Kerr v SU Inns Limited [2014] NIIT 1791

THE INDUSTRIAL TRIBUNALS

CASE REF: 1791/13

CLAIMANT: Jonathan Kerr

RESPONDENT: SU Inns Limited

DECISION ON REMEDY

The decision of the tribunal is that:-

(i) The claimant is entitled, by way of remedy, to an award of compensation to be paid to him by the respondent in respect of his claim of unfair dismissal in the sum of £22,091.88.

(ii) The claimant is entitled, by way of remedy, to an award of compensation to be paid to him by the respondent for failure by the respondent to inform and/or consult with the claimant, pursuant to Regulations 13 – 16 of the Transfer of Undertakings (Protection of Employment) Regulations 2006, in the sum of £6,300.06.

Total award - £28,391.94 (£22,091.88 + £6,300.06)

Constitution of Tribunal:

Chairman (sitting alone): Mr N Drennan QC

Appearances:

The claimant was represented by Mr G Grainger, Barrister-at-Law, instructed by Worthingtons, Solicitors.

The respondent did not appear and was not represented.

Reasons

1.1 The claimant presented his claim to the tribunal on 10 October 2013.

1.2 The time for presenting a response, having expired on 12 November 2013 and no response having been presented to the Office of the Tribunals, a default judgment on liability was entered in the Register and issued to the parties on 19 November 2013. In the said default judgment, it was determined that the respondent:-

“(1) unfairly constructively dismissed the claimant; and/or

(2) breached the claimant’s contract of employment by failing to give him notice pay due to him under his contract of employment; and/or

(3) is required to make payment and/or compensation to the claimant pursuant to the Transfer of Undertakings (Protection of Employment) Regulations 2006 for failing to inform and/or consult pursuant to the said Regulations.”

The said default judgment also stated:-

“Any remedy to which the claimant is entitled will be determined at a hearing, notice of which will be issued shortly.”

1.3 No application was made by the respondent to review the said default judgment on liability or to participate in the remedies hearing (see further D and H Travel v Foster [2006] ICR 1537). Notice of Hearing, dated 22 November 2013, to determine the remedy to which the claimant was entitled following the said default judgment on liability was therefore issued to the parties by the tribunal on 22 November 2013, for a remedy hearing to be held on 18 December 2013.

2.1 At the remedy hearing, the tribunal heard oral evidence by the claimant in relation to the remedy to which he was entitled on foot of the said default judgment on liability. Having considered the evidence given to the tribunal by the claimant and the documents contained in the ‘trial bundle’, as amended, to which the tribunal was referred during the course of the hearing, I made the following findings of fact, set out in the following sub-paragraphs, insofar as relevant and material for the determination of the said remedy to which the claimant was entitled on foot of the said default judgment on liability. It was not disputed by the claimant’s representative that any remedy to which the claimant was entitled, in relation to his claim for breach of contract, did not require to be the subject of a separate remedy for the claimant, by reason of the overlap arising from my determination of the remedy to which the claimant was entitled in relation to his claim of unfair constructive dismissal. In making these findings of fact, I reminded myself the default judgment is conclusive on the liability of the respondent; and it is for the tribunal, at the remedies hearing, insofar as appropriate, to determine issues regarding causation and assessment of loss (see further Eaton v Spence & Others [2011] ICRD 7).

2.2 The claimant was born on 25 September 1971 and was continuously employed by the respondent, by reason of various transfers which were made pursuant to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE Regulations’) from in or about July 1995 until 19 August 2013, when he resigned and was constructively unfairly dismissed by the respondent, as set out in the said default judgment. Immediately prior to 19 August 2013, the respondent operated a bar/restaurant business at The Point, Ballyhackamore, 199 Upper Newtownards Road, Belfast. The claimant was employed by the respondent at the said premises as the office manager, with particular responsibility for, inter alia, accounts/book-keeping, insurance, licensing and human resources. He has no formal financial/accounting qualifications. He has formal qualifications in the area of recreation and, prior to his employment with the respondent, was employed in various positions in the hospitality/hotel trade. Since the date of his dismissal, I am satisfied the claimant has made frequent strenuous efforts to obtain other employment, both in office manager/financial type positions generally but also in the hospitality trade. I am also satisfied he has sought employment in wider areas of employment, such as the Home Office, has made use of the job centres, relevant online services and newspaper recruitment sections. He also has registered with various recruitment, and agency companies. Unfortunately, to date, all these efforts have been without success, despite being interviewed for a number of positions. I accept that, in this period of recession, there are difficulties for obtaining employment. This has been compounded for this claimant by his lack of formal financial/accounting qualifications but also that the majority of his working experience has been mainly in the hospitality trade and this has proved an obstacle when seeking general office manager positions outside the hospitality/hotel trade. However, in the circumstances, I am satisfied the claimant has taken reasonable steps to mitigate his loss (see further Wilding v British Telecom [2002] EWCA Civ 349).

2.3 At the date of the termination of his employment, the claimant was earning £25,000.00 per annum (£484.62 gross per week and £383.08 net per week).

2.4 The claimant has made a claim for loss of earnings from 19 August 2013 to the date of this hearing on 18 December 2013, which period would include the relevant 12 week notice period, following the termination of his employment; and he is not therefore entitled to receive both loss of earnings and notice pay for the said 12 week period, which would involve ‘double-recovery’. In addition, the claimant has also claimed loss of earnings from 18 December 2013 to 17 December 2014 (ie a period of future loss of 12 months). Whilst I do not underestimate the claimant’s difficulties in obtaining further employment at this time, given his unsuccessful experiences to date, I do not think a claim for future loss for 12 months would be in accordance with justice and equity, pursuant to Article 157 of the Employment Rights (Northern Ireland) Order 1996 (‘the 1996 Order’) and does not properly take into account all the uncertainties/contingencies relevant to an assessment for loss of earnings for the said future loss period. On the basis of the evidence before me, I would be hopeful the claimant should be able to obtain appropriate permanent employment within a period of 18 weeks and I therefore restrict any claim for future loss of earnings to the said 18 week period following 18 December 2013.

2.5 The claimant, on or about 2 August 2013, following his return from holiday, learned there was a proposed sale relating to the respondent’s business to another party. He did not learn of any details of any such proposed sale at that time. On 16 August 2013, he was told there was to be a meeting at 3.00 pm on 19 August 2013. On the morning of 19 August 2013, the claimant was informed by Mr B West, the husband of the director of the respondent, Ms G West, that a Mr Nixon was purchasing the lease for the premises (The Point), where the business of the respondent had continued to operate, with effect from 2 September 2013. When the claimant asked what this meant for the staff, including himself, he was told by Mr West:-

“I don’t give a ‘f**k’. He can burn the place down for all I care.”

The claimant attended a meeting on the afternoon of 19 August 2013 with the proposed new owner, the remaining management staff of the respondent and Mr West and the respondent’s legal representative. The staff, at the meeting, were informed that Mr Nixon would be taking over the lease of the premises from 2 September 2013. When queries were raised by staff they were told:-

“They will find out what was going to happen on 2^nd of September.”

2.6 There was no election of employee representatives carried out by the respondent in connection with the said proposed transfer by the respondent pursuant to Regulation 14 of the TUPE Regulations.

3.1 On foot of the default judgment on liability, I then determined the claimant’s remedy to which he was entitled in respect of the said unfair dismissal, pursuant to the 1996 Order and the failure to inform and/or consult, pursuant to the TUPE Regulations, in light of the facts as found by me, as referred to in the previous paragraph of this decision.

4.1 As set out in Article 152 of the 1996 Order, where a tribunal makes an award of compensation for unfair dismissal, the award shall consist of:-

(a) a basic award; and

(b) a compensatory award

4.2 I am satisfied the claimant was entitled to the following award of compensation for unfair dismissal, namely:-

A Basic award

£450.00 (subject to statutory cap) x 1 x 18 = £ 8,100.00

B Compensatory award

(i) Loss of earnings from 19 August 2013 to 18 December 2013

17.35 weeks –

£383.08 x 17.35 = £ 6,646.44

(ii) Loss of statutory rights = £ 450.00

(iii) Future loss – 19 December 2013 to 24 April 2014

18 weeks x £383.08 = £ 6,895.44

Total = £13,991.88

Total Monetary Award – A + B = £22,091.88

4.3 The Employment Protection (Recoupment of Jobseeker’s Allowance and Income Support) Regulations (Northern Ireland) 1996, as amended, apply to this decision in relation to the claimant’s award for compensation for unfair dismissal, as set out above.

Attention is drawn to the attached Recoupment Notice, which forms part of this decision.

5.1 In relation to the claimant’s remedy for the respondent’s failure to inform and/or consult with the claimant, pursuant to Regulations 13 – 16 of the TUPE Regulations, it is set out in Regulation 15 that the claimant is entitled to ‘appropriate compensation’ to be paid in relation to such a failure to comply with the information and consultation obligations imposed by Regulation 13. Pursuant to Regulation 16(3) of the TUPE Regulations, ‘appropriate compensation’ is defined as:-

“ ... such sum not exceeding 13 weeks’ pay for the employer in question as the tribunal considers just and equitable having regard to the seriousness of the failure to comply with its duty.”

Since the tax treatment of an award for such failure to inform and/or consult, which is made pursuant to Regulation 15 of the TUPE Regulations, is not addressed explicitly in the text legislation, TUPE or any case law, it is considered that such an award should be calculated and awarded by the tribunal on a gross basis (see the Law of Transfers – Charles Wynn-Evans, Paragraph 9.106).

In Zaman & Others v Cozee Sleep Products Ltd t/a Dorluz Beds UK [2011] IRLR 96, the Employment Appeal Tribunal held that the statutory cap on a week’s pay, as set out in the 1996 Order, did not apply towards a compensation under Regulation 15 arising out of breaches of the failure to comply with the information and consultation obligations imposed by Regulation 13.

In Susie Radin v GMB & Others [2004] ICR 893, it was confirmed the proper approach to be adopted in determining compensation for breach of Regulation 13 is as follows:-

· the purpose of the award is to provide a sanction for breach not to compensation employees for consequential loss;

· the industrial tribunal has a wide discretion as to what is just and equitable;

· the employer’s default may vary from the technical to complete failure to inform and consult;

· the deliberateness of the failure and any advice taken may be relevant;

· the proper approach is to start with the maximum award and reduced the award only where mitigating circumstances are judged appropriate to justify a reduction.

As Longmore LJ in Susie Radin made clear, arguments to the effect that consultation would have been futile are viewed as irrelevant.

5.2 In light of the said legal authorities, set out in the previous sub-paragraph, it was therefore necessary for me to consider, on the facts as found by me, in particular, what award of compensation would be just and equitable and whether the failure of the respondent to inform and/or consult, pursuant to the TUPE Regulations, as found in the said default judgment on liability, was a technical default or a complete failure to inform and/or consult, the deliberateness of any failure and any advice taken.

In essence, I accept that there was little or no meaningful consultation. As the Employment Appeal Tribunal observed in Todd v Strain and Others [2011] IRLR 11:-

“Part of the purpose of the duty to consult must surely be to enable transitional arrangements ... to be explained to employees and for them to be reassured, if this be the case, that they will not in any be prejudiced by them and to avoid needless worry.”

Whilst there was a meeting on the afternoon of 19 August 2013, I am satisfied it was not meaningful and proper consultation; and, in essence, the claimant was just presented with a ‘fait accompli’, and the employees were merely told he would be informed what was going to happen on 2 September 2013. The meeting with Mr West on the morning of 19 August 2013 had been even less satisfactory.

In Regulation 13(6) of the TUPE Regulations consultation is expressly required to be conducted “with a view to ... seeking agreement”. This was not done at either meeting. There was no attempt to listen to the concerns of staff, including the claimant or to reply to them in any way (see further Regulation 13(7)(a) and (b)).

In R v British Coal Corporation and Secretary of State for Trade and Industry ex parte Price [1994] IRLR 72, the Court of Appeal, albeit in a different context but frequently cited in the context of the TUPE Regulations held:-

“ ... fair consultation involves giving the body consulted a fair and proper opportunity to understand fully the matters about which it is being consulted and to express its views on those subjects with the consultor thereafter considering those views properly and genuinely”.

The respondent by its response to the staff failed to follow the said guidance at either meeting on 19 August 2013.

This failure, on the evidence before me, appears to have been deliberate and done in the presence of the respondent’s legal representative.

Similarly, I accept that there was little or no information provided to the claimant at either meeting on 19 August 2013 and again the claimant was presented with a ‘fait accompli’; but, in particular, he was provided with no relevant detail relating to the proposed transfer. On the evidence before me, this decision to provide no detail at either meeting on 19 August 2013 seems to have been deliberate and was taken in the presence of the respondent’s legal representative. Such a representative should have been fully aware of the duty to consult and/or inform under the TUPE Regulations and to so advise the respondent. Whilst the respondent did inform the claimant that the relevant transfer was to take place on the transfer of the lease to Mr Nixon on 2 September 2013 (see further Regulation 13(2)(a)); no information, in particular, was given in advance of the said transfer by the respondent of the legal economic and social implications of the transfer for the claimant or indeed any other employee (see further Regulation 13(2)(b)) or indeed what measures, if any, either the respondent or Mr Nixon would take in relation to the claimant on the said transfer (see further Regulation 13(2)(c) and (d)). No attempt was made at either of the said meetings on 19 August 2013 to address these matters in any way.

5.3 In light of the foregoing, I was therefore satisfied there was no meaningful consultation at any time by the respondent with a view to seeking his agreement to the intended measures and to conduct a fair and proper consultation in accordance with the requirements as set out in Regulation 13(6) of the TUPE Regulations. Further, he was given no relevant information to enable him to properly consider the matter and, in particular, how the proposed changes would affect him. In the circumstances, I am satisfied that the failure to properly inform and consult with the claimant was, in essence, a complete failure by the respondent. It was not a technical breach by the respondent and it appears, on the evidence, to have been deliberate. Merely telling the claimant, in advance, of the lease transferring to Mr Nixon on 2 September 2013, without any more, was not sufficient, in my judgment, given the terms of the said Regulations, to allow me to make a reduction on the maximum award.

In the circumstances, in the exercise of my discretion, I decided it was just and equitable to make a maximum award of compensation to the claimant, namely £6,300.06 (13 x £484.62).

6.1 The claimant is therefore entitled to a total award of compensation to be paid by the respondent to the claimant in the sum of £28,391.94.

6.2 This is a relevant decision for the purposes of the Industrial Tribunals (Interest) (Northern Ireland) Order 1990.

Chairman:

Date and place of hearing: 18 December 2013, Belfast

Date decision recorded in register and issued to parties:

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You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> Kerr v SU Inns Limited [2014] NIIT 1791_13IT (10 January 2014) URL: http://www.bailii.org/nie/cases/NIIT/2014/1791_13IT.html Cite as: [2014] NIIT 1791_13IT

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