Mr R Smith v Brightdesk Ltd in Creditors Voluntary Liquidation and Others: 6014871/2024 and 6019900/2024
JUDGMENT
The judgment of the Tribunal is: that the claimant’s employment transferred by operation of the Transfer of Undertakings Protection of Employment Regulations 2006 from the first respondent to the third respondent on 31 January 2024 at a time when there was no insolvency in the first respondent which entered voluntary liquidation on 8 May 2024 and that therefore:[1]The complaints are dismissed as against the second respondent.[2]The claimant’s claim for a redundancy payment is well founded against the third respondent and succeeds. Case Nos: 6014871/2024 6019900/2024 2[3]The claimant’s claim for notice pay is well founded against the third respondent and succeeds[4]The claimant’s claim for holiday pay is well founded against the third respondent and succeeds. The third respondent is ordered to pay £ 9880 to the claimant made up as follows: Statutory redundancy pay 15x1.5x £ £281 gross week’s pay £ 6330 Notice pay 12 x £ 269 net week’s pay £ 3228 1 March 2024 – 24 May 2024 Outstanding holiday pay 28 days per annum pro rata 1 January 2024 – 1 March 2024 7 days less one day taken as BH 6 days Net week’s pay divided by 5 Day’s pay £ 53.80 x 6 £ 322 ___________________________ Approved for promulgation byREASONS
[1]By a claim form dated 12 October 2024 case number 6014871-24 (referred to as 4871) the claimant brought claims for redundancy pay, notice pay and holiday pay against his former employer R1.[2]He had made an application to the Redundancy Payments Office (RPO) and had that application rejected on the ground that his employment had transferred before termination to Brightdesk Upholstery Limited. At the time of his dismissal neither R1 nor R3 were insolvent. The claim was served on The Secretary of State (referred to as R2 or The SOS) who was added as second respondent. Case Nos: 6014871/2024 6019900/2024 2[3]The claimant brought a second claim, case number 6019900-24 (referred to as 9900) on 26 November 2024 against Brightdesk Upholstery Limited on the basis that his employment had transferred to it as transferee, for redundancy pay, holiday pay and notice pay.[4]He did not claim unfair dismissal despite having 15 years service. He just wanted redundancy, notice and holiday pay.[5]The claims were served on R3 at its address Linnyshaw Mill, 260 Manchester Road, Worsley, Manchester. M28 3TR. It was informed:[6]“R Smith has made an Employment Tribunal claim against you. A copy of the claim form is enclosed. If you want to defend it, you must complete the response form and submit it tothe Employment Tribunal. It must be by the Tribunal Office by 8 January 2025. If it is not, a Judgment may be issued against you.”[7]The SOS, R2 sent a response on 19 December 2024. It argued, succesfully that as neither R1 nor R3 were insolvent at the time of the transfer and R3 remains active, there is no role for it in these proceedings.[8]R1 wrote to say it would take no part in proceedings.[9]R3 did not submit a Response. It missed its 8 January 2025 deadline. It was then not entitled to participate in any hearing save to any extent permitted by a judge.[10]It made no application to file a late response. It was copied in to a notice of hearing for April 2025, which was then postponed. It was copied in to the notice of postponement and to the relisted Notice of Hearing for today. It did not respond to any of those correspondences.[11]On 6 February 2025 by Order of EJ Tobin the claims were joined together. It was sent notice of combination and did not respond. On 10 April 2025 notice of this hearing was sent to R3 at its Linnyshaw Mill address. Standard case management orders were made and the Claim Forms and R2 Response Form were attached.[12]R3 is an active limited company. At the time of this hearing it has lost its right to defend the proceedings. It has not attended.List of issues
[13]No list of issues had been prepared but those present agreed that the complaints werea. A claim under Section 164 Employment Rights Act 1996 for a redundancy payment.b. A claim under the Working Time Regulations for outstanding holiday pay. Case Nos: 6014871/2024 6019900/2024 3c. A claim in contract for notice pay. Documents[14]R2 had prepared a bundle of 122 pages and a 52 page authorities bundle. The claimant had seen those documents.[15]The documents included an invoice dated 31 January 2024 detailing the sale of assets to R3 and paperwork prepared by Messrs Leonard Curtis including a directors statement of affairs for the voluntary winding up of R 1 dated 2 May 2024. Oral evidence[16]The claimant had not prepared a witness statement and had not submitted a schedule of loss. R2 agreed that I obtain evidence in chief from the claimant and that, after a short break, R2 could then cross-examine the claimant.[17]The claimant was a reluctant witness and answered in short answers without detail. He was very clear that he worked for the same business before and after 31 January 2024 and throughout February 2024 until his dismissal on 1 March 2024.[18]He was an honest and credible witness when he said he did the same work before and after 31 January 2024 for same people in the same way and noticed no change. He was devastated to have been dismissed. He got no help from the Secretary of State or RPO because R1 had not been insolvent at the time and because he was employed by R3, which was not insolvent, when he was dismissed. He said he “went back” to work in May for the same business, now called R3. He was concerned when giving evidence about repercussions for him in his employment.The facts
[19]The claimant was born on 11 January 1965. He worked for R1 as an upholsterer from 15 September 2008 until he was dismissed on 1 March 2024. He made furniture. His boss was Riaz who told him what to do. He was paid £ 281.34 gross per week. He worked at Linnyshaw Mill, Manchester Road, Worsley.[20]On 23 November 2023 R3 was incorporated at Companies House as a limited company. It had the same director Riaz Nawaz as R1. Riaz and his sons Imtiaz and Faraz were each shareholders in both R1 and R3. Riaz then resigned as director of R3 on 27 December 2023.[21]In January 2024 the claimant was working as normal and not aware of any changes, to orders, to his working or to his boss.[22]On 31 January 2024 R1 issued a sales invoice for assets for £ 8000 to R3. Everything that belonged to R1, its order book, stock, tools, staff and trading name Brightdesk, transferred to R3. The claimant knew nothing about this Case Nos: 6014871/2024 6019900/2024 4 at the time.[23]The claimant noticed that orders were going down in February and that there was not much work coming in. His job was to add the upholstery to the sofa frames. On Friday 1 March he was working on upholstery and had sofas waiting to be finished.[24]On Friday 1 March 2024 the claimant was told by Riaz that the business had gone into liquidation so he was being made redundant. The claimant was present when Riaz told all of the staff that same news at the same time. Riaz told the staff that Leonard Curtis would get in touch by email to tell them how to fill in claims for redundancy pay. The claimant left work and went home devastated and worried about work and money.[25]He had been paid his normal pay in February. He got paid weekly in cash. He had net pay of £ 269.22 in cash each week and he worked 27 hours per week. He could work those hours flexibly but tended to work Mondays, Tuesdays and Fridays. He usually worked three nine hour shifts. He felt he had trusted Riaz and that he had had a good relationship with him[26]The claimant received his email from Leonard Curtis and filled in his form claiming £ 9988.29[27]On 8 May 2024 R1 went into creditors voluntary liquidation.[28]In late May the claimant got a phone call from a colleague he used to work with at R1 called Ashley Bromley. Ashley said that orders had picked up and he said that if the claimant wanted he could get his job back. Ashley said that he had gone back to work there in the second week of March.[29]The claimant had not found other work so agreed to work for R3. He went back to work around 25 or 26 May 2024 and found nothing had changed. He was working on the same styles of sofa, same fabrics, same tools; compresors and staple guns, at the same location with the same colleagues including the sewing lady, Carol. Carol told him that she had been made redundant, been paid her redundancy pay and had come back like Ashley after a week. R3 used the same email address that R1 had used.[30]The claimant’s own tools were still there. The layout of the factory was exactly the same and sofas that he had seen on trestles being stored before the end of January and up until he was dismissed on 1 March 2024 were still there.[31]The bosses were the same too though now it was Imtiaz Cheema, Riaz’s son who gave more instructions. Riaz’s other son Faraz Cheema was also there. Riaz owned the Mill and was still the main boss. Riaz was regularly on site in May but was dealing with having work done on site because there had been a big fire in another part of the factory that Riaz owned.[32]The claimant was paid cash weekly as before but when he went back he agreed to work more hours. He worked 31 hours per week from 25 May 2024 and was paid £ 354.64 gross per week. In May the Order Book had Case Nos: 6014871/2024 6019900/2024 5 orders for the same customers as before. The claimant remembered how to do the work for Delta, a customer in Holland, that particularly wanted springs in the backs of their sofas, that continued before and after January until March 2024 and resumed in May for the claimant working on Delta’s orders. Another customer, UK based, had sofas with higher density foam and again that continued uninterrupted before and after 31 January and in May. Sofas that the claimant had finished and were being stored before the end of January were still there waiting to go out in May. Customers waited until there were enough sofas ready and then they ordered a container and haulier.[33]The claimant’s holiday year was the calendar year and he was due 28 days paid annual leave per year pro rata. He took no leave between January and March 2024 when he had accrued 7 days, except that New Year’s Day counted as a bank holiday and as leave.[34]The Redundancy Payment office rejected the claimant’s claim for redundancy pay because at the time of his dismissal neither R1 nor R3 were insolvent.[35]The claimant after returning to work in May 2024 was becoming increasingly dissatisfied with working for Riaz and his sons as R3 because he had a bad chest, COPD, and felt that working with fibre, foam, chemicals and dust was not good for him. Applying the Relevant Law[36]Regulation 3 of TUPE sets out what is deemed to be a relevant transfer. This Regulation refers to the transfer of an economic entity that retains its identity.[37]Regulation 4 of TUPE sets out the effect of a relevant transfer upon the contracts of employment in force with the transferor at the time of the transfer. It provides that a transfer will not operate to terminate the contract of employment of any person employed by the transferor.[38]Regulation 7 of TUPE sets out the criteria in which the dismissal of an Employee because of a relevant transfer can potentially be seen to be fair.[39]Regulation 8 of TUPE sets out the effect of a company’s insolvency upon these regulations with regards to the transfer of the contracts of employment, as well as the duties and liabilities upon the Secretary of State for Business and Trade, under or in connection with those contracts.[40]Section 166 of the Employment Rights 1996 Act allows the Secretary of State to make certain payments from the National Insurance Fund, subject to sections 167 and 168 of that Act.[41]Section 182 of the 1996 Act allows the Secretary of State to make certain payments from the National Insurance Fund, subject to sections 185 and 186 of that Act. Case Nos: 6014871/2024 6019900/2024 6[42]The Tribunal finds that there was a relevant transfer of the economic entity which was the upholstery business, or part of the business known as Brightdesk, of R1 Brightdesk Ltd to R3 Brightdesk Upholstery Ltd within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) on or around 31 January 2024.[43]The Tribunal saw the sales invoice for £ 8000. The Tribunal accepted the oral evidence of the claimant. Before and after the transfer on 31 January 2024 the claimant attended at Linnyshaw Mill, worked in the upholstering room, upholstered fabric to sofas, used the compressor, staple gun, trestles and other equipment, sometimes used his own tools too, accepted instruction from Riaz Nawaz, accepted instruction from Imtiaz sometimes too, was paid in cash net £ 269 per week for 27 hours work, saw the use of the same email address brightdesklimited@gmail.com by R1 and R3.[44]The claimant worked with the same colleagues before and after 31 January 2024 until 1 March 2024. He worked with those same colleagues again after 27 May 2024. He worked on the same orders, for the same customers.[45]The Tribunal accepts R2 submissions about transfer applying Cheesman and others v R Brewer Contracts Limited [2001] IRLR 144). The decisive criterion for establishing the existence of a transfer is whether the entity in question retains its identity, as indicated by the fact that its operation is continued or resumed.[46]All liabilities in respect of his employment transferred to R3. He had accrued over 15 years’ service. Because neither the R1 nor R3 provided payslips no change was apparent to the claimant. He did not know the identity of his employer had changed. In law the transfer had happened. It happened at a time when R1 and R3 were solvent.[47]The claimant was dismissed by Riaz on 1 March 2024 when he was told his post was redundant. The claimant did not dispute the reason for dismissal.[48]The Tribunal finds that the claimant was dismissed by the transferee R3 by reason of redundancy on 1 March 2024. He was due a redundancy payment from the transferee R3. He was also due notice pay and outstanding holiday pay.[49]The claimant was entitled having worked for over 15 years to a statutory redundancy payment made up as follows 15x1.5x £ £281 gross week’s pay £ = £6330[50]The claimant was entitled to notice pay based on a week’s notice for every complete year of service up to a maximum of twelve weeks; made up as follows 12 x £ 269 net week’s pay = £ 3228[51]The claimant was entitled to receive outstanding holiday pay on termination of employment. It accepts his oral evidence that his annual entitlement was 28 days. The Tribunal has applied that pro rata using the calendar year as the annual leave year and accepting the claimant’s oral evidence that he was due 7 days between 1 January and 1 March 2024. He took one day Case Nos: 6014871/2024 6019900/2024 7 for New Year’s Day leaving 6 days outstanding. £269 divided by 5 gives a daily rate of £ 53.80 x 6 = £ 322Conclusion
[52]The claimant’s claim for redundancy pay, holiday pay and notice pay succeeded and R3 was ordered by the judgment issued on 6 October 2025 to pay a total of £ 9880.00 to the claimant. Interest will accrue on that judgment debt.