Mulholland v Construction Register Ltd CRL Management Ltd, t/a Constr... Kearney Consulting Ltd Kearney Consult [2012] NIIT 01256

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	Industrial Tribunals Northern Ireland Decisions
You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> Mulholland v Construction Register Ltd CRL Management Ltd, t/a Constr... Kearney Consulting Ltd Kearney Consult [2012] NIIT 01256_11IT (10 July 2012) URL: http://www.bailii.org/nie/cases/NIIT/2012/1256_11IT.html Cite as: [2012] NIIT 1256_11IT, [2012] NIIT 01256_11IT

THE INDUSTRIAL TRIBUNALS

CASE REF: 1256/11 and Others

CLAIMANT: Therese Mary Mulholland and Others

RESPONDENTS: 1. Construction Register Ltd

2. CRL Management Ltd, t/a Construction Register and CRL

3. Kearney Consulting Ltd

4. Kearney Consult

DECISION

The unanimous decisions of the tribunal are as follows:-

(A) None of the claims against Kearney Consulting Ltd is well-founded. Accordingly, all of those claims are dismissed.

(B) None of the claims against Kearney Consult is well-founded. Accordingly, all of those claims are dismissed.

(C) None of the claims against CRL Management Ltd (which is referred to in this Decision as “Y”) is well-founded. Accordingly, all of those claims are dismissed.

(D) The claimant Victoria Brown’s sex discrimination claim against Construction Register Ltd (“which is referred to in this Decision as “X”) is well-founded. However, the tribunal has decided to make no order for compensation in respect of that sex discrimination.

(E) All of the claimants, with the exception of Ms McKenna, have made claims against X for redundancy pay. All of those claims against X are well-founded. It is declared that X is liable to make the redundancy payments, to the relevant claimants, which are specified in the body of this Decision.

(F) All of the claimants have made claims against X in respect of notice pay. All of those claims are well-founded. It is ordered that X shall pay, to each claimant, the amount of notice pay which has been specified in respect of that claimant in the body of this Decision.

(G) All of the claimants have made claims of unfair dismissal. All of those claims are well-founded.

(H) It is ordered that X shall pay to the claimant Kathy Helen McKenna the sum of £1,900 in compensation in respect of that unfair dismissal.

(I) Any claims for compensation, in respect of the unfair dismissals of the other claimants, will be the subject of a separate hearing, which will be held at a later date.

Constitution of Tribunal:

Chairman: Mr P Buggy

Members: Mr B Collins

Mr A White

Appearances:

The following claimants were represented by Mr M Karayiannis, Solicitor, of Kappa Solicitors:

(1) Hilda Beamish (1778/11)

(2) James Edwards (1779/11)

(3) Jason Laverty (1780/11)

(4) Kathy Helen McKenna (1782/11)

(5) Victoria Brown (1777/11)

The following claimants were self-represented:

(6) Therese Mary Mulholland (1256/11)

(7) Kelly Branney (1836/11)

(8) Jennifer Elaine Adair (1864/11)

(9) Nicola Louise McDade (1865/11)

X was not represented at this main hearing.

Y was represented by Mr T Sheridan of Peninsula Business Services Ltd.

Kearney Consulting Ltd was not represented at this main hearing.

Kearney Consult was not represented at the main hearing.

REASONS

1. By the time of the main hearing, there were nine remaining claimants in this group litigation. They have all been identified above. As already noted above, in this Decision, we refer to Construction Register Ltd as “X”, and we refer to CRL Management Ltd as “Y”.

2. At the end of the main hearing, we announced our decision orally. At the same time, we gave our reasons orally. Accordingly, what follows is, generally, by way of summary only. However, in this Decision, we have taken the opportunity to contextualise and amplify the reasons which we gave, at the end of the hearing, in respect of the main liability issues relating to Y.

3. All of the claimants worked as employees, for a lengthy period, in a business which operated at Unit 6, Forestgrove Business Park in Belfast. When initially employed there, all of the claimants were employed by X. At all times which are material for the purposes of the present proceedings, X was controlled by Mr Adrian Kearney. In mid-February 2011, X purported to dismiss each of the claimants, without notice. As soon as Y became operational, and ever since, that company has been controlled by Mr Steven Mansour.

4. In these proceedings, all of the claimants made claims in respect of notice pay. All of the claimants, with the exception of Ms McKenna, made claims in respect of redundancy pay. All of the claimants made unfair dismissal claims.

5. All of the claims were made in the alternative, in that each claimant made the relevant claim against X, and at the same time, made the relevant claim, in the alternative, against Y.

6. All of the active parties to these proceedings accept that X was the employer, of each of the claimants, at least until the beginning of February 2011. There is dispute between the parties on the question of whether or not X continued to be the employer of the claimants right up to 16 February 2011. There is also dispute between the parties as to whether or not, when X purported to dismiss the claimants in February 2011, it did so because of a contemplated relevant transfer (within the meaning of the transfer of undertakings legislation). That is why each of the claims which have been made against X, in these proceedings, are being made in the alternative against Y, on the basis of an argument that Y has become responsible for the liabilities of the relevant employer, pursuant to transfer of undertakings legislation.

Is Y liable?

7. Everybody associated with these proceedings agrees that each claimant was employed by X until mid-February 2011, and that, on or about 16 February 2011, X purported to dismiss each claimant, with immediate effect.

8. Each claimant was issued with a letter of dismissal, which was dated 16 February 2011. According to each dismissal letter, the dismissal was occurring because of redundancy. Each claimant had been given no advance warning of the dismissal.

9. In these proceedings, each claimant relied upon the provisions of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPER”). Obviously, those regulations must be construed in light of the requirements of the Acquired Rights Directive.

10. Each claimant asserted the following:

(1) He or she was assigned to a particular entity at the time that his/her purported 16 February 2011 dismissal took effect.

(2) On or before that date, there was a “relevant transfer”, (in the sense in which the term “relevant transfer” is used in transfer of undertakings law), of that entity, from X to Y. Alternatively, if there was a relevant transfer, of the relevant entity, from X to Y, on some date after 16 February 2011, the principal reason for that claimant’s 16 February dismissal was either the relevant transfer itself, or a “non-ETO” transfer-connected reason.

11. During the course of the main hearing, Mr Sheridan realistically accepted that there had indeed been a relevant transfer, from X to Y, of the entity to which all of the claimants had been assigned immediately prior to their dismissals. (He contended that that transfer had not occurred until June 2011.)

12. During the course of the main hearing, the following propositions were agreed, between all of the claimants, on the one hand, and Mr Sheridan (for Y), on the other hand:

(1) In each of these cases, Y would have a liability, in respect of any
well-founded claims of sex discrimination, notice pay, redundancy pay or unfair dismissal, if: (1) the relevant transfer had occurred by the date on which that claimant’s dismissal took effect, or if (2) the main reason for that dismissal was the relevant transfer, or a non-ETO transfer-connected reason.

(2) However, Y would have no liability in relation to any such claim, unless the tribunal was not satisfied in relation to either of the following propositions. First, that the relevant transfer occurred on or about 16 February 2011, or at some earlier date. Secondly, (as an alternative) that the principal reason for the relevant dismissal was the transfer itself or some “non-ETO”
transfer-connected reason.

13. Accordingly, in each case, in considering whether Y was liable in respect of each relevant claimant’s claim, the following issues were of central importance:

(1) Was the tribunal satisfied that the relevant transfer occurred on or about 16 February 2011, or at some earlier date?

(2) If this tribunal was not satisfied that the relevant transfer had occurred on or about 16 February 2011, or at some earlier date, was it satisfied as to the correctness of either of the following propositions:

(a) The transfer was the principal reason for the dismissal, by X, of the relevant claimant.

(b) The principal reason for the dismissal, by X, of the relevant claimant, was a reason connected with the transfer, which was not an economic, technical error or organisational reason entailing changes in the workforce.

14. Very sensibly, all of the self-represented claimants were content to rely upon the legal arguments which were put forward on behalf of his clients by Mr Karayiannis. We want to pay tribute to the quality and detail of the written submission (“the Submission”) which Mr Karayiannis prepared on behalf of his clients. We read that Submission very carefully.

15. However, in the end, we concluded that the claims against Y were not well-founded, because we were not satisfied on any of the following points:

(1) We were not satisfied that the relevant transfer had occurred on or about 16 February 2011, or at some earlier date.

(2) We were not satisfied that the relevant transfer which ultimately occurred was the main reason for the dismissal, in February 2011, of any of the claimants.

(3) We were not satisfied that the main reason for the dismissal, in February 2011, of any relevant claimant, was a transfer-connected reason.

The timing issue

16. We were not satisfied that the relevant transfer occurred on or before the date on which any of dismissals of these claimants took effect. We arrived at that conclusion against the following background and for the following reasons:

(1) In all these cases, it was being asserted, by or on behalf of all of the claimants, that there had been a single relevant transfer, from X (as transferor), to Y (as transferee).

(2) We noted that there was uncontroverted evidence from Mr Mansour that Y did not come into his hands until mid-March 2011.

(3) We consider that there is no evidence from which we could infer that the relevant transfer had occurred on or by 16 February 2011.

(4) Incidentally, we take the view that the Astley case (Celtec Ltd v Astley [2005] IRLR 647: Submission, page 12) is authority for the proposition that the “date of a transfer”, for the purposes of the transfer of undertakings legislation, is a particular date, on which responsibility as employer (for carrying on the business of the transferred entity), passes from the transferor to the transferee.

(5) We note that, in an aide memoire which was never intended to become available to the claimants, which was dated 22 February 2011, Lynchehaun (the insolvency practitioners) stated that “a company has expressed an interest in acquiring the company’s business on a going concern basis.” The implication of that comment is that, by 22 February 2011, Lynchehaun were of the view that the business was still in the hands of X.

The reason issue

17. In respect of each dismissal, we were not satisfied that the sole or principal reason for the dismissal was the transfer itself, or a reason connected with the transfer. We arrived at that conclusion against the following background, and for the following reasons:

(1) We noted the points which are made in respect of the “reasons” issues at pages 15, 16, 17 and 18 of the Submission.

(2) We noted that people who were dismissed prior to the transfer could only be entitled to TUPE rights if the transfer, or some transfer-connected reason, was the sole or principal reason for the dismissal. (See the combined effect of Regulation 4(3) and Regulation 7(1) of TUPER. Regulation 4(3) refers to a person who would have been still employed in the relevant entity “if he had not been dismissed in the circumstances described in Regulation 7(1)”; the circumstances described in Regulation 7(1) are circumstances in which the transfer, or the transfer-connected reason, is the sole or principal reason for the dismissal).

(3) We did not accept the proposition, as set out at paragraph 1.5.2 of the Submission that the burden of proof passes to the employer if the employee proves that there was any connection between the dismissal and the transfer. Instead, in our view, the onus of proof is upon the employee throughout.

(4) We fully accepted that a transfer, or transfer-connected reason could be the principal reason for a dismissal, even if the transferee had not been identified at the time of the dismissal. (This issue was discussed at paragraph 1.8.5 of the Submission.)

(5) We took the view that, in determining whether the transfer, or a
transfer-connected reason, was the main reason for the dismissal, it was necessary to focus upon the thought processes of the person who made the decision to dismiss. (We note that a similar point was made in the Submission at paragraph 1.9.1, although that point was being made, in that part of the Submission, in the context of a determination being made as to whether the dismissal was a dismissal which was “connected to the transfer”).

(6) It has been asserted in these proceedings, by or on behalf of the claimants, that Mr Adrian Kearney’s contemporaneous accounts of events were substantially and deliberately inaccurate, and that such deliberate inaccuracies provide support for the proposition that Mr Kearney was dismissing the claimants mainly in order to clear the way for a relevant transfer. However, in our view, any such deliberate inaccuracies, in those circumstances, may equally be consistent with a desire to hide the fact that any relevant transfer was in contemplation. (The relevant factual contentions of the claimants are set out at pages 20 and 21 of the Submission.)

(7) Y had clearly been established for the purpose of facilitating a relevant transfer. Y was established within a month of the date of the claimant’s dismissals. We have decided the “reasons” issue on the assumption that the relevant transfer occurred a short number of weeks after the claimants had been dismissed. We accept that this factor (the imminence of the relevant transfer at the time of the dismissals) is a significant factor in favour of the claimants’ arguments on “the reasons” issue.

(8) Mr Mansour provided lengthy oral sworn testimony in these proceedings. He was subjected to searching and skilful cross-examination, both by Mr Karayiannis and by the claimant Ms Nicola McDade. At the end of his testimony, we were left with considerable reservations as to the credibility of that testimony, in relation to some significant matters. For the purpose of deciding the “reasons” issue, we have assumed (without deciding) that Mr Mansour’s testimony was deliberately inaccurate in relation to a variety of significant matters. However, any such deliberate inaccuracies do not necessarily imply an attempt on Mr Mansour’s part to cover up any involvement on his part in relation to the dismissals. Such inaccuracies would be equally easily explicable on the basis that such inaccuracies would help to avoid a tribunal finding that there had been any relevant transfer at all. (It was ultimately conceded, on behalf of Y, that there had been a relevant transfer in June 2012. However, no such concession had been made prior to the start of the main hearing, and that concession was not made until well into the hearing).

(9) In our view, in the circumstances of this case, the two factors identified at sub-paragraphs (7) and (8) above (the imminence of the transfer and the assumed deliberate inaccuracies in the Mansour testimony) do not provide a sufficient evidential basis for us to be satisfied, on the balance of probabilities, that the main or sole reason for the dismissal was the transfer or a transfer-related reason.

(10) The sub-paragraph (7) and (8) factors have to be seen against the following background. In mid-February 2011, X was unable to pay its debts. If X had continued to trade, the directors of X would have been in breach of the requirements of company law (as Mr Karayiannis realistically recognised, during the course of the hearing). X could not properly continue to trade, and therefore had no future need for its staff, and could not afford to continue to employ them.

Is X liable?

18. We next address the issues relating to the liability of X.

19. We are satisfied both that X dismissed each claimant, and that it did so by reason of redundancy. We are so satisfied against the following background and for the following reasons. First, there is no doubt that X purported to dismiss each claimant. Secondly, there is no doubt that each relevant letter of dismissal asserted that redundancy was the reason for dismissal. In any event, in the circumstances of this case, the dismissal of each claimant must be deemed, in the context of his or her redundancy pay claim (and in that context only), to be a dismissal by reason of redundancy, until the contrary has been proven. The contrary has not been proven in any of these cases. (See Article 198(2) of the Employment Rights (Northern Ireland) Order 1996).

20. Against that background, and for those reasons, we are satisfied that each claimant’s redundancy pay claim is well-founded.

21. Each claimant had a contractual entitlement to six week’s notice. In each instance, that was a contractual right which was specified in written terms and conditions of employment. Each claimant was given less than six weeks notice. In the Brown case, no notice, or pay in lieu of notice, was given. In every other case, no notice was given and only two weeks pay in lieu of notice was given. X has not proven that any of the claimants was guilty of gross misconduct. Accordingly, in each case, there was a failure on the part of the respondent to comply with the relevant claimant’s contractual entitlement to notice.

22. Against that background, and for those reasons, we are satisfied that the notice pay claim of each of the claimants is well-founded.

23. In the context of an unfair dismissal claim, it is for the respondent to show what the sole or principal reason for dismissal was, and to show that this was a potentially fair reason for dismissal. In this case, X has not shown what the sole or principal reason for dismissal was (because X did not participate in the main hearing). For that reason alone, each claimant's claim of unfair dismissal succeeds.

24. In any event, each of these dismissals is an unfair dismissal, pursuant to Article 130A(1) of the Employment Rights (Northern Ireland) Order 1996 (“the 1996 Order”), because the statutory dismissal procedure applied to each of these dismissals, and the requirements of that procedure, in various respects, were not met (in connection with any of these dismissals). In particular, as already noted above, the claimants were simply informed in writing that they were being dismissed, with immediate effect: none of the claimants was notified in writing, in advance of the decision to dismiss him or her, or of the circumstances which were leading X to contemplate dismissing him or her, and no claimant had been informed by X, prior to the communication of the dismissal decision, of the basis for the grounds which were leading X to contemplate dismissing that claimant.

25. Accordingly, for all of those reasons, each claimant’s claim of unfair dismissal is well-founded.

26. Ms Brown says that the respondent was guilty of unlawful discriminatory treatment, contrary to the Sex Discrimination Order, by failing to make her a payment of two week’s pay in lieu of notice (in contrast to the treatment of other claimants).

27. She says that, because the reason for that disparity of treatment was the fact that she was on maternity leave, the relevant treatment has to be regarded as sexually discriminatory. We agree. Accordingly, the claimant Ms Brown’s sex discrimination claim is well-founded.

Summary of our conclusions on the liability issues in relation to X

28. Our conclusions on the liability issues can be summarised as follows:-

(1) All of the claimants, apart from Ms McKenna, have made redundancy pay claims. All of those claims are well-founded.

(2) All of the claimants have made notice-pay claims. All of those claims are
well-founded.

(3) All of the claimants have made unfair dismissal claims. All of those claims are well-founded.

(4) The sex discrimination claim of Ms Brown is well-founded.

How the redundancy pay was calculated

29. Each claimant’s dismissal took place on or about 16 February 2011. Accordingly, the statutory maximum, in the context of redundancy pay, pursuant to Article 23 of the 1996 Order, is £400. Each claimant’s redundancy pay has been calculated on the basis of his/her gross weekly salary, subject to a maximum of £400 per week, on the basis of his/her number of completed years of service and on the basis of his/her age during his/her period of employment.

How the notice pay award was calculated

30. Each claimant’s notice pay award has been calculated on the following basis:

(1) Notice pay has been calculated on the basis of net pay.

(2) Deductions have been made in respect of any Job Seekers Allowance which was actually received, or which could have been received.

(3) It is noted that deductions must be made in respect of any net wages received from new employment. (In the present context, “new” employment refers to employment, during the notice period, by some employer other than X, in a situation in which the claimant’s employment in the new position became possible because of the termination of his/her employment with X).

Sex discrimination remedies

31. The loss which Ms Brown sustained on account of the gender-discriminatory withholding of two week’s notice-pay was a loss which has been taken into account in the calculation of the notice pay award which has been made in her favour. Against that background, and for that reason, we have decided not to make any award to Ms Brown in respect of sex discrimination.

Unfair dismissal compensation

32. We have assessed the amount of unfair dismissal compensation due to Ms McKenna, because of certain concessions which she made, and because she has made no application for a redundancy payment. (See below.)

33. With the agreement of the “other” claimants, we decided to defer making any assessment of the amount of any unfair dismissal compensation which might be due to them.

34. That deferral occurred against the following background and for the following reasons.

35. It was noted that it seems to be very much an open question as to whether X would have sufficient funds to pay any unfair dismissal award. It was also noted that the full assessment of any unfair dismissal compensation claim would involve a relatively lengthy process.

36. It was noted that, in the circumstances of these cases, the statutory guarantee would probably not be available to the “other” claimants in respect of any unfair dismissal award.

37. Against that background, it was agreed that any unfair dismissal compensation hearings (hearings for the purpose of assessing the amounts of any unfair dismissal compensation), in respect of the “other” claimants, will be held at some later date, if the relevant claimants ultimately decide to seek such compensation. It was anticipated that, in the meantime, a clearer picture would have emerged as to the prospects of claimants being able to enforce any unfair dismissal award against X.

38. Any unfair dismissal award would consist of two elements: a Basic Award element and a Compensatory Award element. The Compensatory Award element of the unfair dismissal award will never be within the scope of the statutory guarantee. The Basic Award element, could, in theory, be within the scope of the statutory guarantee (whereby the Department for Employment and Learning acts as statutory guarantor in respect of certain debts which are owed by employers to their
ex-employees). However, the effect of Article 156(4) of the 1996 Order is as follows: If a tribunal makes both a redundancy award and an unfair dismissal award in favour of a claimant during the course of proceedings, the Basic Award element of the unfair dismissal award has to be reduced by the amount of any redundancy pay award. In most situations, the outcome of that exercise will be to reduce the amount of the Basic Award to nil.

39. Against that background, it is of some significance that Ms McKenna has made no redundancy claim in these proceedings. (As a result, her Basic Award cannot be reduced by the amount of any redundancy pay award. Accordingly, she has a greater practical incentive to pursue an application for compensation in respect of unfair dismissal).

40. Against that background, a Case Management Discussion was held on the McKenna case, on 1 June 2012. As was pointed out during the course of that Case Management Discussion, and as was recorded in the record of proceedings in respect of that Case Management Discussion:

“1. The purpose of this Case Management Discussion (“CMD”) was to address the procedural issues arising in relation to any assessment of Ms McKenna’s claim for unfair dismissal. During the course of this CMD, I noted that, according to her own evidence, the claimant in this particular case had engaged, on a full-time basis, in a new business, very soon after the termination of her employment. Against that background, I asked Mr Karayiannis whether his client would consider it appropriate or inappropriate to limit the Compensatory Award element of her unfair dismissal claim to (say) a sum of £300 for “loss of statutory rights”.

2. I pointed out to [Mr] Karayiannis that, if this claimant were to decide to limit her unfair dismissal compensation claim in that way, it would be likely that the tribunal would be able to make an award of unfair dismissal compensation to her now (which would obviate [any] need for the tribunal to be reconvened for the purpose of considering some future application, on her behalf, for unfair dismissal compensation).

3. It will be appreciated if Mr Karayiannis will write to the Secretary of the tribunals, by 15 June at the latest, to inform the Secretary whether his client will be content to limit her UD compensation claim to the extent indicated above. I stress again that it is of course entirely a matter for the claimant as to whether she wishes to limit her claim in that way.”

Mr Karayiannis did subsequently confirm that Ms McKenna was willing to limit the Compensatory Award element of her unfair dismissal claim to the sum of £300.

41. Accordingly, we have assessed the amount of compensation due to Ms McKenna. She is entitled to an unfair dismissal award of £1,900. That award consists of a Basic Award element of £1,600 and a Compensatory Award element of £300.

42. The Basic Award consists of gross pay, which has been awarded to Ms McKenna pursuant to Article 154(1A)(a) of the 1996 Order. (For that purpose, the amount of a week’s pay is limited to £400, pursuant to Article 23 of the 1996 Order).

43. The £300 Compensatory Award consists only of an award of £300 to compensate Ms McKenna for the fact that she will have no continuity of service in any “new” employment (employment which starts, or has started, at a date subsequent to the February 2011 dismissal). The Recoupment Regulations do not apply to that award.

44. A Case Management Discussion (“CMD”) will be held on Wednesday, 5 September, at 4.15 pm. Mr Karayiannis, all of the self-represented claimants, and Construction Register Ltd, will all be invited to that CMD. The purpose of that CMD will be to consider the best procedural way forward in relation to any applications for assessment of unfair dismissal compensation which the “other” claimants (the claimants other than Ms McKenna) might at that point wish to pursue. Any claimant is welcome to request the re-scheduling of that CMD, for some earlier date, if some noteworthy development occurs in the meantime.

The amounts of compensation

45. X is liable to make the following redundancy payments to the following claimants:

(1) Ms Beamish: £2,400

(2) Mr Edward: £1,800

(3) Mr Laverty: £2,400

(4) Ms McKenna: n/a

(5) Ms Brown: £2,400

(6) Ms Mulholland: £2,000

(7) Ms Branney: £1,600

(8) Ms Adair: £3,000

(9) Ms McDade: £1,200

46. In relation to each of the claimants, it is ordered that X shall pay, to the relevant claimant, the amount specified in respect of that claimant below, as compensation for breach of that claimant’s entitlement to notice:

(1) Ms Beamish: £1,757

(2) Mr Edward: £1,812

(3) Mr Laverty: £1,521

(4) Ms McKenna: £2,180

(5) Ms Brown: £1,728

(6) Ms Mulholland: £1,182

(7) Ms Branney: £820

(8) Ms Adair: £636

(9) Ms McDade: £3,583

Interest

47. This is a relevant decision for the purposes of the Industrial Tribunals (Interest) Order (Northern Ire land) 1990.

Chairman:

Date and place of hearing: 12 March, 13 March, 30 April, 1 May and 22 May 2012, Belfast.

Date decision recorded in register and issued to parties:

Industrial Tribunals Northern Ireland Decisions