Mr D Smith v Business Solutions for Companies Ltd: 6019803/2024
JUDGMENT
[1]The claimant did not establish on the balance of probabilities that he had two years’ service as an employee with the respondent. The claim for a redundancy payment is therefore dismissed because the Tribunal does not have jurisdiction to determine it.[2]The Tribunal did not accept that the claimant was entitled to a paid notice period of six months. His claim for notice monies fails and is dismissed.[3]The claimant was not paid for work done in August 2024. He is entitled to recover this under s13 Employment Rights Act 1996 as an unlawful deduction from wages. The respondent is to pay the claimant £7333.33 subject to deductions for tax and National Insurance. Case Number: 6019803/2024 2REASONS
[1]The claimant claims for a redundancy payment, unpaid wages amounting to one month’s pay, and contractual notice pay of 6 months’ salary. In total the claimant claims £58,384.70.[2]The matters to be decided at this hearing was set down by Employment Judge Tobin at a case management hearing on 24 February 2025. The respondent submitted an ET3 response form, but provided no information about the claimant’s employment and did not address the claims made by him. The respondent has not attended this hearing, did not attend the last hearing and has not participated in the claim. Employment Judge Tobin made case management orders for the respondent to provide documents at the last hearing, which the respondent has failed to comply with. Therefore, the claim is effectively undefended.[3]However, the Tribunal nevertheless must be satisfied that the claims are made out. For example, if the claimant is not an employee and/or does not have two years’ service, the Tribunal has no jurisdiction to award him a redundancy payment. It is highly unlikely that the respondent will pay the claimant’s award of compensation, if any, and therefore the award will likely come out of public funds via the National Insurance Fund. The Tribunal must be satisfied that the claimant has met the relevant legal tests in order to receive such a payment.[4]Employment Judge Tobin at the case management hearing was concerned that the claimant may have been an office holder (a director) and not an employee. It is clear from the Companies House records that the claimant was not a shareholder with a controlling stake in the business during his time with the respondent, indeed he held no shares at all. He was a director from 10 February 2022 until 5 June 2023. It is possible to be both a director and an employee and so given the lack of a controlling shareholding, such a directorship does not preclude him from also having been an employee, provided the evidence is available to support his employment status.[5]The burden of proof is on the claimant to establish on the balance of probabilities:a. That he was an employee;b. That he had a valid contract of employment (so as to be entitled to a contractual notice payment); andc. That he was employed for more than 2 years to be entitled to a redundancy payment. Case Number: 6019803/2024 3[6]Employment Judge Tobin made this clear to the claimant at the last hearing. He wrote: “The claimant provided a contract of employment with Resolve Financial Limited, which I see from a Companies House search, was the name of the respondent company from 8 January 2021 to 8 April 2024. I also saw from Companies House that the claimant was a former director of the respondent company and that the company accounts for 2023 showed 1 employee and then no employees (i.e. a zero return) for the year ending 31 March 2024. The limited accounts provided showed a company in debt with very little assets. It did not look to me as though this company had done much trading for some time. Whilst, at the moment, the respondent company was not going through any form of insolvency, I explained my concern to Mr Smith that any judgment I was to issue, might ultimately be met by the redundancy payment office and/or the taxpayers. Therefore, I was going to list the case for a full hearing to ascertain whether the claimant was, as a matter of fact and law properly an employee of the respondent and that this was not a device for directors/shareholders to secure payments from the public purse for which they were not entitled. ………. The claimant will need to prepare a witness statement. I want to ascertain the claimant’s full involvement in this business. I would like him to confirm whether or not he is now, or was at any time, an owner of the business, i.e. a shareholder. I would expect to see contemporaneous documentation establishing that he worked for the business as an employee, e.g. P60s for his full employment history, copy emails that corroborate that he was an employee, such as holiday bookings, etc. That sort of material should be easily found because the claimant told me that he worked from home, and he has not returned his computer.” (emphasis added)[7]The claimant took an oath at the start of the hearing and so the evidence he has provided me is his sworn evidence. I took time to go through the bundle of documents that the claimant has provided me with, including his witness statement. The bundle contains a contract of employment that was, unusually, executed as a deed. It is purportedly signed by him and witnessed by Claire Smith, who lives at the same address as the claimant. It is also purportedly signed by Trevor Forrester, who was a director of the respondent. However, the contract is signed and dated electronically by all parties with standard cut-and-paste signatures and so it is not possible to verify the authenticity of that document. Put plainly, such a contract could have been drawn up recently by the claimant, and back-dated. The claimant expressed surprise that the contract was not accepted as valid on its face. Case Number: 6019803/2024 4[8]However, as the claimant was warned by Employment Judge Tobin, to establish that the claimant was an employee and had been for the appropriate period of time, I would need to see other corroborating evidence for his full employment history. As well as P60s and emails this could include payslips, bank statements, WhatsApp or email messages from during that time to show that for the whole period, the claimant was regularly receiving salary subject to PAYE tax and NI and that his employer was subjecting him to the relevant control and direction so as to make him an employee, as opposed to, for example, an independent contractor or a worker.[9]Before me in evidence, as well as a contract, were payslips. The payslips were from random months in 2022 and 2023 and one from 2024. They do not contain any information from which their authenticity can be verified, for example there is no evidence of them being sent to the claimant by email from the respondent. Again, as with the contract, they could have been drawn up recently. They also do not contain all of the information that would usually be expected to be shown, such as both employee and employer’s NI deductions. I am concerned as to their authenticity.[10]The claimant has provided copies of his bank statements but only from January 2024 to August 2024. I can see that from January 2024 to August 2024 he has received what appears to be a regular monthly payment from the business. He tells me he was paid £88000 per year, and the pay slip from March 2024 shows a “salary sacrifice” of approximately £16000 that year, which the claimant says was concerned with payments made by him into a personal pension, with surplus employment income from another role he did with a different firm, which he says was in 2022 and 2023 for approximately a year. He told me that he cannot remember with any more precision the dates of employment for that other company. This strikes me as unlikely.[11]He has provided no bank statements for 2021-2023. I told him that it would assist his case if he was able to provide them, for example could they be found electronically during an adjournment. He said that this would not be possible, as he changed banks during that time, and couldn’t remember what bank he was with in 2022-2023, and did not keep old bank statements. I find that this explanation lacks credibility. The claimant is an insolvency practitioner. He very likely understands the need for paper trails and reliable documentary evidence. Old bank statements can be easily obtained electronically, including by contacting the bank or visiting a branch of the bank and asking for copies. Alternatively, the claimant could have provided evidence of salary payments and deductions of PAYE tax and National Insurance via his HMRC online account, which he confirmed he had. Case Number: 6019803/2024 5[12]I was only provided with very limited evidence of the claimant’s interaction with HMRC. I have been given a screenshot of his National Insurance record, to show that his NI was paid in full for 2021-2023 but not 2023-2024. However, he told me he was an employee elsewhere in 2022 and 2023 and so his NI may well have been paid by his other employment – that does not persuade me as to his employment with the respondent. As his NI record has been obtained from his HMRC online account, so could also his PAYE and employment history have been provided to me.[13]The absence of straightforward evidence from third parties such as his bank, or HMRC, that would have been very easily obtained by the claimant, especially given his profession, leads me to conclude that the claimant has not established on the balance of probabilities that he was an employee of the respondent from February 2021 to December 2023. He rejected outright my suggestion that he provide that evidence by searching online during the hearing, or as part of a reconsideration application after I gave this judgment to him. He very quickly and flatly rejected my suggestion that this be provided by him, which leads me to conclude that such evidence is not available not because of a lack of access, but that it does not exist.[14]He is therefore not entitled to claim a redundancy payment. He has not worked as an employee for the respondent for more than two years.[15]As I am not satisfied as to the authenticity and reliability of his contract of employment, I do not accept his claim to six months’ notice pay.[16]I do have evidence of the claimant having worked for the respondent regularly since January 2024, in the form of bank statements and WhatsApp messages from Mr Clarke, the managing director. It is assumed that this more regular arrangement took effect when his other paid employment ended. I am persuaded that this amounted to the claimant at least being a “worker” of the respondent during this period (as per s230(3) Employment Rights Act 1996), given that he told me he worked independently and had a high degree of autonomy. A WhatsApp message on 2 September 2024 from the claimant to Mr Clark said “Hi Richard, can I be paid for August please?” The reply from Mr Clark refused the payment but said “hopefully with you making loads from your other CVL work (confirmed by C to be his creditors voluntary liquidation work separate from the respondent) and leads from Trevor… If any work comes in will certainly pass your way not my field of expertise sorry…”[17]I am therefore satisfied that the claimant was expecting a salary payment of some kind in September 2024 for August 2024 and this was not paid. There is Case Number: 6019803/2024 6 evidence of regular payments being made by the respondent each month from January to July 2024 into the claimant’s bank account. He is therefore entitled to claim unpaid wages for the month of July 2024 of £7333.33. This is based on one-twelfth of his gross annual salary of £88000 and is subject to deductions for tax and National Insurance.[18]Following my delivery of this judgment and reasons to the claimant, I asked him if he had any questions. He said that he had “concerns” that I had not been prepared to accept a contract signed electronically, as this was regularly done in his line of work. I told him that it was not the contract per se that caused me concern, but the selective nature of the other information that he had provided, such as the absence of bank statements, communication with the respondent, HMRC records and so on, for the periods before January 2024. I reminded him that he had been warned by Employment Judge Tobin that this information would be required. I had asked him if he would like to attempt to obtain it during the hearing, but he had made no attempt to do so. He told me that he considered that he had not been properly directed by Employment Judge Tobin. Given the contents of the case management orders (some extracts of which are repeated above) I do not accept that this was the case. Employment Judge Tobin was clear about what would be needed, and why.[19]I reminded him that, were he to present this missing information to me within the period available for reconsideration of the judgment (14 days from today), I would consider it. He told me that it would absolutely not be possible to obtain bank statements within 14 days from his previous bank. Again, I note that the claimant makes no attempt to provide that information. His reason as to why this would not be possible is lacking in credibility.[20]He told me that as the respondent was not in liquidation, he would not be able to recover the salary that was awarded from the National Insurance Fund, and it would not be “worth my while” to take the necessary court action himself to start the process. That is a matter solely for the claimant. Approved by