Ms K Alcroft v Renfrew Transport Services Ltd: 8000777/2025
JUDGMENT
[1]The claimant was dismissed by reason of redundancy and is entitled to a redundancy payment of £4675 (FOUR THOUSAND, SIX HUNDRED AND SEVENTY FIVE POUNDS).[2]The claim of breach of contract in respect of notice pay is not well-founded and is hereby dismissed.[3]The respondent has made an unauthorised deduction from the claimant’s wages and is ordered to pay the claimant the sum of £2046 (TWO THOUSAND AND FORTY SIX POUNDS).[4]The respondent has failed to pay the claimant’s holiday entitlement and is ordered to pay the claimant the sum of £1091.20 (ONE THOUSAND AND NINETY ONE POUNDS, TWENTY PENCE).REASONS
[1]The claimant has brought a number of complaints relating to the termination of her employment. Specifically, claims for payment of the following sums:a. Redundancy pay;b. Notice pay;c. Holiday pay; andd. Arrears of pay.[2]No ET3 response form was submitted on behalf of the respondent and the claim has proceeded as undefended.[3]The present hearing was necessary because there is a question of when the claimant was dismissed and, depending on the answer to that question, whether the claims have been lodged within the relevant statutory time limits.[4]The Tribunal heard evidence only from the claimant. Findings in fact[5]The Tribunal made the following relevant findings in fact.[6]The claimant commenced employment with the respondent as a finance assistant on 5 August 2013. She worked from home for 30 hours a week, Monday to Friday. She was paid £425 a week gross and £341 a week net.[7]The claimant’s job involved contacting customers of the respondent to chase up payments of invoices.[8]The holiday year operated by the respondent ran from April to March. In the holiday year 2024/2025, the claimant had taken 6 days’ holiday.[9]On 9 December 2024, the claimant was phoned by Robert Gibson, sales manager, who informed her that the managing director, Andrew Alcroft (the claimant’s cousin), had told them that they were to let customers know that the business was going to cease trading. Mr Gibson was not the claimant’s line manager and was not contacting her on behalf of the company.[10]That same day or the next day, the claimant contacted Andrew Alcroft by text (Mr Alcroft lives abroad) to find out what was happening. He did not respond straightaway. When he replied, he asked the claimant to continue working and chasing customers for payment. He stated that if money could be brought into the company then he could pay staff.[11]The claimant continued to work that week but she was not aware of what money was coming into the company. The claimant had been due to be paid on 5 and 12 December 2024 but no payments were received. She, therefore, started to look for a new job.[12]The claimant secured a new job to start on 14 January 2025. She informed Mr Alcroft of this on or around that date and ceased to work for the respondent at that time.Relevant Law
[13]Under s136(1)(a) of the Employment Rights Act 1996 (ERA), an express dismissal is defined as the employer terminating the contract of employment with or without notice.[14]The general rule is that unambiguous words of dismissal (or resignation) should be taken at face value with no need for analysis of the surrounding circumstances (Sothern v Franks Charlesly & Co [1981] IRLR 278).[15]Where there are ambiguous words or conduct then an employee should investigate further before jumping to the conclusion that they have been dismissed (see, for example, Leeman v Johnson Gibbons Tools Ltd [1976] IRLR 11). The same principle applies where an employer relies on ambiguous words or conduct in arguing that there has been a resignation.[16]Section 136(1)(c) ERA states that dismissal can also arise where: “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.”[17]The circumstances in which an employee is entitled to terminate their contract by reason of the employer’s conduct is set out in the case of Western Excavating v Sharp [1978] ICR 221. The Court of Appeal held that there required to be more than simply unreasonable conduct by the employer and that had to be a repudiation of the contract by the employer. They laid down a three stage test:a. There must be a fundamental breach of contract by the employer;b. The employer’s breach caused the employee to resign; andc. The employee did not delay too long before resigning thus affirming the contract.[18]Section 135 ERA provides that an employee is entitled to redundancy payment where they are dismissed in circumstances where they are redundant.[19]The definition of redundancy can be found in section 139 ERA and includes the situation where the employer ceases to carry on the business in which the employee is employed or there is a reduction in the requirement for employees to carry out work of a particular kind.[20]The amount of any redundancy pay is determined by section 162 ERA and is a number of weeks’ pay depending on age and length of service.[21]An employee is entitled to notice of the termination of their employment. The amount of any such notice can be found in the contract of employment or by way of the minimum statutory notice to be found in section 86 ERA which is based on length of service.[22]Where an employer does not give the correct notice of dismissal then an employee can recover damages for this breach of contract equivalent to the salary they have lost for the relevant period.[23]The Tribunal was given the power to hear breach of contract claims by the Employment Tribunals Extension of Jurisdiction (Scotland) Order 1994.[24]Section 13 ERA provides that an employer shall not make a deduction from a worker’s wages unless this is authorised by statute, a provision in the worker’s contract or by the previous written consent of the worker.[25]In terms of s13(3) ERA, a deduction of wages arises in circumstances where the total amount of wages paid by an employer to a worker on any occasion is less than the total amount of wages properly payable on that occasion.[26]Regulations 13 and 13A of the Working Time Regulations (WTR) make provision for workers to receive 5.6 weeks’ paid holidays each year.[27]Where a worker leaves employment part way through the leave year then Regulation 14 of the 1998 Regulations provides for compensation to be paid to the worker in respect of untaken holidays in the following terms:(1) This regulation applies where— (a) a worker's employment is terminated during the course of his leave year, and (b) on the date on which the termination takes effect ('the termination date'), the proportion he has taken of the leave to which he is entitled in the leave year under [regulation 13] [and regulation 13A] differs from the proportion of the leave year which has expired.(2) Where the proportion of leave taken by the worker is less than the proportion of the leave year which has expired, his employer shall make him a payment in lieu of leave in accordance with paragraph (3).(3) The payment due under paragraph (2) shall be— (a) such sum as may be provided for the purposes of this regulation in a relevant agreement, or (b) where there are no provisions of a relevant agreement which apply, a sum equal to the amount that would be due to the worker under regulation 16 in respect of a period of leave determined according to the formula— (AxB)-C where— A is the period of leave to which the worker is entitled under [regulation 13] [and regulation 13A]; B is the proportion of the worker's leave year which expired before the termination date, and C is the period of leave taken by the worker between the start of the leave year and the termination date.[28]The first question for the Tribunal is whether the claimant has been dismissed and, if so, when she was dismissed.[29]The Tribunal does not consider that there was an express dismissal by the respondent at any time. There was certainly no unambiguous words of dismissal used by anyone with authority or ostensible authority to dismiss the claimant; the Tribunal considers that the conversation between the claimant and Mr Gibson on 9 December 2024 was a conversation between colleagues rather than Mr Gibson acting on behalf of the respondent.[30]In fact, the evidence shows that the claimant was being asked to continue working for the respondent by Mr Alcroft and so the Tribunal considers that she was not dismissed by him at any time, either by words or conduct.[31]Rather, the Tribunal considers that this was a case of constructive dismissal with the claimant’s employment terminating when she informed Mr Alcroft, on or around 14 January 2025, that she was starting a new job. Although she did not use the word “resignation”, it was clear from her actions that she was terminating her employment with the respondent to take up another job.[32]There was clearly a fundamental breach of contract by the respondent when it failed to pay the claimant from 5 December 2024 onwards. The payment of wages goes to the heart of the contract and a failure to make payment is clearly a fundamental breach by the respondent.[33]The claimant resigned because of this breach. Although the proximate cause of her resignation was the fact that she had a new job, the underlying cause was the fact that her wages were not being paid which forced her to look for new employment. To put it another way, if the claimant’s wages had continued to be paid then she would not have had any need to seek new employment.[34]The Tribunal is, therefore, satisfied that the claimant resigned in circumstances in which she entitled to do so by reason of the respondent’s fundamental breach of contract. She was, therefore, dismissed as defined in s136(1)(c) ERA.[35]The date of dismissal is 14 January 2025 when the claimant took up her new job. In light of this, the Tribunal is satisfied that the ET1 was presented within the relevant time limit for each claim and so no issue of time bar arises.[36]The Tribunal is also satisfied that the reason for the claimant’s dismissal was redundancy. In a constructive dismissal case, the reason for dismissal is the reason for the breach of contract by the employer (Berriman v Delabole Slate Ltd [1985] ICR 546, CA).[37]The fundamental breach by the respondent was clearly caused by the fact that they were ceasing to trade and/or a reduction in their requirements for employees to do work of a particular kind.[38]In these circumstances, the claimant is entitled to redundancy pay. She had 11 years’ continuous service and was aged 33 at the date of termination. She is, therefore, entitled to 11 weeks at £425 a week amounting to £4675 (Four thousand, six hundred and seventy five pounds).[39]Given that the claimant resigned then she is not entitled to notice and so the claim for breach of contract in respect of notice pay is not well-founded and is hereby dismissed.[40]The claimant was entitled to be paid for the period up to the termination of her employment. She was last paid on 1 December 2024 and there were 6 weeks between this and the end of her employment. No payments in respect of those weeks were made. The Tribunal, therefore, finds that the respondent made unauthorised deductions from the claimant’s wages by failing to pay her for those weeks and makes an award to her of 6 x £341 = £2046 (TWO THOUSAND AND FORTY SIX POUNDS).[41]The claimant had a pro-rated holiday entitlement of 22 days on the termination of her employment (9.5/12 x 28) and had taken 6 days holiday during the holiday year leaving untaken holiday entitlement of 16 days. The claimant was paid £68.20 a day (£341/5). The Tribunal, therefore, awards the claimant pay in lieu of untaken holidays amounting to £1091.20 (ONE THOUSAND AND NINETY ONE POUNDS, TWENTY PENCE).