Mr M KangClaimantMetagravity Group LimitedRespondent
Before
Employment Judge RamsdenDate 18 June 2025
JUDGMENT
[1]The Employment Tribunal is the appropriate forum to decide this dispute, pursuant to section 15C(2)(a) of the Civil Jurisdiction and Judgments Act 1982.[2]The Respondent breached the Claimant’s employment contract by failing to pay his salary in respect of the period 1 to 26 April 2024, and by failing to pay him in lieu of his six days of accrued but untaken holiday on the termination of his employment.[3]The Respondent did not breach the Claimant’s employment contract by failing to reimburse him expenses.[4]The Respondent is Ordered to pay the Claimant the sums of: a) US $10,833.33, in respect of salary due to him in respect of 1 to 26 April 2024; and b) US $3,561.54, in lieu of six days’ accrued but untaken annual leave on the termination of his employment.[5]The Claimant must account for any income tax and/or social security contributions he owes on any sums paid to him pursuant to this judgment. 1 of 14
REASONS
[6]These written reasons are provided at the request of the Respondent following oral reasons given earlier today.
Background
[7]The Claimant is a US national.[8]The Respondent is a UK-incorporated and based software development company.[9]The Respondent recruited the Claimant to take up the role of Head of Business Development (APAC). The role was based entirely in South Korea, and the Claimant was expected to build interest in the Respondent’s product in the Asia Pacific region. There was no expectation of the Claimant working in the UK.[10]The Claimant commenced employment with the Respondent on 15 May 2023. The Claimant’s written contract of employment, dated the same day, contained the following provisions: a) “The validity, construction and performance of this Agreement will be governed by and construed in accordance with the laws of England and Wales and each of you [the Claimant] and the Company [the Respondent] irrevocably agree to submit to the exclusive jurisdiction of the courts of England and Wales over any claim, dispute or matter arising under or in connection with this Agreement.” (Clause 20.8) b) “We will work with you in the next 3 months to localise this contract (either employment or B2B) and ensure that it is fully localised and compliant with Korean regulations, tax and social charges.” (Clause 3.5) c) “Your place of work will be your home or our office as mutually agreed (hybrid working) in the APAC cluster (Seoul) which is GMT+8 hours.” (Clause 7.1) d) “Your working hours will be from 8:30AM to 6:30PM in your local time zone from Monday to Friday (inclusive)…”. (Clause 7.3) e) “Regulation 4(1) of the Working Time Regulations 1998 (“WTR”) provides that your average working time, including overtime, should not exceed 48 hours for each seven day period…”. (Clause 7.6) f) “In addition to your basic salary, you will be reimbursed all reasonable expenses properly and exclusively incurred by you in the performance of your duties for the Company, subject to you complying with our expenses policy from time to time in force.” (Clause 3.3) g) “We may also deducted from your salary or other payments due to you, to the extent permitted by law, any money which you may owe to the 2 of 14 Company at any time, and you hereby authorise and consent to any such deduction.” (Clause 3.4) h) “You are entitled to 28 days paid holiday during each holiday year (or the pro rata equivalent if you work part time), which includes local national public holidays.” (Clause 9.1) i) “No payment in lieu will be made for holiday days not taken, except on the termination of your employment, when you will be paid in lieu of holiday not taken but accrued in the holiday year and cumulatively. The amount of the payment in lieu will be 1/260th of your full time equivalent salary for each accrued holiday day.” (Clause 9.5)[11]Despite the parties’ expectation that the Claimant’s employment contract, or a “business-to-business” contract (referred to by the parties as a B2B contract), would be “localised”, no replacement written contract was entered into between them. It is clear from correspondence that the parties both intended to enter into a business-to-business contract, whereby the Claimant would become an independent contractor for the Respondent. The Respondent avers that the parties had a common understanding that the Claimant came to be an independent contractor, but the Claimant disputes that.[12]The Respondent Staff Handbook, dated April 2022, contained the following: a) In section 10, relating to holiday: “On termination of employment you may be required to use any remaining holiday entitlement during your notice period. Alternatively, you will be paid in lieu of any accrued but untaken holiday entitlement for the current holiday year to date, plus any holiday permitted to be carried over from previous years under this policy or as required by law. You are entitled to be paid at a rate of 1/260th of your full-time equivalent basic salary for each day of untaken entitlement.” b) In section 33, relating to expenses: “Expenses will only be reimbursed if they are:(a) submitted to a director on the appropriate claim form;(b) submitted within 28 days of being incurred;(c) supported by relevant documents (for example, VAT receipts, tickets, and credit or debit card slips); and(d) authorised in advance where required… You may entertain actual or prospective clients only where your proposal and an appropriate budget has been agreed in writing in advance with a Director. Receipts must be submitted in full with your expenses claim.”[13]The Claimant was paid without deductions from his pay for UK income tax or employee’s National Insurance contributions, and the Respondent understood 3 of 14 that the Claimant made arrangements in South Korea to account for any taxes and social security payments owed by him in respect of the sums paid to him by the Respondent.[14]The Claimant was given notice to terminate his employment by reason of redundancy on 9 March 2024, providing for six weeks’ notice to expire on 26 April 2024. That letter encouraged (but did not require) the Claimant to take any remaining accrued holiday entitlement, or he would be paid the remaining balance if his employment is terminated.[15]The Claimant then resigned on 27 March 2024, giving one month’s notice, which would expire on the same day as the notice given to him by the Respondent – 26 April 2024.[16]On 15 April 2024, Tobin Ireland, the Respondent’s Co-Founder and then-Chief Business Officer, emailed the Claimant to express concern that as he had finished his handover he would be at a loose end for the next two weeks. He wrote: “We obviously can’t have you sitting around doing nothing on full pay, so what I thought is that you could do a market assessment project for us along the lines of the industry document for Korea that I’ve just sent your on Slack.” The email went on to give further detail of Mr Ireland’s expectation of the report the Claimant was to produce.[17]The Claimant’s employment ended on 26 April 2024.[18]The Respondent paid the Claimant in full for the period to the end of March 2024, but it agrees that it did not pay the Claimant: a) Salary in respect of 1 to 26 April 2024 (US $10,833.33); b) So as to reimburse expenses which the Claimant says he incurred in the course of his work for the Respondent (which he says amount to US $450.85); and c) In lieu of the six days’ annual leave he had accrued, and he says he had not taken by the termination of his employment (valued at US $3,561.54).[19]On 26 April 2024, the Claimant’s last day of employment, the Respondent wrote to the Claimant, noting that, since the Claimant’s resignation: “We have subsequently entered into correspondence about how we were not happy with your conduct during your handover period, including your lack of availability for scheduled meetings, the completeness of your handover, the quality of the word produced on the APAC strategy paper we asked you to write, and your refusal to attend the scheduled final handover meeting. We do not believe that you have honoured your professional responsibilities to the company.” 4 of 14 That letter contained an open offer to settle the dispute between them, which was not accepted by the Claimant.[20]Following a period of ACAS Early Conciliation which began on 16 June and ended on 20 June, both of 2024, the Claimant presented a claim to the Employment Tribunal on 21 June 2024.[21]This matter came before EJ England for final determination on 15 January 2025, but was not ready for determination, and so was relisted for today’s date.[22]The Claimant’s complaints, as discussed at the outset of this hearing, are that: a) The Respondent breached his contract of employment by:(i) Failing to pay him his salary for 1 to 26 April 2024;(ii) Failing to reimburse his expenses; or(iii) Failing to pay him in lieu of the holiday he says he had accrued but not taken by the termination of his employment; b) In the alternative, that the Respondent made unauthorised deductions from his wages in breach of section 23 of the Employment Rights Act 1996 (the 1996 Act); c) In the alternative, that the Respondent failed to pay him in lieu of his accrued but untaken annual leave in breach of Regulation 14 of the Working Time Regulations 1998 (the WTR).[23]The Respondent says that: a) The Claimant failed to carry out the amount of work he was obliged to by the terms of his contract of employment in the period 1 to 26 April 2024, and therefore it does not owe him salary for that period, so there was no breach of contract by the Respondent, and no unauthorised deduction from wages because those wages were not properly payable because the condition for receiving them (i.e., work by the Claimant) was not fulfilled; b) The sums claimed by the Claimant by way of expenses were not properly incurred in the performance of his duties for the Respondent, and therefore it is not in breach of his contract of employment by failing to reimburse them; and c) The Claimant worked so little in the period 1 to 26 April 2024 that it has treated him as effectively taking his accrued annual leave in that period, and therefore no sum is owed by it to him in respect of annual leave, whether pursuant to his contract of employment or the WTR.[24]It is clear from the terms of the contract of employment between the Claimant and the Respondent that: a) The applicable law governing that contract is English law; and 5 of 14 b) The parties have agreed that the courts (or tribunals) of England and Wales have exclusive jurisdiction to determine disputes concerning it.[25]The merits of the Claimant’s complaints, and the Respondent’s resistance of them, only fall to be considered if this Tribunal has the power to determine them. A preliminary question arises as to whether an Employment Tribunal in England the forum where this dispute is properly to be determined.[26]If it is, and the Claimant’s breach of contract complaints do not succeed in relation to the non-payment of his salary and the non-payment of his accrued holiday, questions arise as to the territorial scope of each of the 1996 Act and the WTR, and whether those statutory protections extend to the Claimant’s work for the Respondent. The questions for the Tribunal[27]As discussed with the parties, the questions for the Tribunal in this case were: a) Is an Employment Tribunal in England the forum where this dispute is properly to be determined? b) Had the employment contract between the parties be replaced by an independent contractor agreement? c) What is the applicable law by which the contract between the parties is governed? d) Do each the Claimant’s breach of contract complaints (pertaining to salary, expenses and holiday pay) succeed? If so, what damages award should be awarded? e) If the Claimant’s breach of contract complaint in respect of unpaid salary does not succeed, does the 1996 Act apply to the Claimant’s employment? f) If so, does his complaint of unauthorised deductions from his wages succeed? If so, how much should he be awarded by way of compensation? g) If the Claimant’s breach of contract complaint in respect of accrued holiday does not succeed, do the WTR apply to the Claimant’s employment? h) If so, does his complaint that Regulation 14 of the WTR has been breached succeed? If so, how much should he be awarded by way of compensation?
The hearing
[28]The Respondent was represented in the hearing by its Chief Executive Officer, Rashid Mansoor. The Claimant presented his own case.[29]The Claimant, ordinarily resident in South Korea, had flown to Malaysia in order to be able to give oral evidence in the case. 6 of 14[30]Mr Mansoor was in Dubai, and the hearing was also attended by the Respondent’s HR Manager, Weronika Olko, who attended from Poland.[31]No bundle was provided by the parties, but each party sent a number of documents to the Tribunal and the other side. a) The Claimant sent:(i) A copy of his contract of employment with the Respondent;(ii) A copy of the Respondent’s Employee Handbook;(iii) A copy of a document sent by the Respondent to the Claimant dated 9 March 2024, entitled “Notice of potential redundncay [sic] with regards to employment contract”;(iv) A copy of Project for next 2 weeks;(v) Some correspondence between the parties, marked as “without prejudice” and relating to attempts to settle the dispute them – which was not taken into consideration by the Tribunal; and(vi) Termination of employment. b) The Respondent sent: (i) A copy of the contract of employment between it and the Claimant; (ii) The Claimant’s curriculum vitae or resumé; (iii) An email dated 12 October 2023; (iv) An email dated 19 June 2023; (v) An email dated 10 July 2023; (vi) A LinkedIn;(vii) A copy of email correspondence for the period 15 to 26 April 2024;(viii) A copy of a document entitled “APAC Market Overview”;(ix) A copy of a presentation entitled “APAC Market Overview”;(x) Notice of potential redundancy;(xi) Resignation;(xii) An email from Felix Olko, who had line-managed the Claimant, and the Respondent’s HR manager, in which Mr Olko responded to questions about the latter part of the Claimant’s employment; and(xiii) Some written submissions on the issues in the case.[32]The Tribunal heard evidence from: a) The Claimant, on his own behalf; 7 of 14 b) Feliks Olko, the Respondent’s Vice President of Commercial and formerly the Claimant’s line manager, on behalf of the Respondent; and c) Weronika Olko, the Respondent’s HR Manager, on behalf of the Respondent.[33]Each of the Respondent and the Claimant made submissions in support of their respective positions. Law Appropriate forum[34]Employment Tribunals are creatures of statute, and can only determine disputes where they have been given the power to do so.[35]Section 15C of the Civil Jurisdiction and Judgments Act 1982 (as amended) provides that: “(1) This section applies in relation to proceedings whose subject-matter is a matter relating to an individual contract of employment. (2) The employer may be sued by the employee—(a) where the employer is domiciled in the United Kingdom, in the courts for the part of the United Kingdom in which the employer is domiciled, ... (6) Subsections (2) and (3) may be departed from only by an agreement which— (a) is entered into after the dispute has arisen, or(b) allows the employee to bring proceedings in courts other than those indicated in this section…”. Applicable
Law
[36]Prior to the UK’s withdrawal from the European Union, the applicable law in contract-related cases, which included employment cases, was determined by the EU Regulation on the law applicable to contractual obligations (No.593/2008), known as the ‘Rome I Regulation’.[37]The European Union (Withdrawal) Act 2018 provided for the retention of the Rome I Regulation in UK law.[38]Articles 3(1) and 8(1) of the Rome I Regulation provide that an employment contract is governed by the law chosen by the parties. Breach of employment contract by an employee[39]In the case of an employee who is paid monthly for work performed, without reference to piecework or some other measure of output, unless an employment 8 of 14 contract contains an express right for an employer to pay an employee less if they, for example, fail to work all the working hours they are obliged to, or fail to perform their work to the standard expected, or the employer can otherwise show that by means of an implied term or custom and practice they may do so, the employer has no right to reduce the employee’s pay.[40]Where one party to a contract of employment commits a repudiatory breach, being either: a) A breach which goes to the root of the contract; or b) By the breaching party’s words or conduct indicate that they no longer intend to honour future obligations under the contract, the innocent party may accept that repudiatory breach and bring the contract to an immediate end.[41]Whether a breach is a repudiatory one is a question of fact.[42]A repudiatory breach does not automatically bring an employment contract to an end – it gives the innocent party the right of election as to whether or not to accept the breach and bring the contract to an immediate end (Geys v Société Générale, London Branch [2013] ICR 117). Whether the innocent party has accepted the repudiation is a question of fact.[43]Where an employer has purported to accept a fundamental breach by the employee and do that, the tribunal must examine: a) Whether the employee breached the contract of employment; b) Whether the breach was fundamental, going to the heart of the contract (Wilson v Racher [1974] ICR 428); and c) Whether the employer accepted that breach without affirming the contract. Application to the claims here Is an Employment Tribunal in England the forum where this dispute is properly to be determined?[44]Yes, section 15C(2)(a) of the Civil Jurisdiction and Judgments Act 1982 (as amended) applies: the Respondent may be sued by the Claimant in England and Wales, because that is the domicile of the Respondent. What was the contract that governed the relationship between the parties – the contract of employment provided to the Tribunal, or an independent contractor agreement?[45]The parties agree that they entered into the written contract of employment on 15 May 2023.[46]The parties had a common intention to change the arrangement between them so that the Claimant provided his services to the Respondent as an independent 9 of 14 contractor, but the evidence does not support implying that such a contract was entered into between them. The Respondent continued to treat the Claimant as an employee (e.g., giving him notice to terminate his employment by reason of redundancy). There is no evidence to suggest that an independent contractor agreement was entered into between them, and any such evidence would need to be very powerful for a subsequent oral agreement to displace a written signed employment contract. What is the applicable law by which the contract between the parties is governed?[47]As noted in the Law section above, the European Union (Withdrawal) Act 2018 preserves the Rome I Regulation position – the law governing the contract between the Claimant and the Respondent is the law of England and Wales, as provided by clause 20.8 of that contract. Neither party has sought to argue that that clause does not apply. If so, do each the Claimant’s breach of contract complaints succeed? Salary[48]As noted above, the standing arrangement under the contract of employment between the Claimant and the Respondent was that, in return for the Claimant’s work, the Respondent would pay him. It is for the Respondent to prove to the Tribunal’s satisfaction that that standing arrangement was displaced by what in fact occurred.[49]The Respondent seeks to argue that that standing arrangement was breached by the Claimant’s failure to perform work. There is some limited correspondence from the Respondent to the Claimant in this period where Mr Ireland expressed concern at the amount of work being performed by the Claimant, but that was after-the-event, on the last day of the Claimant’s employment, when Mr Ireland called into question the amount of the Claimant’s work in the handover period of 1 to 14 April 2024, and in respect of the period 15 to 26 April, when the Claimant was to carry out a market assessment.[50]The terms of the contract of employment between the parties did not expressly entitle the Respondent to reduce the Claimant’s pay if he did not work for the hours the contract provided for. Moreover, the contract gave the Respondent an express right to suspend the Claimant for misconduct (Clause 18.3), but the Respondent did not exercise that during April 2024.[51]The questions for the Tribunal are therefore whether the Respondent has shown that: a) The Claimant breached the contract of employment between them; b) That breach was fundamental, going to the heart of the contract; and c) It accepted that breach without affirming the contract. 10 of 14[52]The Respondent has shown the Tribunal relatively contemporaneous evidence from Mr Ireland that the Respondent was dissatisfied with the amount of work performed by the Claimant in April 2024, and some after-the-event recollections from Mr Olko that some work was performed by the Claimant in this period, but that it was limited.[53]The Tribunal considers that this is far from establishing that the Claimant fundamentally breached the contract between them. The Claimant performed some work, albeit there are questions about the amount of work. The Claimant was not ‘pulled up on it’ at the time. The Claimant was not suspended from work, or warned of any misconduct process. Moreover, the Respondent had identified his role at risk of redundancy, meaning that it regarded there as being a diminished need for the work the Claimant did. There is no evidence of anyone liaising with the Claimant about the content of the market appraisal report he was to put together, and while the Respondent has estimated that the amount of work involved in the APAC report and presentation was two hours at best, there was no prescribed minimum time period stipulated for the task that was assigned to him.[54]There is absolutely no evidence to indicate that the Respondent accepted any fundamental breach by the Claimant and brought the contract to an earlier end that his notice period provided for. Indeed, the Respondent agreed at the outset of the hearing that the Claimant’s employment ended on 26 April 2024.[55]There is certainly no question of the Respondent bringing contract to an end before 15 April 2024 – Mr Tobin gave the Claimant a new assignment on that date.[56]After that time, there is no evidence until the conclusion of the contract that the Respondent regarded the Claimant as in breach of his contract, or that that breach had been accepted.[57]The Claimant’s complaint that the Respondent was in breach of his contract of employment by failing to pay him in respect of his period of employment from 1 to 26 April 2024 succeeds. The amount of compensation claimed by the Claimant is not disputed by the Respondent. The Respondent must pay the Claimant US $10,833.33, in respect of salary due to him in respect of 1 to 26 April 2024. Expenses[58]It is for the Claimant to show that the expenses in question complied with the terms of clause 3.3 of his contract of employment and the terms of the Staff Handbook, i.e., that: a) They were reasonably and properly incurred; b) They were exclusively incurred in the performance of his duties for the Respondent; 11 of 14 c) He submitted an appropriate claim form to a director in respect of each of them; d) Appropriate claim forms were submitted within 28 days of each expense being incurred; e) The expenses submitted were supported by relevant evidence; and f) Where those expenses related to entertaining actual or prospective clients, they were authorised in advance by a director.[59]The Claimant is hampered in this regard by the fact he lost access to the Respondent’s Xero software, where such expense claims were filed, on the termination of his employment. The Claimant did not apply for specific disclosure of those records, or complaint that the Respondent did not disclose them.[60]Ms Olko gave oral evidence that the disputed expenses were not authorised by the Claimant’s line manager (Mr Ireland) on the Xero system.[61]The Tribunal concludes that the Claimant has not discharged the burden of proof that rests with him to show that the breach he alleges occurred, and the Tribunal concludes that he has not discharged it. Compensation in respect of accrued but untaken holiday[62]The parties agree that the Claimant would have accrued six days’ holiday upon the termination of his employment if he did not take any of it. It is for the Respondent to show, therefore, that either the contract of employment came to an end earlier (which the Tribunal has already determined did not occur), or that the Claimant did take that holiday in that period. The Respondent has not discharged that burden. Whilst it is clear that it encouraged the Claimant to take holiday leave in his notice period, it did not instruct him to do so (as it left the option of payment in lieu ‘on the table’ should he not take it), so the Claimant did not breach an instruction by not taking that leave.[63]This complaint succeeds. The amount at issue was not disputed by the Respondent. The Respondent must now pay the Claimant US $3,561.54, in lieu of six days’ accrued but untaken annual leave on the termination of his employment. If the Claimant’s breach of contract complaint in respect of unpaid salary does not succeed, does the 1996 Act apply to the Claimant’s employment? If so, does his complaint of unauthorised deductions from his wages succeed? And if so, how much should he be awarded by way of compensation?[64]This need not be considered given the Tribunal’s conclusion on the breach of contract complaint concerning unpaid salary. 12 of 14 If the Claimant’s breach of contract complaint in respect of accrued holiday does not succeed, do the WTR apply to the Claimant’s employment? If so, does his complaint that Regulation 14 of the WTR has been breached succeed? And if so, how much should he be awarded by way of compensation?[65]This need not be considered given the Tribunal’s conclusion on the breach of contract complaint concerning compensation in respect of accrued but untaken holiday on the termination of the Claimant’s employment.
Conclusions
[66]For all of the above reasons the Tribunal finds that: a) The Employment Tribunal is the appropriate forum to decide this dispute, pursuant to section 15C(2)(a) of the Civil Jurisdiction and Judgments Act 1982; b) The relationship between the parties was governed by the written contract of employment between them, dated 15 May 2023. This had not been displaced by an independent contractor agreement; c) The Claimant’s contract of employment with the Respondent was governed by English law; d) The Respondent breached the Claimant’s employment contract by failing to pay his salary in respect of the period 1 to 26 April 2024 and must now pay him US $10,833.33; e) The Respondent breached the Claimant’s employment contract by failing to pay him in lieu of his six days of accrued but untaken holiday on the termination of his employment, and must now pay him US $3,561.54 by way of damages; and f) The Respondent did not breach the Claimant’s employment contract by failing to reimburse him for expenses. The Claimant has not satisfied the Tribunal that those expenses met the conditions for reimbursement set out in the Claimant’s contract of employment, incorporating provisions from the Respondent’s Staff Handbook.[67]The Claimant must account for any income tax and/or social security contributions he owes on any sums paid to him pursuant to this judgment.