Ms C Milne v Fairwayrock Components Ltd: 4107129/2023

EMPLOYMENT TRIBUNALS (SCOTLAND)

Case No 4107129/2023

Between

Ms Claire MilneClaimant

Fairwayrock Components LtdRespondent

Before

Employment Judge Campbell

Date 21 May 2024

JUDGMENT

[1]The claim of unfair dismissal succeeds,

[2]The claim of unlawful deduction from wages succeeds,

[3]The claim for holiday pay succeeds,

[4]Accordingly the claimant is awarded:a. A basic award of £783.23

b. A compensatory award of £999.69

c. The sum of £8,014.00 in respect of unpaid wages and

d. The sum of £797.09 in respect of accrued annual leave, and the respondent is hereby ordered to pay those sums to the claimant.

REASONS

Summary

[1]This claim arises out of the claimant's employment with the respondent which ended with her dismissal. She alleges that she was unfairly dismissed, and that at the date of dismissal she was due outstanding wages which were not later paid to her. She also claims payment for notice which was not given, and accrued annual holidays.

[2]The respondent did not defend the claim. A hearing was scheduled to decide the complaints. The claimant gave evidence. Mr Gary Homewood, a director of the respondent, joined the hearing. He was permitted to give evidence as he was in a position to clarify some relevant matters and, ultimately, assist the claimant.

[3]The respondent submitted a numbered set of 16 documents and some were referred to in the hearing. Where referred to below, the number of the document appears in square brackets.

Relevant law

[1]By virtue of Part X of the Employment Rights Act 1996 (the 'Act'), an employee is entitled not to be unfairly dismissed from their employment. The right is subject to certain qualifications based on matters such as length of continuous service and the reason alleged for the dismissal.

[2]Unless the reason for dismissal is one which will render termination automatically unfair, the employer has an onus to show that it fell within at least one permitted category contained in section 98(1) and (2) of the Act. Permissible reasons for dismissal include redundancy.

[3]Should the employer be able to do so, a tribunal must consider whether it acted reasonably in relying on that reason to dismiss the individual. That must be judged by the requirements set out in section 98(4) of the Act, taking in the particular circumstances which existed, such as the employer's size and administrative resources, as well as equity and the substantial merits of the case. The onus of proof is neutral in that exercise.

[4]An employee is entitled to pay in lieu of unused annual leave on the termination of their employment, by virtue of Regulations 13 and 13A of the Working Time Regulations 1998. Their accrued leave will be taken as the proportion of their annual entitlement matching the proportion of the leave year worked by the time of termination, less any leave actually taken.

[5]By virtue of section 13 of the Act a worker is entitled not to have unauthorised deductions made from their wages. Therefore, subject to specific exceptions provided for in that part of the Act, there will have been an unauthorised deduction if the worker is paid less than they have earned, depending on how their earnings are calculated, or not paid at all for their work. The date of the deduction is deemed to be either the day when less is paid to them than they have earned, or when they would normally have been paid but were not. A complaint can be made about a series of deductions if the situation is repeated. Legal issues The legal issues to be decided were as follows: 1. Was the claimant's dismissal on 11 August 2023 for a potentially fair reason within section 98(1) or (2) of the Employment Rights Act 1996 (the 'Act')?; 2. If so, did the respondent act reasonably in the circumstances by dismissing the claimant for that reason, within the terms of section 98(4) of the Act?; 3. Did the respondent not pay the claimant, or pay her less than she was entitled to, in breach of section 13 of the Act?; 4. Was the claimant paid in lieu of any accrued and untaken annual leave as at the date of dismissal?; 5. If any of the claims succeed, what compensation is due? Findings of fact The following findings of fact were made:

Findings of fact

[1]The claimant worked as a Content Marketing Associate with the respondent between the dates of 4 May 2021 and 11 August 2023. The respondent company operated a price comparison shopping website.

[2]The claimant was paid an annual salary equivalent to £1,697 gross per month and £1,444 net. She was paid on or around the 10th of each month.

[3]The respondent began to experience cash flow difficulties and did not pay its five employees on 10 March 2023. They were asked into a meeting by Mr Gary Homewood, sole director of the respondent and he explained the issues the company was going through. He explained that he was trying to secure external funding.

[4]The position continued into April and May, with no wages being paid for those months. In May the claimant told Mr Homewood that she had booked a holiday in June and needed to pay the balance of the cost. On 25 May he paid her the sum of £650 towards her outstanding wages to cover this. It was paid directly to her account without any deductions. It came out of a grant the business had just received. Each employee was paid a share.

[5]The claimant continued to work as normal in the hope that things would improve. Others in the team resigned. She received no pay in June or July.

[6]On 20 July 2023 the claimant submitted a written grievance to Mr Homewood [7]. She explained that the ongoing lack of payment of wages was causing her difficulty, and she had resorted to paying living expenses using a credit card. She was unable to claim any benefits because she was still in employment. She said she had done her best to be patient, but needed to know when her wages from March onwards would be paid to her. She asked Mr Homewood to confirm whether her wages would be paid by 10 August, so she could consider her next steps.

[7]The grievance was acknowledged by the General Manager, Lynette McCraith, in the absence of Mr Homewood. She promised they would both consider it on or around 24 July [8].

[8]Ms McCraith issued a written response to the grievance on 24 July 2023 [9]. She reiterated than the business had been going through financial difficulties and Mr Homewood was trying to secure investment. She said that with regret she was unable to say when the company would be able to pay all of her outstanding wages.

[9]The claimant was given the opportunity to appeal against the grievance outcome which she did by email dated 4 August 2023 [13]. Receipt was acknowledged by Ms McCraith [14].

[10]The grievance process was overtaken by events shortly after. On Friday 11 August 2023 Mr Homewood convened one-to-one virtual meetings with each of the remaining employees and told them that their employment was being terminated with immediate effect. It had still not been possible to find investors and the company could not afford to pay staff.

[11]The claimant's dismissal was confirmed by letter from Mr Homewood dated 14 August 2023 [15]. It referred back to the Teams meeting the Friday before, and confirmed that the claimant's contract of employment 'has been terminated, effective 10 August, due to the financial uncertainty of the business.' The letter went on to say: As the organisation is not in a position to be able to pay your wages or make redundancy payments, I would suggest you seek advice from the UK government website, www.redundancypaymentsonline.gov,uk (030 331

[0020]and ACAS, www.acas.orq.uk.'12. Although the letter stated the termination date as 10 August, that could not be so as the claimant had not been told on that date that her contract was being terminated. Her termination date was 11 August 2023, when her dismissal was confirmed to her verbally.

13. The respondent's holiday year is the calendar year. The claimant was entitled to 28 days per annum, four of which were to be taken at Christmas and New Year. She took 5 days of leave in 2023.

14. Mr Homewood was frank in explaining that the respondent found itself in difficulty after a joint venture with another company unexpectedly ceased. The process of securing external investors is still ongoing, but has taken months longer than expected due to, among other things, a need for FCA approval of any investors. This is expected to be secured, but not until June 2024 on current information. He confirmed that the claimant was a valued employee with no performance or conduct issues.

15. The claimant began employment with another organisation on 4 September 2023 and she was still in that role at the time of the hearing. She saw no reason why she would not remain in the role for the foreseeable future. She is now being paid more than her salary with the respondent. She therefore entirely mitigated her financial losses from that date onwards.

16. The claimant's contractual entitlement to notice of termination of employment was the same as her statutory right, namely two weeks.

17. The claimant began early conciliation via ACAS on 14 October 2023, which ended on 25 November 2023. She presented her claim to the employment tribunal on 25 November 2023. Discussion and decision Unfair dismissal

18. Where it is agreed that a claimant was dismissed, as here, the onus is on the respondent to prove that they did so for a fair statutory reason. The list of possible reasons is found within section 98(1) and (2) of ERA. The respondent indicated, in correspondence such as document [15] and Mr Homewood's evidence, that the reason for dismissal was redundancy. That is a potentially fair reason under section 98(2)(c).

19. The claimant appeared to accept that this was the reason for her dismissal. She did not challenge it. The test of redundancy is found in section 139 ERA and it requires that there should be either a cessation of the business, or a reduction in the requirement for employees to carry out work of a particular kind. The first of those circumstances did not apply, as technically the respondent's business was still trading, but the second did. The respondent no longer needed its staff to carry out their duties. There was sufficient evidence therefore to establish that the claimant was dismissed for the potentially fair reason of redundancy. 20. If an employer is to dismiss an employee fairly on grounds of redundancy, it must normally inform them of the relevant details of the situation and consult about it. Consultation may be about whether there need to be redundancies at all or whether some other solution can be explored to alleviate the employer's difficulties, or consultation about numbers of redundancies, roles affected, selection methods or other aspects of the process. It can include discussion about ways to minimise the impact of redundancies if they do have to take place. Only rarely, if there are special circumstances which render it impossible to consult, is an employer absolved of this requirement.

[21]There was no consultation at all with the claimant or her colleagues. Each of their dismissals was a foregone conclusion. There was no forewarning of the situation and no opportunity for the claimant to give her view on the situation, propose any alternatives to her redundancy or to suggests ways of mitigating its effect if it could not be avoided. The claimant had already been employed for a number of months without pay by this point, and there was no discernible reason why consultation could not have started earlier, or at least been undertake for a short period in August.

[22]Consequently, the requirement of section 98(4) of the Act to act reasonably in all of the circumstances was not met. The claimant's dismissal was therefore unfair.

[23]In terms of remedy, the claimant is entitled first to a basic award. This is calculated in the same way as a statutory redundancy payment. She would have been entitled to claim for a redundancy payment, but that is now largely academic as she would not be entitled to that and a basic award, and they are both of the same value. Her gross weekly pay is calculated at £391.62 and she was entitled to two weeks, reflecting her two years of service, making £783.23 after rounding.

[24]An employment tribunal can also make a compensatory award in an unfair dismissal claim. This is designed to compensate the claimant for the financial loss sustained as a result of being dismissed. The claimant was out of work between 12 August and 3 September 2023. She mitigated her loss by seeking further work and was able to do so. She did not sustain any financial loss from 4 September onwards as she was paid at least as much in her new role as she was by the respondent.

[25]Her losses between 12 August and 3 September 2023 amount to net pay for essentially three weeks, equating to £999.69. This is arrived at by multiplying net monthly salary of £1,444 by 12 to get an annual figure, then dividing by 52 weeks, then multiplying by three weeks. Arrears of pay and holiday pay

[26]By the admission of Mr Homewood, the claimant was not paid her entitlement to salary from 11 February to 11 August 2023 - i.e. six months. This was a series of deductions, each deduction occurring with the non-payment of her monthly salary on the date it was due. The last of those was therefore on 11 August 2023, meaning that the claim for the whole series was presented in time.

[27]The claimant earned £1,444 net per month and so the total value of the series of deductions was £8,664. From this the payment made to her of £650 needs to be deducted, leaving £8,014 due.

[28]Similarly it was admitted that the claimant had not been paid for any accrued holidays at the point of her dismissal. She was entitled to 28 days each calendar year, and so had accrued 61% of that entitlement (i.e. 223 days out of 365) on 11 August 2023. That amounted to 17 days. She had taken five days, and so was entitled to payment for the remaining 12.

[29]There were 260 working days (weekdays) in 2023. 12 days as a fraction of that is 0.046, or 4.6%. The claimant is therefore entitled to 4.6% of her net annual salary of £17,328, which is £797.09.

Conclusion

[30]By the respondent's admission, the claimant was dismissed without any process, despite there being a fair statutory reason for doing so, namely redundancy. She had not been paid her normal salary for six months by that point, and was not compensated for her accrued holidays. The above sums are awarded in compensation for her successful complaints.