THE INDUSTRIAL TRIBUNALS

CASE REF:	7351/09

CLAIMANT:			Andrew McAllister

RESPONDENT:		Greenhills Security Products (NI) Ltd

DECISION ON REMEDY
The unanimous decision of the tribunal is that the respondent is ordered to pay to the claimant the sum of £68,001.00.

Constitution of Tribunal:
Chairman:		Mr N Drennan QC
Members:		Mr E Grant
			Mr B McAnoy

Appearances:
The claimant was represented by Ms N Gowan, Solicitor, of Hewitt & Gilpin, Solicitors.
The respondent did not appear and was not represented.

Reasons

1.1	A default judgment was entered in the Register and issued to the parties on 29 December 2009, which stated:-

“The time for presenting a response having expired, the tribunal finds that the claimant’s claims of unfair dismissal; breach of contract (holiday pay and notice pay); and the right to written reasons for dismissal are well-founded.

Any remedies to which the claimant is entitled in respect of the above complaints will be determined at a hearing, notice of which will be issued shortly.”

1.2	This hearing was arranged to consider the remedy to which the claimant is entitled on foot of the said default judgment.

1.3	Notice of Hearing of this matter was served on the directors of the respondent, pursuant to an Order for Substituted Service made by the President of the Industrial Tribunals and the Fair Employment Tribunal on 14 June 2010.  Although there was evidence, before this tribunal, that the holding company with the respondent, Aviva Security Distribution Limited (‘Aviva’), a company registered in the Republic of Ireland, had gone into receivership on 11 December 2009, there was no evidence before this tribunal that the respondent, a company registered in Northern Ireland, had gone into receivership.  The solicitors for the claimant had written to the Receiver for Aviva, but had received no reply to the said correspondence.  

2.1	The tribunal, having heard oral evidence from the claimant, together with oral submissions from his representative, Ms Gowan, made the following findings of fact, as set out in the following sub-paragraphs, insofar as relevant and material, to the remedy to which the claimant is entitled on foot of the said default judgment.  

2.2	The claimant was employed by the respondent from on or about 4 January 2008 until on or about 31 July 2009, under a service agreement made between the parties.  

2.3	The following, insofar as relevant and material, were terms of the said agreement entered into between the claimant and the respondent; who, respectively, were referred to in the said agreement as ‘the executive’ and ‘the company’.  The tribunal was satisfied, on the evidence before it, the completion date referred to in the agreement was 4 January 2008:-

“2.1	The executive shall serve the company as director and general manager or in such other capacity of a like-status as the company may require from the completion date until the fifth anniversary of the completion date and thereafter, unless his employment is terminated at any time by the company in accordance with Clauses 14 or 15 of this agreement.

 …

 2.3	Either party may give 12 months notice to terminate the employment to expire on a date not earlier than the third anniversary of the completion date.

 5.1	For the duration of his employment hereunder, the executive shall be entitled to:-

(a)	continuance of his private health insurance (for himself and his dependant family) be paid by the company;

(b)	the continuance of his critical illness insurance policy; and

(c)	contributions of £300 to the executive’s authorised pension scheme per annum payable by the company.

 7.1	The executive shall be entitled to 28 days paid holiday (inclusive of bank and statutory holidays) in every calendar year to be taken at such time or times as may be approved by the board.”

2.4	There was no evidence that the claimant’s employment was terminated by the respondent, pursuant to Clause 14 or 15 of the agreement.

2.5	On 23 July 2009, the claimant was working at home and, without warning, he was contacted by telephone and required to attend a meeting at the respondent’s premises later that day.  Mr Brian Gallivan, the managing director, and Mr John Munnelly, the chief financial officer, were in attendance at the meeting.  He was informed by them he was to be dismissed because of lack of business.  He was given no other information about the dismissal and/or the reasons for same at the meeting, other than he would be paid up until 31 July 2009.  He was further told Mr Munnelly would deal with notice payments, expenses and any other outstanding matters, such as benefits and holiday pay.  In August 2009, the claimant was paid his salary up until 31 July 2009 and was subsequently paid his expenses; but, despite various requests by the claimant, he was not paid any sums due to him in respect of notice, holiday pay, pension or in relation to his personal health insurance, pursuant to the terms of the service agreement.  

2.6	At the said termination of his employment, without notice, on 31 July 2009, the claimant had five days holiday remaining; and contributions to his pension and/or payments in respect of his personal health insurance were no longer paid by the respondent.  

2.7	Despite various requests by the claimant to the respondent to hold an appeal in relation to the decision to dismiss him, despite promises made by the respondent to hold such an appeal, no such appeal was carried out by the respondent.

2.8	At the date of the said termination of his employment, the claimant was in receipt of a salary of £2,500 gross per month (£1843.36 net).  To date, he has not been able to obtain any other employment.  The tribunal is satisfied that, at the date of termination of his employment, the claimant, as claimed by him, was entitled to the sum of £426 holiday pay, in respect of five days of holiday which had not been taken by him prior to that date; and further that, pursuant to the terms of the said agreement, he was entitled to the sum of £833.33, as claimed by him, in relation to his private health insurance together with loss of pension contributions in the sum of £450.

3.1	As set out, in the default judgment, the tribunal found that the claimant had been unfairly dismissed, pursuant to Article 130 of the Employment Rights (Northern Ireland) Order 1996 (‘the 1996 Order’).

3.2	Substantial changes to the law of unfair dismissal were introduced following the commencement in 2005 of the Employment (Northern Ireland) Order 2003 (‘the 2003 Order’) and the Employment (Northern Ireland) Order 2003 (Dispute Resolution) Regulations (Northern Ireland) 2004 (‘the 2004 Regulations’).  The 2003 Order and the 2004 Regulations introduced, inter alia, procedures to be complied with by an employer relating to matters of discipline and/or dismissal; which procedures were applicable to the dismissal of the claimant.  Under the said disciplinary and dismissal procedure (‘DDP’), on the facts found by the tribunal, the respondent was required, as set out in Paragraphs 1 – 3 of Schedule 1 of the 2003 Order to carry out the following steps:-

		“Step 1 : Statement of grounds for action and invitation to meeting

 1(1)	The employer must set out in writing the employee’s alleged conduct or characteristics, or other circumstances, which lead him to contemplate dismissing or taking disciplinary action against the employee.

  (2)	The employer must send a statement or a copy of it to the employee and invite the employee to attend a meeting to discuss the matter.

 Step 2 : Meeting

 2(1)	The meeting must take place before action is taken, except in the case where the disciplinary action consists of suspension.

   (2)	The meeting must not take place unless –

(a)	the employer has informed the employee what the basis was for including in the statement under Paragraph 1(1) the ground or grounds given in it, and

(b)	the employee has had a reasonable opportunity to consider his response to that information.

		   (3)	The employee must take all reasonable steps to attend the meeting.

  (4)	After the meeting, the employer must inform the employee of its decision and notify him of the right to appeal against the decision if he is not satisfied with it.

 Step 3 : Appeal

 3(1)	If the employee does wish to appeal, he must inform the employer.

   (2)	If the employee informs the employer of his wish to appeal, the employer must invite him to attend a further meeting.

   (3)	The employee must take all reasonable steps to attend the meeting.

   (4)	The appeal meeting need not take place before the dismissal or disciplinary action takes affect.

  (5)	After the appeal meeting, the employer must inform the employee of its final decision.”

3.3	Under Regulation 12 of the 2004 Regulations, it is provided, in essence, that the failure of a party to follow the said procedure releases the other party from the obligation to follow it.

3.4	Arising from the introduction of the said statutory procedures, the 1996 Order was amended by Article 130A which provides that, where an employer fails to comply with the relevant DDP, when dismissing the employee, the dismissal will be automatically unfair.  On the facts as found by the tribunal, the respondent failed to comply with the said DDP and the said dismissal was therefore automatically unfair.

3.5	A finding of such an automatic unfair dismissal is relevant to the remedy that the claimant is entitled to and must therefore be considered by the tribunal (see Venniri  v  Autodex Ltd [UKEAT/0436/07]).  In particular, such a failure to comply with the relevant statutory procedure has an impact on the remedy to which a claimant is entitled in relation to a claim of unfair dismissal, as a tribunal is able; if appropriate to make an adjustment upwards to the amount of compensation, which a claimant is entitled to where there has been such default by an employer.  Under Article 17(2) and 17(3) of the 2003 Order, the adjustment must be at least 10% and, if the tribunal considers it just and equitable, up to 50%.  However, under Article 17(4) of the 2003 Order, the tribunal can apply no adjustment (or an adjustment of less than 10%) if there are ‘exceptional circumstances’ making a 10% adjustment unjust or inequitable.  Any potential uplift is limited to the compensatory award only (see Hope  v  Gordon Engineering Ltd [UKEAT/0545/07]).  Further, there is no provision, in an unfair dismissal claim, to uplift the compensatory award beyond the statutory maximum (Article 158A of the 1996 Order).

	In relation to the basic award payable on a finding of unfair dismissal, no uplift is applicable; save that, pursuant to Article 154(1)(A) of the 1996 Order, where the amount of any basic award would otherwise be less than four weeks pay, then the basic award is increased to four weeks pay (subject to the statutory cap) unless the tribunal considers that such an increase would result in injustice to the employer.  

3.6	There has been considerable authority, in relation to the amount of any uplift, which a tribunal should make, pursuant to the said provisions set out above.  However, in essence, the tribunal has a wide discretion (see Cex Ltd  v  Mark Lewis [UKEAT/0013/07]) and in the case of Metrobus Ltd  v  Cooke [UKEAT/0490/06] an uplift of 40% was upheld, where the employer had ‘blatantly’ failed to comply with sending the Step 1 letter.  In the recent case of Virgin Media Ltd  v  Seddington [2009] UKEAT/0539/08, Mr Justice Underhill gave some guidance in relation to this issue of the said uplift.  He emphasised, in the absence of exceptional circumstances, where a dismissal has been found to be automatically unfair, because of a failure to follow the statutory procedures, by an employer, the tribunal was obliged to apply an uplift to their awards of at least 10% and, if it thought it was just and equitable, of up to 50%.  He also stated that a (if not the) primary factor required to be taken into account in exercising the discretion was how culpable the failure to employ the statutory procedures was.  However, he emphasised that a tribunal should not approach the task in a mechanistic way.  In the decision of the English Court of Appeal in the case of Chagger  v  Abbey National PLC & Another [2009] EWCA Civ 1202, Lord Justice Elias acknowledged that the level of compensation is, of itself, capable of being an ‘exceptional circumstance’, when he stated at Paragraph 102 of this judgment:-  

“The Court of Appeal noted in Redcar & Cleveland Council  v  Bainbridge [2008] IRLR 776, Paragraph 311.  The uplift operates as an incentive to encourage parties to make use of the statutory procedures.  We do not think Parliament would have intended the sums awarded to be wholly disproportionate to the nature of the breach.  In our view that would have been the effect of awarding even a 10% uplift.  There is no definition of ‘exceptional circumstance’ and we are satisfied that it was open to the tribunal to conclude that the size of the award was one such circumstance.”

3.7	In this matter, as set out below, the claimant is entitled to a sizeable compensatory award.  However, this arose because of the loss of earnings to which the claimant was entitled, pursuant to the service agreement entered into between the claimant and the respondent, and which agreement was clearly intended to reflect not only the claimant’s senior position in the respondent but also to give him security in his said employment for the said minimum period of employment.  In those circumstances, the tribunal was not satisfied the size of the award was an ‘exceptional circumstance’ for the purposes of determining the amount of any uplift to be allowed by the tribunal in relation to the compensatory award.  The respondent failed to have any regard to the said statutory procedures, which the tribunal found totally unacceptable.  Further, the respondent did so, despite requests by the claimant for an appeal of the decision to dismiss him.  If the respondent had given the claimant an appeal, as it promised to do, the tribunal, despite the earlier breaches of the said statutory procedures, would have taken this into account in assessing the amount of the uplift to be applied in this case.  In the absence of any explanation by the respondent in relation to its failure to comply with the said statutory procedures, the tribunal concluded that the maximum uplift of 50% in relation to the claimant’s compensatory award was appropriate in the circumstances.  Further, in relation to the basic award to which the claimant is entitled, the tribunal did not consider that, to increase the basic award to four weeks pay, pursuant to Article 154(1)(A) of the 1996 Order, would result in injustice to the respondent, in the circumstances.  

4.	Although the dismissal of the claimant was automatically unfair, as set out above, the tribunal was still entitled to have regard, if appropriate, to the principles set out in the well-known decision of the House of Lords in the case of Polkey  v  AE Dayton Services Ltd [1988] ICR 344.  In the case of Goodin  v  Toshiba [UKEAT/0271/08] it was held there could be a Polkey reduction of up to 100% in an automatic unfair dismissal case, where the tribunal was satisfied that the breaches of procedure would have made no difference to the dismissal.

	In this case, given the failure of the respondent to provide any relevant information about the dismissal and/or the reasons for same, other than to state to the claimant that the dismissal was because of lack of business, the tribunal was not satisfied, in the circumstances, that the breaches of the DDP would have made no difference to the said dismissal.  In the circumstances, the tribunal therefore declined to make any Polkey reduction.  

5.1	In light of the failure of the respondent to provide to the claimant a written statement of the reasons for the dismissal, the claimant is entitled, pursuant to Article 125 of the 1996 Order to an award equal to the amount of two weeks pay, subject to the statutory cap.

6.1	In light of the foregoing, the tribunal assessed the compensation to which the claimant is entitled to by way of remedy, in relation to his said claims (see further Digital Equipment Co Ltd  v  Clements (No 2) [1997] ICR 237):-

		A	Failure to provide statement of written reasons for dismissal

			2 x £350 (subject to statutory cap)			£     700.00

		B	Unfair dismissal

			(i)	Basic award

				4 x £350 (subject to statutory cap)		£  1,400.00

			(ii)	Compensatory award

				(aa)	Loss of one week’s statutory notice
					(in respect of period 1 August 2009
					 to 7 August 2009)

					1 x £350 (subject to statutory cap)	£      350.00

				(bb)	loss of earnings from
					8 August 2009 – 4 January 2011
					@ £2,500 gross/£1,843.36 net 
					per month
					16.75 x 1,843.36				£30,876.28

Note:	For taxation purposes this sum
has to be grossed up – 
16.75 x £656.64			£10,998.72

				(cc)	Holiday pay (5 days)			£     426.00

				(dd)	Loss of pension contribution		£      450.00

				(ee)	Loss of private health insurance
					contribution					£       833.00

				Total							£  43,934.00

				Add uplift of compensatory award at 50%	£  21,967.00

				Compensatory award total				£  65,901.00

			Total monetary award for unfair dismissal		£  68,001.00

6.2	As the claimant has recovered compensation in respect of his breach of contract for holiday pay, notice pay, as set out above, the tribunal declined to make any award in respect of same by way of remedy.

6.3	This is a relevant decision for the purposes of the Employment Protection (Recoupment of Jobseekers Allowance and Income Support) Regulations (Northern Ireland) 1996.  Pursuant to the said Regulations the tribunal sets out the following particulars:-

	£	
(a)  Monetary award	                68,001.00	
(b)  Prescribed element	                30,625.00	
(c)  Period to which (b) relates:
	     1 August 2009 to
8 August 2010	
(d)  Excess of (a) over (b)	                 37,376.00	

	The attention of the parties is drawn to the attached annex which forms part of this decision relating to the recoupment of Jobseekers Allowance/Income Support.

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

Chairman:

Date and place of hearing:	26 July 2010, Belfast

Date decision recorded in register and issued to parties:

Case Ref No: 7351/09	

CLAIMANT:		Andrew McAllister

RESPONDENTS:	           Greenhills Security Products (NI) Ltd
ANNEX TO THE DECISION OF THE TRIBUNAL

STATEMENT RELATING TO THE RECOUPMENT OF JOBSEEKER’S ALLOWANCE/INCOME SUPPORT

1.	The following particulars are given pursuant to the Employment Protection (Recoupment of Jobseeker’s Allowance and Income Support) Regulations (Northern Ireland) 1996. 

	£	
(a)  Monetary award	68001.00	
(b)  Prescribed element	30,625.00	
(c)  Period to which (b) relates:	         1 August 2009 – 
         8 August 2010	
(d)  Excess of (a) over (b)	37,376.00	

	The claimant may not be entitled to the whole monetary award.  Only (d) is payable forthwith; (b) is the amount awarded for loss of earnings Income during the period under (c) without any allowance for Jobseeker’s Allowance or Support received by the claimant in respect of that period; (b) is not payable until the Department of Social Development has served a notice (called a recoupment notice) on the respondent to pay the whole or a part of (b) to the Department (which it may do in order to obtain repayment of Jobseeker’s Allowance or Income Support paid to the claimant in respect of that period) or informs the respondent in writing that no such notice, which will not exceed (b), will be payable to the Department.  The balance of (b), or the whole of it if notice is given that no recoupment notice will be served, is then payable to the claimant.

2.	The Recoupment Notice must be served within the period of 21 days after the conclusion of the hearing or 9 days after the decision is sent to the parties (whichever is the later), or as soon as practicable thereafter, when the decision is given orally at the hearing.  When the decision is reserved the notice must be sent within a period of 21 days after the date on which the decision is sent to the parties, or as soon as practicable thereafter.

3.	The claimant will receive a copy of the recoupment notice and should inform the Department of Social Development in writing within 21 days if the amount claimed is disputed.  The tribunal cannot decide that question and the respondent, after paying the amount under (d) and the balance (if any) under (b), will have no further liability to the claimant, but the sum claimed in a recoupment notice is due from the respondent as a debt to the Department whatever may have been paid to the claimant and regardless of any dispute between the claimant and the Department.