract at 80% of £2,000 and was paid at 80% of £1,667. Deductions were made from his wages in each month from March 2020 to May 2021. Was there a series of deductions? If so was the claim presented within three months of the last of them?

[135]The deductions due to the miscalculation of furlough pay were undoubtedly, in my view, a series of deductions. The same miscalculation was made monthly which provides the factual and temporal link required: Bear Scotland applied.

[136]The last deduction (if any) in respect of underpayment of wages due to a breach of the implied term to pay NMW was made in February/March 2020. The claimant argues that these deductions should be regarded as in a series with the deductions from furlough. The respondent argues against that.

[137]I have not set out exact calculations of likely underpayments up to and including December 2019 based on my findings about the hours worked. However, the £1,667 gross monthly payment with a 53 hours working week would meant that the number of hours worked per month (which varied depending upon the number of days in the month) would average 230 Hours per month: {[(53 X 52) ÷ 12] + 1}. This would mean that £1,667 gross per month divided by the number of hours was an average rate of £7.24; less than the then applicable NMW of £8.21.

[138]Do I consider that a series of deductions due to underpayment of NMW between June 2019 and March 2020 from the claimant’s wages, due in part to a failure to account for the impact of extra hours worked over and above 48 hours per week on his rate of pay is factually linked to deductions from furlough pay because the respondent genuinely but incorrectly believed that the claimant should be paid 80% of base salary excluding the tronc – that being what they could claim under the CJRS? 2 Taken from page 135. 3 Taken from page 135

[139]You might reasonably argue that the last NMW related deduction was temporally linked to the first furlough related deduction because they overlapped: March 2020 contained a furlough related deduction and (for the purposes of this analysis) a potential NMW related deduction. I consider Group 4 Nightspeed (several instances of unpaid commission which were all failures to pay contractual commission) to be a quite different situation to the present case. There are quite different sets of facts underpinning these two arguments (as demonstrated by the detail with which each have had to be considered in this judgment). The first depended upon findings of fact about the claimant’s working hours. The second depended upon findings of fact about the agreement between employer and employee about pay. I do not consider the NMW based deduction claims to be part of a series of deductions together with the furlough based deduction claims.

[140]Having made findings which mean that the latest the NMW based deduction could have occurred was in the February 2020 pay period, the three month time limit started to run on 7 May 2020. There is no question but that the claimant would or ought to have been aware of that because he accepts that he did not work excessive hours from December 2019 onwards and was on furlough for much of 2020. It was reasonably practicable for him to have presented a claim based on that argument in time and the employment tribunal does not have jurisdiction to consider so much of his unauthorised deduction from wages claim as is based upon the argument that the respondent failed to pay him in accordance with the implied term that his gross pay should be at least equal to the multiple of his hours worked and the NMW. No reason has been advanced as to why it was not reasonably practicable to claim sooner.

[141]However, the unauthorised deduction from wages claim succeeds overall. The amount of the deduction is 80% of (£2,000 – £1,667) p.c.m. multiplied by the number of months he was on furlough. That would need to be adjusted to take account of flexi-furlough. I accept the figures from the claimant’s schedule of loss which have reduced the amount claimed by the ratio of hours worked to hours available to work for that month. March 2020 £368.15 April 2020 £266.40 May 2020 £266.40 June 2020 £266.40 July 2020 £247.25 August 2020 £567.46 September 2020 £685.66 October 2020 November 2020 £266.40 December 2020 £481.11 January 2021 £266.40 February 2021 £266.40 March 2021 £266.40 April 2021 £266.40 May 2021 £200.79 TOTAL £4,681.62

[142]I turn next to the constructive dismissal claim and consider whether the respondent did any of the following thingsa. unreasonably require the claimant to work overtime without pay or failed to pay the claimant for over time worked

b. pay the claimant less service charge than was paid to the other employees

c. unilaterally change the terms and conditions of the claimant employment to include service charge in his basic pay

[143]There was an express term of the contract that the claimant should not be paid for overtime. I have found that he was required to work some additional hours in excess of the contractual 48 hours a week. This was not to the extent alleged by the claimant. My findings are that until 15 December 2019 the claimant was probably required to work an additional five hours a week together with one further hour I say this amounts to our once a month. This was not insignificant. There are three reasons for this: the additional five hours a week took the claimant outside the maximum 48-hour working week set out in the Working Time regulations 1998 and the one additional hour a month probably meant that on that particular day you did not have his prescribed rest breaks and he was paid less than NMW as a result.

[144]However when the claimant complained about the hours that he was working the respondent sat down with him and agreed that in the future he would stick to 48 hours that were in his contract of employment. That was on 15 December 2019 and the claimant accepted that he was not required to work more than those hours without pay after that date. Therefore although this was a breach of contract the respondent put their house in order in terms of the hours they were expecting the claimant to work and did not commit any further breach.

[145]As I have explained above, it seems likely that the respondent was in breach of an implied term to pay the claimant that was no less then the national minimum wage up until February 2020. That is not the breach relied on for the purposes the constructive dismissal claim.

[146]The respondent did pay the claimant on some occasions less by way of service charge than was paid to at least one other employee. That employee, a chef received service charge payments that are set out in para.64 above. The real difference it seems to me between their situations was that the chef in question appears to have been paid tronc that varied at least twice whereas I have found that the claimant’s service charge was in fact not discretionary.

[147]It is impossible on the information in front of me to make a finding about whether that was to the claimant’s disadvantage will not. He was clearly aggrieved that the amount of his service charge was less than the chef but there is insufficient reason for me to think that this was capricious or unreasonable. They carried out very different roles with very different value to the business. The tronc rules did not accurately represent the agreement between the respondent and the claimant which about the basis of which payments were made to the chef. On balance the respondent has done enough to persuade me that there were valid reasons to distinguish between the payments by way of service charge to the chef and those to the claimant. There is evidence that the claimant was occasionally late and that Mr McArthur had cause to remind the claimant not to take cigarette breaks during working time. These were not reasons for me to make specific findings about the hours worked by the claimant but they are certainly matters that the respondent would have been entitled to take into account when deciding to pay to the chef a variable amount and to reward performance and good conduct.

[148]It is accepted that the respondent in about May 2021 announced that the tronc system would be disbanded and the service charge incorporated into the basic pay for all employees. In the claimant’s case this was merely to recognise the true contractual position that he was entitled to a guaranteed payment of £2000 per calendar month so the impact on him was that he would additionally have deductions made for employees national insurance contributions. The reason why the respondent did this was that they had made a business decision not to charge an automatic service charge to their customers which they hoped would encourage the clientele to leave cash tips which would be distributed among the staff.

[149]Taking into account the extent to which the claimant has shown the matters relied on were made out I do not consider individually or cumulatively that they amount to a breach of the implied term of mutual trust and confidence. That is because the test for that is that the employer has behaved without reasonable or proper cause in a way that seriously damages or destroys the relationship of trust and confidence. I have accepted that there was a entirely valid reason why the service charge was to be incorporated into the basic pay namely that it was no longer to be charged to the customers. The action would mean that the employees suffered no real detriment because their basic pay would be increased. The claimant’s fear that the would use this as a pretext to force him to work additional hours without pay because they would be at little or no risk that his hourly rate would drop below the national minimum wage is one that I think had no justifiable basis in fact. This is because the respondent had acted promptly to address his concerns about excess hours when he raised them in 2019.

[150]There are a number of ways in which one could criticise this respondent’s handling of employee relations but on two occasions in their relationship with the claimant they have shown themselves responsive to his concerns: when they increased his salary and when they agreed strictly to observe his maximum contractual hours. In my experience this is not the hallmark of an employer who is heedless about their employees’ working conditions. They would benefit from clear guidance about the formalities which need to be observed in order to protect employee rights.

[151]I therefore do not consider that the employer was in repudiatory breach of contract at the time that the claimant resigned. His evidence appears to be that he resigned because he feared the respondent would require him to work so many hours without additional pay that he would be paid less than National Minimum Wage four hours worked. This was set against the background of his perception that in the past he had worked many hours unpaid overtime which he thought he should be compensated for over and above his basic salary. This was coupled with his belief that others were receiving a larger share of the service charge and that meant he felt undervalued (see para. 102 above). In principle therefore the claimant did resign in response to the matters that he alleges were breaches of the 152. on 31 May 2021 he was not dismissed because the respondent was not in repudiatory breach of contract. The facts I have found do not amount to a breach of the trust and confidence claim as set out in Malik.

[153]The claimant brought forward by his resignation on 8 June 2021 because he realised that the increase of his basic pay by the amount of the service charge was being introduced immediately and his view was that he did not agree to it. I have found that, in essence, the service charge was a device by which the claimant was paid an element of his guaranteed salary. I reject the argument that this amounted to a repudiatory breach of contract when the respondent changed the means by way which the claimant was to be paid his full entitlement. This it seems to me cannot be a breach of contract in itself, particularly when the change meant he was to be paid in according with the true terms of the contract, and therefore if one considers the act of the claimant in bringing forward the termination of his employment separately that does not amount to a dismissal either.

[154]Although I have accepted that part of the reason for the claimant’s resignation with the pre-December 2019 requirement that he should work overtime without pay and that that was a breach of contract at the relevant time the claimant continued to work after the issues regarding overtime had been dealt with for 17 months. I am quite satisfied that in continuing to work, in accepting pay, in agreeing to go on furlough and to return to work from furlough the claimant affirmed the contract of employment after that breach.

[155]To the extent that it remains a live issue I do not consider that in the handling of the grievance procedure the respondent is guilty of any unreasonable breach of the ACAS code of practice relating to grievance procedures.

[156]For those reasons I do not need to go on to consider any remedy issues arising out of the unfair dismissal or wrongful dismissal claim.