Mrs K Kadar v Highland Holiday Home Cleaning Ltd and Others: 4103650/2023

EMPLOYMENT TRIBUNALS (SCOTLAND)

Case No 4103650/2023

Between

Mrs Klara KadarClaimant

Highland Holiday Home Cleaning Ltd and OthersRespondent

Before

Employment Judge W A Meiklejohn

Dr T Kadar for claimant

Claimant’s husband for claimant

HighlandHoliday Home Cleaning Ltd for claimant

Date 13 October 2023

JUDGMENT

The Judgment of the Employment Tribunal is as follows -(a) The correct identity of the respondent is Monika Szabo and Sandor Szabo trading as Highland Holiday Home Cleaning and Maintenance (hereafter the “Respondent”);

(b) The Respondent made unauthorised deductions from the wages of the Claimant and the Respondent is ordered to pay to the Claimant the sum of ONE THOUSAND TWO HUNDRED AND TWENTY EIGHT POUNDS AND FORTY ONE PENCE (£1228.41).

(c) The Respondent failed to pay the Claimant holiday pay to which she was entitled on termination of employment and the Respondent is ordered to pay to the Claimant the sum of TWO THOUSAND SIX HUNDRED AND TWENTY NINE POUNDS AND SIXTY PENCE (£2629.60).

(d) The Respondent failed to provide the claimant with a written statement of initial employment particulars and, in terms of section 38 of the Employment Act. 2002, the Respondent is ordered to pay to the Claimant the sum of ONE THOUSAND THREE HUNDRED AND EIGHT SIX POUNDS (£1386.00).

REASONS

[1]This case came before me for a final hearing, conducted remotely by means of the Cloud Video Platform (“CVP”), to deal with both liability and remedy in respect of the claims brought by the Claimant. The Claimant was represented by her husband, Dr T Kadar. None of the respondents had submitted a Notice of Appearance and none of them had representation at the hearing (although the Third Respondent attended briefly, as described below). The claimant had the services of a Hungarian interpreter, Ms A Gyongy. Nature of claims

[2]The claims brought by the Claimant related to(a) alleged underpayment of the wages to which she 'was entitled in her role of Housekeeper,

(b) alleged nonpayment of wages to which she was entitled in respect of additional work undertaken by her at Nethy Bridge Community Centre and

(c) alleged nonpayment of holiday pay to which she was entitled on termination of employment. (The Claimant spoke of the “Nethy Bridge Common Hall” but I was satisfied that it was the Nethy Bridge Community Centre to which she was referring).

[3]In relation to (a) (underpayment of wages) Dr Kadar advised that the sum of £980.19 had very recently been paid into the Claimant’s bank account. This was the amount in which the underpayment claim was quantified in the .Claimant’s ET1 claim form. It was understood that this payment had been made by the Respondent. Dr Kadar confirmed that this satisfied the Claimant’s underpayment of wages claim, and this claim was no longer being pursued. Procedural history

[4]When she initiated these proceedings, the Claimant believed her employer to be the First Respondent. The First Respondent was a limited company incorporated in Scotland on 4 February 2019 with company number SC620055. The claimant was not aware at that time that the First Respondent had been dissolved on 5 January 2021, and therefore no longer existed when the claim was commenced.

[5]Prior to presenting her ET1 claim form, the claimant notified ACAS to initiate Early Conciliation (“EC”). The date of her notification was 4 May 2023 and the date of the issuing by ACAS of the EC certificate was 15 June 2023. The claimant’s ET1 was received by the Employment Tribunal on 6 July 2023.

[6]Unfortunately, when completing the ET1 on the Claimant’s behalf, Dr Kadar had(a) inserted his own details at section 1 (where the Claimant’s details should have appeared) and

(b) inserted the Claimant’s details at section 2 (where the First Respondent’s details should have appeared). This meant that the ET1 did not conform with the EC certificate issued by ACAS and the claim was rejected.

[7]Dr Kadar submitted on the Claimant’s behalf an application for reconsideration of the rejection in terms of Rule 13 of the Employment Tribunal Rules of Procedure 2013. This was accompanied by an amended version of the Claimant’s ET1 identifying all four of the respondents as the parties against whom, the claim was brought. It was also accompanied by ACAS EC certificates in respect of the Second Respondent, the Third Respondent and the Fourth Respondent. The application for reconsideration was granted (without a hearing) by Employment Judge MacLean. The claim was then accepted and was treated as having been presented on 13 July 2023.

[8]On 27 July 2023 the claim was intimated to all of the respondents, This included notice of a two hour final hearing to take place by video at 11,00 on 9 October 2023. None of the respondents lodged a Notice of Appearance. The case was then referred to a Legal Officer (Booth) who, after consulting an Employment Judge (Hendry), directed that the final hearing should be extended to one day as there were issues of time bar and the correct identity of the employer to be resolved.

[9]An amended notice of final hearing was then issued on 15 September 2023 (marked “For Information Only" in the case of the respondents). This advised that the starting time of the final hearing had been changed to 10.00 on 9 October 2023. Time bar

[10]An issue of time bar (ie whether the claim had been presented within the applicable statutory time limits) arose because -(a) Time began to run (for the purpose of those time limits) from 21 March 2023 when the claimant’s employment ended (in the case of her holiday pay claim) and 4 April 2023 which appeared from the Claimant’s March 2023 payslip to have been the date of her final payment of wages (in the case of her unauthorised deduction of wages claim).

(b) The normal time limits therefore expired on 20 June 2023 (in respect of the holiday pay claim) and 3 July 2023 (in the case of the unauthorised deduction of wages claim). The claim was treated as lodged on 13 July 2023 and was therefore out of time, unless the time limits required to be extended by the period of EC (as EC operates to “stop the clock”).

(c) This was not an issue in respect of the First Respondent since the EC period in that case was 42 days (see paragraph 5 above) and, when this was added on to the normal time limits, it took the deadline well beyond the date of submission. However, in the cases of the Second, Third and Fourth Respondents, the dates of the notification to ACAS and the issuing of the EC certificate were both 13 July 2023. That meant there was no EC period to add on and so, on the face of it, the claims against those other respondents were out of time.

[11]Section 23(4) of the Employment Rights Act 1996 (“ERA”) provides as follows “Where the employment tribunal is satisfied that it was not reasonably practicable for a complaint under this section to be presented before the end of the relevant period of three months, the tribunal may consider the complaint if it is presented within such further period as the tribunal considers reasonable.” The Tribunal has a similar discretion to extend the normal three month time limit in terms of Regulation 30(2)(b) of the Working Time Regulations 1998 (“WRT”).

[12]In his application on behalf of the Claimant for reconsideration of the rejection of the original ET1, Dr Kadar explained that he and the Claimant had been unaware that the First Respondent had been dissolved. He had explained to ACAS during the EC period (in relation to the First Respondent) that there might be an issue with the correct identity of the employer because the business was carried on under the name of the Second Respondent. He had anticipated that this might be resolved during EC but the respondents had not engaged with ACAS so this did not happen.

[13]I was satisfied that the Ciaimant reasonably believed that(a) her employment had initially been with the First Respondent but

(b) there was an element of doubt by the time she initiated EC because the business was carried on under a different name (being the name of the Second Respondent). It had been reasonable for the Claimant to present her claim against the party by which she understood she had originally been employed, when she had not been advised of any change in the identity of her employer.

[14]The Claimant’s ignorance of the true identity of her employer at the time she presented her original claim was reasonable, and meant that it had not been reasonably practicable for her to present her claim in time against the Second, Third and Fourth Respondents. I was satisfied that the Claimant had acted promptly in presenting her amended ET1 (along with the application for reconsideration) and that this had been done within a reasonable period after the expiry of the primary time limits. Accordingly I found that the claim against these parties was not time barred and could proceed. Identity of respondent

[15]I was able to address this matter only after hearing the Claimant’s evidence but as it was identified effectively as a preliminary point to be decided at the final hearing, it is convenient to deal with it here. From the moment of its dissolution on 5 January 2021, the First Respondent ceased to exist as a legal entity. Notwithstanding this, the business by which the Claimant was employed continued to operate. Her payslips identified her employer as Highland Holiday Home Cleaning and Maintenance.

[16]I was satisfied that the business operating as Highland Holiday Home Cleaning and Maintenance was carried on by the Third Respondent and the Fourth Respondent. This was done through the medium of a limited company up to the point of the dissolution of the First Respondent. Thereafter, I found that there was a partnership between the Third Respondent and the Fourth Respondent which operated the business under the same name. They were carrying on the business in common with a view to profit which satisfied the definition of “Partnership” in section 1(1) of the Partnership Act 1890. The correct identity of the Respondent was therefore as described in my Judgment above. Third Respondent

[17]it is also convenient to record here that the Third Respondent was admitted to the CVP room during the hearing at 10.28. She told me that she had not been aware of the starting time of the hearing until very recently. I explained that as it was a public hearing of the Tribunal, she was entitled to observe. However, she could only participate to the extent I might allow (reflecting Rule 21(3) of the Tribunal Rules).

[18]I indicated that I was not minded to allow the Third Respondent to participate in the hearing. The Third Respondent then indicated that she would leave the CVP room and she did so at 10.33.

Evidence

[19]I heard oral evidence from the Claimant. Dr Kadar had submitted a number of documents in advance of the hearing and I took account of these to the extent that they were referred to during the Claimant’s evidence. Findings in fact

[20]Given that the underpayment of wages claim had been settled (see paragraph 3 above) the Claimant’s evidence related only to the other aspects of her claim. Additional work

[21]The Claimant was given work to do by the Respondent at the Nethy Bridge Community Centre from October 2020. This was over and above her normal cleaning work. Initially the Claimant worked an additional 1 5 minutes per day, 7 days a week, giving a total of 1.75 extra hours each week. From October 2022, this increased to 2 extra hours each week (and for ease of calculation I have assumed that this change occurred on or around 14 October 2022). This additional work continued until the Claimant’s employment ended on 21 March 2023 (with the exception of weeks when the Claimant was on holiday).

[22]The Claimant expected to be paid for these additional hours of work at the same hourly rate as she received for her normal cleaning work. She was entitled to be paid for these hours, but was not. The Claimant did not agree in writing (or otherwise) to any deduction being made from her wages.

[23]The Claimant’s net pay during her period of employment was as follows -(a) From the start of her employment until March 2022, £1 250 per month.

(b) From April 2022 until 23 February 2023, £1400 per month.

[24]The Claimant’s evidence was that her net pay was increased to £15 per hour as from 23 February 2023. I did not find this credible. The documents produced for the Claimant included a copy of an advertisement for cleaners for the Respondent’s business (C12) at an hourly rate of £12, increasing to £14 after two months, described as “the HIGHEST HOURLY RATE in the area”. It was highly improbable that these figures indicated net pay.

[25]What was credible was that the Claimant’s gross pay increased from £14 per hour to £15 per hour from 23 February 2023. This was supported by the reference in her March 2023 payslip to a rate of £14 per hour. The Claimant asserted that this was incorrect, but it made sense that this had been her gross hourly rate up to 23 February 2023 because (a) that appeared to be the rate at which other cleaners recruited by the Respondent were being paid and (b)£15 per hour gross represented an increase of 7%, whereas £15 per hour net would have represented an increase (based on my calculations below) of more than 85%. Adjustments in income tax and National Insurance contributions would affect the net pay position. However, in the absence of information about this, I found that, it was reasonable to assume that the Claimant’s net. pay also increased by 7% from 23 February 2023.

[26]I accepted the claimant’s evidence that the amounts she had actually been 5 paid (prior to 23 February 2023) reflected the net pay set out at sub-paragraphs 23(a) and (b) above, notwithstanding that her payslips showed these amounts as being her gross pay. This point was made in her ET1 claim form in relation to underpayment of wages. The fact that the Respondent had actually paid the amount claimed in respect of underpayment of wages supported the io claimant’s position. Holidays

[27]The Claimant was not given a statement of employment particulars at the start 15 of, nor at any time during, her period of employment. Notwithstanding this, the Claimant understood that her annual holiday entitlement was 28 days. This was indicative of working five days per week, which in turn indicated working (on average) eight hours per day (as the Claimant’s ET1 stated that she worked 40 hours per week).

[28]During 2020, because of the coronavirus pandemic, the Claimant was unable to travel. She would normally have visited her mother in Hungary but did not do so. The Claimant did travel to Hungary to see her mother in 2021 and 2022. She took one week’s holiday on both occasions, for which she was paid.

[29]The Claimant did not take any other holidays during her period of employment. She was not paid for holidays which she had accrued, but not taken, on termination of her employment. Comments on evidence

[30]It is always more difficult to assess credibility when evidence is given through an interpreter, but I found no reason to doubt that the Claimant was a truthful witness. She answered questions without hesitation and consistently. I found 35 her to be credible.

Applicable law

[31]In relation to the claim for payment of wages for the time spent cleaning the Nethy Bridge Community Centre, the following provisions of section 13 ERA were engaged -(1) An employer shall not make a deduction from wages of a worker employed by him unless - (a) the deduction is required or authorised to be made by virtue of a statutory provision or a relevant provision of the worker’s contract, or (b) the worker has previously signified in writing his agreement or consent to the making of the deduction.

(2) In this section “relevant provision”, in relation to a worker’s contract, means a provision of the contract comprised - (a) in one or more written terms of the contract of which the employer has given the worker a copy on an occasion prior to the employer making the deduction in question, or (b) in one or more terms of the contract (whether express or implied and, if express, whether oral or in writing) the existence and effect, or combined effect, of which in relation to the worker the employer has notified to the worker in writing on such an occasion.

(3) Where the total amount of wages paid on any occasion by an employer to a worker employed by him is less than the total amount of the wages properly payable by him to the worker on that occasion (after deductions), the amount of the deficiency shall be treated for the purpose of this Part as a deduction made by the employer from the worker’s wages on that occasion....”

[32]In relation to the claim for payment for holidays accrued but not taken on termination of employment, the relevant provisions of WRT were engaged. Regulations 13 and 13A deal with the entitlement to 5.6 weeks’ annual leave (ie 28 days per year). In the absence of a relevant agreement (such as a written contract of employment) the holiday year runs from the employee’s start date. Regulation 13 contains the following provisions - a (9) Leave to which a worker in entitled under this regulation may be taken in instalments, but -(a) subject to the exception in paragraphs (10) and (11), it may only be taken in the leave year in respect of which it is due, and

(b) it may not be replaced by a payment in lieu except when the worker’s employment is terminated. (10) Where in any leave year it was not reasonably practicable for a worker to take some or all of the leave to which the worker was entitled under this regulation as a result of the effects of coronavirus (including on the worker, the employer or the wider economy or society), the worker shall be entitled to carry forward such untaken leave as provided for in paragraph (11). (11) Leave to which paragraph (10) applies may be carried forward and taken in the two leave years immediately following the leave year in respect of which it is due.” Discussion and disposal

[33]I was satisfied that(a) the Claimant had undertaken cleaning work at Nethy Bridge Community Centre which was additional to her normal duties and

(b) she had not been paid for this work. I was also satisfied that the Claimant was entitled to be paid for this additional work at the same hourly rate as for her normal duties.

[34]In her ET 1 the Claimant stated that she worked 40 hours per week.. This meant that her hourly rate was as follows -(a) In the period up to 31 March 2022 - £7.21. This figure represents £1250 (the Claimant’s net monthly pay) multiplied by 12 (months in the year) divided by 52 (weeks in the year) divided by 40 (hours worked per week).

(b) In the period up to 23 February 2023 - £8.08. This figure represents £1400 (the Claimant’s net monthly pay) multiplied by 12 (months in the year) divided by 52 (weeks in the year) divided by 40 (hours worked per week).

[35]Before calculating the amount to which the Claimant was entitled, I had to take account of section 23(4A) ERA. This provides - “An employment tribunal is not (despite subsections (3) and (4)) to consider so much of a complaint brought under this section as relates to a deduction where the date of payment of the wages from which the deduction was made was before the period of two years ending with the date of presentation of the complaint.’'

[36]The “wages from which the deduction was made” in this case were the monthly payments to the Claimant in the two years prior to presentation of her claim on 13 July 2023. Each of these should have included payment for hours worked at Nethy Bridge Community Centre. To the extent that the wages paid during that period did not include hours worked by the Claimant at Nethy Bridge Community Centre, there had been unauthorised deductions from the Claimant’s wages.

[37]I calculated the amount of the unauthorised deductions as follows -(a) In the period from 13 July 2021 to 31 March 2022 (36 weeks, allowing for one week of holiday) the Claimant should have been paid for 1.75 hours per week at £7.21 per hour giving a total of £454.23.

(b) In the period from 1 April to 14 October 2022 (27 weeks, allowing for one week of holiday) the Claimant should have been paid for 1.75 hours per week at £8.08 per hour giving a total of £381.78.

(c) In the period from 15 October 2022 to 22 February 2023 (20 weeks) the Claimant should have been paid for 2 hours per week at £8.08 per hour giving a total of £323.20.

(d) In the period from 23 February to 21 March 2023 (4 weeks) the Claimant should have been paid for 2 hours per week at £8.65 per hour giving a total of £69.20.

[38]The total of the unauthorised deductions made by the Respondent from the Claimant’s wages is accordingly £1 228.41. This represents the net amount of pay due to the Claimant. It will be for the Respondent to account to HM Revenue and Customs (“HMRC”) for the appropriate amounts in respect of income tax and National Insurance contributions.

[39]Turning to holiday pay, I was satisfied that the Claimant was entitled to 28 days of holiday in each leave year. Her leave year ran from 1 July. In terms of holidays taken, I found that-(a) In the leave year beginning on 1 July 2020, the Claimant had been unable to travel as she might otherwise have done as the result of restrictions due to the coronavirus pandemic.

(b) In the leave year beginning on 1 July 2021, the Claimant had taken one week of holiday for which she had been paid.

[40]I was satisfied that it had not been reasonably practicable for the Claimant to take some of the leave to which she was entitled in the holiday year commencing 1 July 2020 as a result of travel restrictions (preventing her from visiting her mother in Hungary) introduced because of coronavirus. That meant Regulation 13(10) WTR was engaged.

[41]Regulation 16(1) WTR confers on a worker the right to be paid at the rate of a week's pay in respect of each week of annual leave to which he/she is entitled under Regulations 13 and 13A WTR. However, Regulation 16(4) WTR provides - “A right to payment under paragraph (1) does not affect any right of a worker to remuneration under his contract (“contractual remuneration”) and paragraph (1) does not confer a right under that contract.”

[42]The underlined words were introduced into the WTR by the Deduction from Wages (Limitation) Regulations 2014. These Regulations also introduced section 23(4A) ERA. The intention was to limit claims for arrears of pay to the relevant period of two years. This followed the decision of the Employment Appeal Tribunal in Bear Scotland Ltd v Fulton and another

[2015] ICR 221

[43]For the sake of completeness I should add that Dr Kadar was clearly aware at the hearing that an important aspect of the decision in Fulton, that a gap of more than three months interrupted a series of unlawful deductions, had been overruled by the Supreme Court in Chief Constable of the Police Service of Northern Ireland and another v Agnew and others

[2023] UKSC 33

. The present case does not involve a series of deductions (for holiday pay purposes) but a failure to pay for accrued but untaken holidays on termination of employment.

[44]I understand the effect of the amendment to Regulation 16(4) WTR to be that claims for arrears of holiday pay need to be brought in the Employment Tribunal as unauthorised deduction of wages claims to which section 23(4A) ERA applies, so as to restrict recovery to the relevant period of two years.

[45]On that basis, the arrears of holiday pay due to the Claimant on termination of her employment are calculated as follows -(a) The relevant period is two years ending on 13 July 2023 (date of presentation of the claim).

(b) During that period the Claimant accrued the right to holidays - (i) Between 13 July 2021 and 30 June 2022 - 27 days (annual entitlement of 28 days multiplied by 50 weeks in this period, divided by 52). (ii) Between 1 July 2022 and 21 March 2023 - 21 days (annual entitlement of 28 days multiplied by 39 weeks in this period, divided by 52).

(c) From the aggregate of 48 days, there require to be deducted the 10 days taken by the Claimant, leaving an accrued but untaken entitlement of 38 days.

(d) In respect of each day of this accrued but untaken holiday entitlement, the Claimant is entitled to a day’s pay at the rate applicable when her employment ended.

(e) A day’s pay as at 21 March 2023 was 8 hours multiplied by £8.65 which equals £69.20.

(f) 38 days at a daily rate of £69.20 produces a total of £2629.60.

(g) This represents the net amount of holiday pay due to the Claimant. It will be for the Respondent to account to HMRC for the appropriate amounts in respect of income tax and National Insurance contributions.

[46]Finally, I turn to section 38 of the Employment Act 2002. This provides, so far as relevant, as follows - (1) This section applies to proceedings before an employment tribunal by a worker under any of the jurisdictions listed in Schedule 5. (3) If in the case of proceedings to which this section applies - (a) the employment tribunal makes an award to the worker in respect of the claim to which the proceedings relate, and (b) when the proceedings were begun the employer was in breach of his duty to the worker under section 1(1) or 4(1) of the Employment Rights Act 1996 .... the tribunal must, subject to subsection (5), increase the award by the minimum amount and may, if it considers it just and equitable in all the circumstances, increase the award by the higher amount instead. (4) In subsections (2) and (3) - (a) references to the minimum amount are to an amount equal to two weeks’ pay, and (b) references to the higher amount are to an amount equal to four weeks’ pay. (5) The duty under subsection (2) or (3) does not apply if there are exceptional circumstances which would make an award or increase under that subsection unjust or inequitable. . ..

[47]Applying this to the present case -(a) The jurisdictions engaged in this case are included in Schedule 5.

(b) The Respondent had not given the Claimant a statement of initial employment particulars as required under section 1(1) ERA.

(d) I decided that as there had been no compliance (as opposed to partial or inadequate compliance) with section 1(1) ERA, it was appropriate to award the higher amount

[48]A week’s pay in this case amounts to £346.50 (40 hours at £8.65 per hour). The award of four weeks’ pay therefore amounts to £1386.00.