THE INDUSTRIAL TRIBUNALS
CASE REF: 269/12
CLAIMANT: Julie Lynch
RESPONDENTS: 1. Jimmy Lynch 2. World of Furniture
DECISION
The unanimous decision of the Tribunal is that the claimant was unfairly discriminated against on the grounds of her sex. The Tribunal orders the respondent Mr Jimmy Lynch to pay the claimant the sum of £28,410.04.
Constitution of Tribunal:
Chairman: Ms P Sheils
Members: Mr J Devlin Ms E McFarline
Appearances:
The claimant appeared and was represented by Mr Neil Richards, of Counsel, instructed by the Equality Commission.
The respondent appeared and represented himself.
1. At the hearing:-
At the outset of this hearing Mr Richards for the claimant quite properly advised the Tribunal that following his most recent consultation with the claimant an issue had arisen as to whether the contract between the parties was void for illegality.
2. The issue arose when the claimant’s instructions included the alleged fact that she had been paid £320.00 per week by the respondent, part in cheque and part in cash. The claimant was aware that the respondent’s returns reflected only the part paid by cheque.
3. The respondent denied that he had paid the claimant by cheque only unless no cash was available. The respondent denied there had been a routine arrangement whereby the claimant had been paid partly by cheque and partly by cash. The respondent stated that the claimant was paid sometimes by cheque and sometimes in cash but always in the full amount.
1 CASE MANAGEMENT DISCUSSION
4. The Tribunal noted that this case had been case managed in June 2012. The case management discussion ordered witness statements to be exchanged between the parties and directed the parties to bring to the hearing all documentary and other evidence on which they would be relying.
5. This Tribunal noted that the respondent failed to submit a witness statement and he provided no satisfactory explanation for this. The Tribunal also noted that the respondent failed to provide documentary or other additional evidence to support his response to the claim. The respondent give no cogent explanation for his failure to provide any documentary or any other evidence that would have supported his contentions, even after he had been prompted to do so by the case management discussion.
FACTS
6. In this case the claimant and the respondent refuted almost every aspect of the other’s evidence. The issues in dispute were as set out below and the Tribunal reached relevant findings of fact on the balance of probabilities.
Unfair Dismissal and Sex Discrimination
7. The claimant whose date of birth is 17 July 1976 commenced employment with the respondent on 18 December 2009. The claimant stated that she had been employed by the respondent who owned World of Furniture (Warrenpoint) Ltd initially as a Logistics Assistant but that she had only carried out this role for a short time before she became the respondent’s Accounts Technician, responsible for maintaining all financial records, managing accounts, trial balances, profit and loss accounts and VAT returns. The claimant also did the wages for all staff in the furniture shops owned by the respondent and was the respondent’s main point of contact with the company accountants, Phelan Prescott and Co.
8. The respondent stated that he was not the owner of the business, World of Furniture, that it was actually called World of Furniture (Warrenpoint) Ltd. He stated that he was a Director of this Company with responsibility to Company House to provide reports. He stated that he took a salary from the business and that in effect he was only an employee of the Company. The respondent also stated that the claimant had only ever been employed as an Accounts Technician and Administrator.
9. The Tribunal noted that the claim form cited “Jimmy Lynch” and “World of Furniture” as respondents and that the response cited “World of Furniture” and “James Lynch” as respondents to the claim. The Tribunal noted that at the case management discussion the respondent was noted as being “Jimmy Lynch”, there being no reference to “World of Furniture” at all. The respondent made no reference to “World of Furniture, (Warrenpoint) Ltd” during that case management discussion.
10. In these circumstances the Tribunal concluded that the respondent owned “World of Furniture.”
11. The claimant stated that she had been happy in her work even when its contents changed and she agreed to assume administrative responsibility across two stores, Lisburn and Warrenpoint. The claimant stated that this was to support the 2 respondent during a period of time when he was seeking to open another store on Boucher Road.
12. Although this situation ultimately led to there being a backlog of work for the claimant at her base at Warrenpoint the claimant was happy to clear this backlog and restore it to her usual workload level over a period of time.
13. In August 2011 the respondent approached the claimant and asked her if she would go down to working a three day week. The claimant stated that the respondent told her that this situation would be very temporary as he was in the process of opening up more stores.
14. The respondent stated that during 2011 he had experienced financial difficulties and had been forced to reduce his business undertakings to retain only one shop in an effort to keep himself afloat. He stated that he had become aware of the need to make the claimant redundant as early as August 2011.
15. The respondent accepted that he had not warned or told the claimant of the possible redundancy situation before her dismissal in November 2011. However the respondent stated that the claimant had been well aware of the potential for her job to be made redundant and that this awareness had become obvious in August, when he had asked her to go down to working a three day week.
16. The respondent produced no evidence of his financial difficulties or evidence of there being a redundancy situation with reference to the claimant or at all.
17. The Tribunal concluded that the respondent had failed to show that there had been a genuine redundancy which required the dismissal of the claimant.
18. The claimant stated as far as she was aware her work was still ongoing. The respondent stated that the claimant’s work was not being done by anyone else.
19. The Tribunal concluded that as the respondent was still carrying out business at least some of the work carried out by the claimant was ongoing and the Tribunal was not satisfied by the respondent’s response on this.
20. The claimant worked a three day week for several weeks. She stated that this had ended in September 2012 when it became clear that the three day week was simply not enough time for the claimant to carry out her work and she went up to working four days after September. However as this was still not enough time for the claimant to do all her work she resumed working her normal five day weeks by the end of 2011.
21. The respondent denied that the claimant had ever returned to full-time working after August 2011 and prior to her dismissal in November 2011 stating instead that she had been willing to increase her hours to help out as and when required.
22. The Tribunal noted the payslips submitted on behalf of the claimant. These indicated clearly that the claimant had returned to a five day working week at the end of September which continued until the date of her dismissal in November 2011.
23. The Tribunal concluded that the claimant had returned to full time hours for a period of time up until her dismissal.
3 24. In early November 2011 the claimant discovered she was pregnant. She decided to tell the respondent immediately. On her arrival into work the claimant told her colleague about her pregnancy and advised her colleague and fellow employee that she would be telling the respondent of her situation that same day.
25. The respondent challenged the claimant’s statement that she had told her colleague she would be informing the respondent of her pregnancy by refuting that Michael Hughes was his employee. He stated that Mr Hughes was a friend of his who sometimes helped him out and was usually on the premises for periods of up to an hour or so. The respondent stated that Mr Hughes was not on the payroll and that he got paid cash in hand.
26. The Tribunal concluded that whether Mr Hughes had been told by the claimant she was going to tell the respondent she was pregnant was immaterial, but was unimpressed by the respondent’s completely irrelevant challenge to this evidence. The Tribunal concluded this challenge was motivated by the respondent’s attempt to undermine the claimant’s credibility.
27. The claimant stated that she had told the respondent of her pregnancy at about lunchtime that same day and noted that although the respondent seemed a bit taken aback he had not appeared to be angry or annoyed and indeed offered her his congratulations.
28. During the course of the afternoon the claimant stated that the respondent’s attitude towards her changed. He became demanding of various sales reports and seemed to put her under pressure. The respondent left the office for about half an hour between 3.15 pm and 3.45 pm. On his return, the claimant asked the respondent if she could go at 4.30 pm instead of 5.00 pm as she had missed her lunch. The respondent agreed.
29. At about 4.20 pm the respondent called the claimant into his office. The respondent told the claimant that there was no more work for her to do and that he was making her redundant.
30. The claimant stated that she was devastated and also frustrated and angry. She asked the respondent to produce figures to indicate that she would be redundant but he refused to do so. The claimant left the respondent’s office in distress.
31. The respondent accepted that he had not complied with the statutory dismissal procedures and had not given the claimant any warning or notice of her dismissal. The respondent failed to give any explanation for this failure.
32. The respondent denied that the claimant had told him she was pregnant before he dismissed her. Therefore the respondent refuted that there was any connection between the claimant’s pregnancy and her redundancy.
33. The Tribunal had no hesitation in rejecting the respondent’s evidence on this. The Tribunal noted that the respondent presented his evidence in a less than straightforward manner and even on occasions contradicted his own evidence.
34. Accordingly, the Tribunal found that when the claimant advised the respondent that she was pregnant he shortly thereafter dismissed her.
35. The claimant contacted Newry and Mourne District CAB on 7 November. She advised them that she had been dismissed with no prior notice. The claimant 4 stated that she believed that her dismissal had been unfair and that she may have been unlawfully discriminated against on the grounds of her pregnancy. The claimant was advised to write to the respondent requesting written reasons for her dismissal, giving him up to 14 days in which to reply. The respondent did not reply to this request.
36. The claimant subsequently miscarried her baby. The claimant stated that although she was not saying the respondent’s behaviour towards her caused this to happen she did say that she believed that the stress of losing her job in these circumstances contributed to the miscarriage. There was no medical evidence produced on this point.
Alleged Illegal Contract
37. The claimant’s evidence in this regard was that she had been paid every week by cheque and cash. She received a cheque for £250 and received £70 in cash. The claimant stated that this arrangement had pertained from the outset of her employment. The claimant stated that she was aware that the respondent only declared the money he paid her by cheque, keeping him below a tax level, which was to his gain. The claimant was also aware that other employees were being paid in the same way. The claimant stated that she had made several attempts to get the respondent to regularise the matter.
38. The claimant stated that she had remonstrated with the respondent on occasions but that he had disregarded her. She stated that she drew the respondent’s attention to the guidance on HMRC website and put a set of PAYE regulations on his desk and that the respondent ignored these.
39. At first the respondent denied that he had paid any part of the claimant’s wages in cash.
40. However, during the course of the hearing the respondent accepted that on occasion he had paid the claimant and other employees in cash on the basis that it was easier to do so and that it was not unlawful to do so. The respondent denied that he had consistently paid the claimant by cheque in part and that he had made up the difference in cash with the purpose of defrauding HMRC.
41. The Tribunal accepted the claimant’s evidence in this regard.
THE LAW
Illegal Contracts
42. This doctrine applies only to the unfair aspect of this case. In reaching this decision the Tribunal was guided by the judgement in Hall v Woolston Hall Leisure Ltd 2000 IRLR. This case drew the distinction between employment protection cases, which rely on the contract of employment, and discrimination cases in which the contract is not an issue.
43. An employee works for an employer under a contract of employment. This contract entitles the employee to a raft of employment law protection. under the Employment Rights (Northern Ireland) Order 1996. However if it is established that the contract is illegal the contract becomes void and the employee may no longer rely on it to enjoy those protections.
5 44. Under the doctrine of illegality of contracts there are two broad categories. The first is whether the contract is illegal on the face of it, “illegality at inception,” the second being “illegality in performance” where the contract cannot be performed without illegality on the part of either or both the employee and the employer. This case comes into the second category.
45. The question for this Tribunal is whether the arrangement whereby the respondent did not declare the claimant’s full wages amounted to an illegal contract, thereby depriving the claimant of her employment protection.
46. The Tribunal considered the relevant law and was guided by case law. Two aspects of the law were important in this case. The claimant did know what the respondent was doing but the Tribunal found that she did not actively participate in the illegality. The evidence was that the claimant remonstrated with the respondent and gave him guidance on rectifying the situation.
47. Further the Tribunal considered the case of Hewcastle Catering Ltd v Ahmed and Elkamah [1991] IRLR 437,where it was decided that 'where the defendants' (here, the respondent) conduct in participating in an illegal contract on which the plaintiff (here, the claimant) sues is so reprehensible in comparison with that of the plaintiff, that it would be wrong to allow the defendant to rely upon it'.
48. Taking these two principles together the Tribunal concluded that the claimant could rely on her contract of employment to avail of the protections it afforded her.
Unfair Dismissal
49. Article 126 of the Employment Rights (Northern Ireland) Order 1996 provides an employee with the right not to be unfairly dismissed by his employer. Article 130 of the same order indicates that any dismissal of an employee is fair if the employer shows that the reason for the dismissal is a reason falling within Article 130.
50. Article 130 states at paragraph (2) a reason falls within this paragraph if it –
“(a) relates to the capability or qualifications of the employee performing work of the kind which he was employed by the employer to do,
(b) relates to the conduct of the employee,
(c) is that the employee was redundant or,
(d) is that the employee could not continue to work in the position which he held without contravention (either on his part or on that of his employer) of the duty or restriction imposed by or under a statutory provision.”
51. Article 130(4) states where the employer has fulfilled the requirements at paragraph 1, the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer) –
“(a) depends on whether in the circumstances (including the size and administrative resources of the employer’s undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee; and 6 (b) shall be determined in accordance with equity and the substantial merits of the case.”
Article 130(A) of the same Order provides that an employee shall be regarded as dismissed where the statutory procedures (dismissals and disciplinary procedures) apply and where these have not been completed and where the failure so to complete them lies with the employer.
Automatic Unfair Dismissal for Pregnancy
Article 131 of the Employment Rights (Northern Ireland) Order 1996 sets out a number of grounds when a dismissal will be automatically unfair and by Article 131 (3)(a) one of these grounds is pregnancy.
Sex Discrimination
52. The relevant law in this case is contained in the Sex Discrimination Northern Ireland Order 1976, the Sex Discrimination (Indirect Discrimination and Burden of Proof) Regulations (Northern Ireland) 2001 and relevant case law.
53. Article 3 of the Sex Discrimination Northern Ireland Order 1976 as amended by the Sex Discrimination (Indirect Discrimination and Burden of Proof) Regulations (Northern Ireland) 2001 provides:-
“(1) In any circumstances relevant for the purposes of any provision of this Order, other than a provision to which paragraph (2) applies, a person discriminates against a woman if —
(a) on the ground of her sex, he treats her less favorably than he treats or would treat a man, or...... ”
Article 8 (ii) of the Order provides;
“(2) It is unlawful for a person, in the case of a women employed by him at an establishment in Northern Ireland to discriminate against her –
(a) in the way he affords her access to opportunities for promotion, transfer or training, or to any other benefits, facilities or services, by refusing or deliberately omitting to afford her access to them; or
(b) by dismissing her, or subjecting her to any other detriment.”
THE TRIBUNAL’S CONCLUSIONS
Automatic Unfair Dismissal and Unfair Dismissal
54. The Tribunal concluded that the respondent had unfairly dismissed the claimant on the grounds of her pregnancy. The Tribunal preferred the claimant’s evidence in relation to the events and circumstances of her dismissal and on the basis that the respondent failed to show that a redundancy situation existed and that he failed to apply the statutory procedures the Tribunal concluded that the claimant’s dismissal had been automatically and substantively unfair. 7 Sex Discrimination
55. The Tribunal found that on hearing of the claimant’s pregnancy, the respondent dismissed the claimant without warning, consultation or hesitation. The Tribunal concluded that this amounted to unlawful sex discrimination, contrary to the Order.
Compensation
1. Automatic/Unfair dismissal 2. Loss of statutory rights 3. Loss of earnings 4. Future loss 5. Injury to feelings 6. Total before uplift 7. Uplift
1. Unfair Dismissal
Basic award: - £309.68 x 4 weeks = £1,238.72
2. Loss of Statutory Rights = £700.00
3. Loss of Earnings
Loss of earnings from the respondent from date of dismissal
4 November 2011-3 June 2013
82 weeks x net weekly earnings = 82 x £256.00 = £20,992.00
Less
Total Income up to date of hearing - £15,793.00 (Including Tax Rebate @ £500 and Benefits Excluding JSA@ £2,600)
Total Loss of Earnings = £5,199.00
8 4. Future Loss
The claimant’s representative requested that future loss should be decided by the Tribunal. Given that the claimant was employed on a lesser wage and working in a temporary post the Tribunal awarded the claimant 12 weeks future loss.
Total Future Loss = £3,716.16
5. Injury to feelings
The Tribunal decided that the claimant should receive an award which would fall into the “middle band” (Vento). The Tribunal considered the relevant case law and concluded that the claimant should receive such an amount that would reflect not only her dismissal and loss of job but also the fact that this had occurred at a time when she was so uncertain of her future, having just discovered that she was pregnant. The Tribunal noted that the claimant suffered serious upset and distress. The Tribunal did not ascribe loss for the claimant’s regrettable miscarriage, in the absence of medical evidence establishing a clear causal link. The Tribunal awarded the claimant £11,000.00, injury to feelings.
Award = £11,000.00
6. Total Compensation before uplift £21,853.88
7. Uplift
The Tribunal concluded that a 30% uplift was appropriate in this case where this respondent failed to apply any procedure to the dismissal of the claimant never mind adhere to the statutory dismissal procedures. = £6,556.16
Total Compensation Payable
The Tribunal orders the respondent to pay the claimant the sum of £28,410.04
56. This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ireland) 1990.
Chairman:
Date and place of hearing: 3-5 and 14 June 2013, Belfast.
Date decision recorded in register and issued to parties:
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