Mr L Adach v Just 3 Architectural Aluminium Ltd (In voluntary liquidation): 6004080/2024
JUDGMENT
[1]The respondent has failed to file an ET3 Grounds of Resistance in this case and failed to attend the final hearing. The Tribunal proceeded to hear and determine the claim in the absence of the Respondent and in the absence of a Respondent’s ET3 in accordance with rules 21 and 47 of the Rules of Procedure.[2]The claim for constructive unfair dismissal succeeds. The claimant is entitled to a basic award in the total sum of £2,800.[3]The claim for unauthorised deductions from wages and breach of contract in respect of wages succeeds. The respondent failed to pay the claimant the full amount of wages due between 1 April 2024 to 23 May 2024 and is ordered to pay the claimant the sum of £7,307.70 gross.[4]The respondent failed to pay the claimant the full amount of accrued but unpaid holiday allowance on termination and is ordered to pay the claimant the sum of £2,211.56 gross.[5]The claim for breach of contract for notice pay does not succeed.[6]The respondent failed to comply with the ACAS Code of Practice on Disciplinary and Grievance Procedures and the award made to the claimant is increased by £3,079.82 being a 25% uplift to the award.[7]The respondent has entered voluntary liquidation and the claimant has been referred to the National Insurance Fund by the liquidators. Any sums not recovered by that fund remain due by the respondent.REASONS
[1]The claimant was an estimator employed by the respondent between 1 September 2019 and 23 May 2024. The respondent failed to pay the claimant his wages from 1 April 2024 onwards. The claimant resigned on 23 May 2024. ACAS was notified under the early conciliation procedure on 7 May 2024 and the certificate was issued on 18 June 2024. The ET1 was presented on 18 June 2024. The Respondent failed to present an ET3. Procedure and Evidence Rule 21[2]The respondent was sent the notice of claim and notice of hearing on 22 July 2024 but failed to respond. The Tribunal made enquiries and determined that the company was still active at that time. They wrote to the respondent on 30 September 2024 to tell them that as they had failed to present a response to the claim, a judgment may be issued. They were told they would be able to participate in any hearing to the extent permitted by the Employment Judge hearing the case.[3]The claimant confirmed that the registered address for the respondent of Unit 43, Greenway Business Park, was a storage facility on the same site as the respondent’s office at Unit 18, Greenway Business Park. Both addresses had physical post boxes where post would be delivered or it could be handed to the concierge for the business park. Lack of attendance from respondent[4]The respondent did not respond to the Tribunal’s correspondence and did not attend the hearing on 7 November 2024.[5]I proceeded to hear the claim in the absence of the respondent under rule 21 and 47 Rules of Procedure. Correct respondent[6]During the course of the proceedings, the Companies House record changed to record that the respondent was not in voluntary liquidation. Accordingly the name of the respondent is changed to Just 3 Architectural Aluminium Ltd (in voluntary liquidation). Claimant’s evidence[7]The claimant provided a number of documents including payslips for 2024 including the month of April 2024 in which he was not paid, his P60 from April 2023 being the last year in which he received one, HMRC records showing his employment and pay history, a template contract of employment from his work with a former company in which he was employed by Mr Tweedie of the respondent, correspondence between himself and Mr Tweedie, their accountants and other employees. The claimant provided a signed letter from his colleague and a former director of the respondent Mr Alessio Miscera.[8]The claimant gave evidence under oath and was able to clearly articulate his claim and the basis for it. He provided additional documents on request to evidence his explanations as to his employment and how it had ended. These included his pay slips, HMRC records and copies of correspondence he had received from insolvency practitioners appointed to wind up the respondent company. The correspondence is dated 7 October and 24 October 2024.The issues
[9]The issues in the case were: 1. Constructive unfair dismissal:a. Did the respondent fail to pay the claimant sums due as wages?b. Did that breach the claimant’s contract of employment?c. Was the breach a fundamental one such that the claimant was entitled to treat the contract as being at an end?d. Did the claimant resign in response to the breach?e. Did the claimant affirm the contract before resigning?f. Is the claimant entitled to a basic award and if so how much? (The claimant did not seek a compensatory award) 2. Unlawful deduction of wages: a. Did the respondent make an unauthorised deduction from wages by withholding payment of wages between 1 April 2024 and 23 May 2024, and if so how much is the claimant entitled to? b. Was the claimant entitled to payment for any accrued but untaken holiday pay and if so how much? 3. Breach of contract: a. Was the claimant contractually entitled to a notice payment and if so, how much? 4. ACAS Code of Practice a. Did the respondent unreasonably breach the ACAS Code of Practice on Grievances by failing to engage with the claimant’s grievance and if so, should compensation be uplifted and if so by how much?Findings of Fact
[10]The claimant was employed by the respondent as an estimator from 2 September 2019 until 23 May 2024. The director of the company was a Mr James Tweedie. The claimant had worked for Mr Tweedie in his previous companies, namely Clapton Glass from 2006 to 2011 then London Architectural Glazing (“LAG”) from 2011 to 2019. In his work for the respondent, the claimant’s normal practice was to work from home attending the office on a Monday and Friday.[11]On or around 20 April 2024, the relationship with a key client of the respondent ended. The claimant noticed on Friday 26 April 2024 that he had not been paid his wages and attended the respondent’s office with his colleague Mr Miscera the following week. The respondent operated from an office at Unit 18 Greenway Business Centre in Harlow and also had a storage facility with a physical post box at Unit 43 of the same site.[12]They were shocked to find that the office had been closed down and emptied out. Their personal items were no longer in the office and to this day have not been given back to them. Both units were locked and no one was present. The concierge staff confirmed that the office had been cleared earlier on around 22 April 2024.[13]Due to the office being closed down, the claimant does not have access to his written contract of employment. He has provided a historic contract from when he worked for Mr Tweedie at LAG and says the terms were broadly the same. I accept this is the case and accept that he was entitled to receive 20 days holiday per year plus bank holidays, that is 28 days per year. The holiday year ran from 1 January – 31 December each year and holiday was accrued at a rate of 1/12 per month. The claimant did not take any annual leave in 2024 and so his full holiday allowance was outstanding.[14]The contract of employment dated 2011 does not state the claimant’s rate of pay. The claimant’s final pay slip of financial year 2023/2024 dated 29 March 2024 records that he received an annual gross pay of £50,000 and £47,812.08 for tax. These sums are confirmed by the HMRC records provided.[15]The claimant’s monthly gross pay was £4,166.67. He received a payslip relating to April 2024 recording that he was due to receive £4,166.67 gross. He explained, and the HMRC records shown to the Tribunal confirm, that he did not receive this sum.[16]Adding back in the employee and employer pension contributions that were not paid, the claimant was due £3,439.38 net for the month of April 2024.[17]The claimant’s weekly pay can be calculated as follows:a. Weekly gross pay at the time of resignation was £961.54 (£4,166.67 * 12 / 52).b. Weekly net pay at the time of his resignation was £793.70 (£3,439.38 * 12 / 52).c. Daily gross pay at the time of resignation was £192.31 (£961.54 / 5).d. Daily net pay at the time of resignation was £158.74 (£793.70 / 5)[18]The claimant and Mr Miscera tried to contact Mr Tweedie a number of times to seek payment of their unpaid wages including:a. By WhatsApp on 29 April 2024 and 30 April 2024.b. By email from Mr Miscera to Mr Ellis of the respondent and Mr Tweedie on 2 and 3 May 2024. I accept that the Claimant also tried to contact Mr Tweedie by phone and text.[19]Mr Tweedie did not reply. Mr Ellis did not engage with the requests for payment.[20]On 1 May 2024, the claimant issued a formal grievance sending it by email to Mr Tweedie at his professional and personal addresses. The grievance said: “James, I am writing to you to raise a formal grievance. As you know, the last month’s wages were not paid last week. I have tried contacting you on a number of occasions. You have not responded once, blocking my number, and refraining from further correspondence. Our office has been emptied and personal items removed. You have not given us a notice or confirmed the status of our employment. Let me know when we can meet to discuss my grievance. I would like to be accompanied at the meeting by Alessio and your personal assistant Ed Ellis. Lucasz Adach”[21]Mr Tweedie did not acknowledge or reply to the grievance.[22]On 23 May 2024, the claimant resigned with immediate effect. He did not give notice. He informed Mr Tweedie that he was resigning “in response to a repudiatory breach of employment contract by you as my employer”. He referred to the attempts he had made to contact Mr Tweedie by phone, text, WhatsApp and email to discuss the grievance of unpaid wages. He requested payment for unpaid wages and holiday and for his P45 and P60 to be sent to his home address. These were never sent.[23]The claimant commenced new employment on 28 May 2024. He received £350 in benefits payments prior to this date.[24]On 4 July 2024, the claimant contacted Owen White, Accountants Assistant instructed by the respondent, to request his P45 and P60. He was told that the accountant had spoken to Mr Tweedie and he had advised that the last pay run he was included on was March 2024 and therefore he would not receive a P45 for the tax year. He was sent a P60 for year ending 5 April 2023 but not for the year ending 5 April 2024.[25]On 7 October 2024, the claimant was contacted by Seneca, Insolvency Practitioners Ltd to inform him that the company had decided to commence liquidation proceedings and to invite creditors to a virtual meeting on 29 October 2024. He was told that the company was no longer able to make payments to him for services under his contract of employment which terminated on 23 May 2024 and that he was entitled to be paid any arrears of pay, accrued holiday pay or pay in lieu of notice out of the National Insurance Fund.[26]During the course of Tribunal deliberations, the company status has changed on Companies House to now record the extraordinary resolution to wind up the company on 29 October 2024 and that the voluntary liquidator has been appointed. The company is now in liquidation and the respondent’s name is changed accordingly. Applicable Law Constructive dismissalApplicable Law
[27]Section 95(1)(c) of the Employment Rights Act 1996 provides that an employee is taken to be dismissed by his employer if “the employee terminates the contract under which he is employed (with or without notice) in circumstances in which he is entitled to terminate it without notice by reason of the employer’s conduct”.[28]In order to claim constructive dismissal, an employee must establish that there was a fundamental breach of contract on the part of the employer, the breach caused the employee to resign and the employee did not delay too long before resigning. Unlawful deduction from wages under section 13 Employment Rights Act[29]Section 13(1) of the Employment Rights Act 1996 provides that an employer shall not make a deduction from wages of a worker employed by him unless 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 the worker has previously signified in writing his agreement or consent to the making of the deduction. An employee has a right to complain to an Employment Tribunal of an unlawful deduction from wages pursuant to Section 23 of the Employment Rights Act 1996.[30]The definition of “wages” in section 27(1)(a) Employment Rights Act 1996 includes holiday pay. Breach of contract[31]Proceedings may be brought before an Employment Tribunal in respect of a claim for the recovery of damages or other sum if the claim arises or is outstanding on the termination of the employee’s employment (Regulation 3, The Employment Tribunals Extension of Jurisdiction (England and Wales) Order 1994).[32]An employer will be in breach of contract if they terminate an employee’s contract without the contractual notice to which the employee is entitled, unless the employee has committed a fundamental breach of contract which would entitle the employer to dismiss without notice.[33]A claim for unpaid wages and holiday pay may also be brought as a claim for breach of contract. ACAS Code of Practice on Disciplinary and Grievance Procedures (2015)[34]The ACAS Code of Practice on Disciplinary and Grievance Procedures (2015) applies to claims of unlawful deduction from wages pursuant S.207A of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A) and Schedule A2.[35]The tribunal may increase or decrease an award by up to 25% if it considers it just and equitable to do so if the employer has unreasonably failed to comply with a relevant code of practice relating to the resolution of disputes, this includes the ACAS Code of Practice on Disciplinary and Grievance Procedures.Conclusion
[36]In applying the relevant law to my findings of fact I reach the following conclusions in respect of each of the issues identified at the outset of the hearing. Constructive unfair dismissal[37]The respondent breached the claimant’s contract of employment when it failed to pay him his wages due between 1 April 2024 and 23 May 2024. The claimant was entitled to resign in response to the breach and did so resign. The claim of constructive unfair dismissal succeeds. Basic pay award[38]The claimant is entitled to a basic award calculated in accordance with the statutory formula which takes into account age, weekly pay and number of years’ service. The claimant received £961.54 gross per week but the calculation is based on the statutory maximum gross weekly salary applicable for dismissals between 6 April 2024 to date which is £700. Basic pay = £700 * 1 * 4yrs = £2,800. Compensatory pay award[39]The claimant does not seek any loss of earnings beyond the date of his dismissal as he shortly mitigated his losses with new employment. The loss of earnings from 1 April 2024 until 23 May 2024 is accounted for below. Unlawful deduction from wages[40]The respondent did make an unlawful deduction of wages from the claimant in failing to pay him all of his salary due under his contract of employment between 1 April 2024 and 23 May 2024.[41]I accept the sums provided by the claimant and supported by payslips and HMRC records. The claimant is due the following sums: 1 April 2024 until 22 May inclusive 2024 = 7 weeks and 3 days = 7.6 * £961.54 = £7,307.70[42]Benefits received during this period have not been taken into account and the Tribunal has not provided a recoupment notice as the respondent is now in liquidation and the claimant will be seeking payment from the National Insurance Fund. The benefits payments and any tax and employee national insurance due will be recouped at that stage as described below.[43]The respondent is required to account to HMRC for the tax and employee national insurance due on any amount outstanding after National Insurance Fund payment which remains due by the respondent. Holiday pay[44]The claimant accrued holiday at a rate of 1/12th annual leave per month between 1 January 2024 and 23 May 2024 to be rounded up to the nearest half day. He therefore accrued 4.74 months annual leave at 2.33 days per month (28days / 12months) = 11.06 days, rounded up to 11.5 days. 11.5 days x £192.31 daily pay = £2,211.56 gross[45]As above, tax and employee national insurance payments due should be accounted for by the respondent or the National Insurance Fund. Breach of contract – notice payment[46]The claimant resigned without notice and without seeking a notice payment in his letter of resignation. This was his choice and accordingly he is not entitled to payment for notice. In any event, he has only suffered a nominal loss as he is due his unpaid wages for the majority of the month of May 2024 before he secured alternative employment. ACAS Code of Practice[47]The claimant made several attempts to resolve his pay dispute without litigation including phone calls, texts, WhatsApp messages and emails. He kept the respondent notified of these proceedings including sending them his schedule of loss. The respondent had sufficient information to know the unpaid wages sought and to engage with a plan to repay it however they failed to respond to the claimant and made no effort to resolve the pay dispute.[48]I consider that the claimant has acted reasonably throughout and would have been willing to resolve matters without litigation had he been given the opportunity to do so.[49]The respondent seemingly did engage with their accountant who referred to having spoken to him about the claimant coming off the payroll and did provide the claimant’s information to the appointed insolvency practitioners including providing them with the claimant’s termination date. There is no explanation for why they couldn’t equally engage with the claimant.[50]I conclude that the awards made should be increased by the full 25% to reflect the respondent’s unreasonable failure to engage with the grievance and so comply with the ACAS Code of Practice on Disciplinary and Grievance Procedures. This provides for the following figure: £2,800 + £7,307.70 + £2,211.56 gross = £12,319.26 * 25% = £3,079.82Summary
[51]The respondent is ordered to pay the following sums: Head of loss Sum ordered Basic award £2,800.00 Unpaid wages £7,307.70 Unpaid holiday £2,211.56 ACAS uplift at 25% £3,079.82 Total sum due £15,399.08 National Insurance Fund[52]Since deliberations began, the Companies House record confirms that the respondent is now in voluntary liquidation.[53]The following calculation is provided to assist the parties and not to bind them or the National Insurance Fund. It is understood that the following sums ought to be paid to the claimant from the Fund. Any sums unpaid remain the debt of the respondent: Head of loss Sum ordered NIF Balance to be paid by Respondent if NIF payment made Basic award £2,800.00 £2,800 £0 Unpaid wages £7,307.70 7.6 * cap of £700 £2,337.70 gross with = £5,320 less credit due for JSA £350 benefits = £4,970 gross Unpaid holiday £2,211.56 11.5 days * cap £601.56 gross of £140 = £1,610 gross ACAS uplift at £3,079.82 £0 £3,079.82 25% Total sum due £15,399.08 £9,380 £6,019.08