THE INDUSTRIAL TRIBUNALS

CASE REF:	  1035/14
1048/14

CLAIMANTS:		1.	Robert Adamson
				2.	William Thompson

RESPONDENT:		Fire and Flooring Systems Ltd

DECISION 

The unanimous decision of the tribunal is that the first-named claimant Mr Adamson was unfairly dismissed by the respondent and the respondent is ordered to pay to the first-named claimant the sum of £49,625 as set out at paragraphs 21-24 below.

The unanimous decision of the tribunal is that the second-named claimant Mr Thompson was unfairly dismissed by the respondent and the respondent is ordered to pay to the second-named claimant the sum of £17,149.33 as set out at paragraphs 17-20 below.

Constitution of Tribunal:

Employment Judge:	Employment Judge McCaffrey

Members:	Mr B Collins
	Mr I Rosbotham

Appearances:

The claimants appeared in person and represented themselves.

The respondent did not attend and was not represented.

ISSUES

1.	These were two claims of unfair dismissal against the respondent company.

2.	The first-named claimant (“Mr Adamson”) was employed by the respondent from 9 January 1995 until 3 March 2014.  He ultimately became a Director and general manager of the respondent company which had a business in Fire Protection Training within the construction industry.  The second-named claimant (“Mr Thompson”) was employed as contracts manager by the respondent from 27 March 2000 until 3 March 2014.

3.	The respondent company was owned by Mr Bell who was the sole shareholder.  The respondent was not represented at the hearing, although they had initially been represented at Case Management Discussions and a response had been received in both claims.  It was clear from the record of proceedings that the Case Management discussions held on this matter (and in particular the Case Management Discussion on 4 March 2015) that the respondent company was no longer trading, having ceased trading on 7 January 2015.  There was no indication that the company had become insolvent or had been put into administration.  There had been no contact or representation from the respondent seeking a postponement of the matter and accordingly we considered it appropriate to proceed with the hearing in their absence.  The previous CMD had been told that a medical report had been submitted from Mr Bell’s General Practitioner indicating that the doctor did not feel Mr Bell “will ever be fit to attend as a witness to the tribunal in the future”.  In our view therefore, postponing the matter is unlikely to make any difference to whether or not the respondent attends.

4.	We had been made aware that there was a police investigation ongoing although neither claimant had been interviewed by the police as of March 2015.  Mr Thompson (against whom allegations of fraud had been made) advised us at the hearing that at his request he had been interviewed by the police earlier in June 2015 and had been told that if the police needed to contact him they would do so in the future.  There was no indication at this stage that there will be any prosecution.

5.	We were impressed by the clarity and credibility of both claimants and on the basis of their oral evidence, we make the following findings of fact.

6.	From approximately 2008 onwards, Mr Bell the owner of the respondent company had cut back in his activity in relation to the business to three days a week, as a result of which Mr Adamson took responsibility for the day to day running of the business.  In April 2013, Mr Bell approached Mr Adamson to buy the business from him, but those negotiations ultimately proved fruitless.  Mr Bell was less and less involved in the running of the business.  Towards the end of 2013, Mr Adamson, along with Mr Thompson who he considered his “right hand man” put together a strategy for growth in the business, succeeded in improving the company’s performance and putting together a business plan which they submitted to their bankers with a view to obtaining additional finance.  The bank approved the plan subject to Mr Bell’s involvement as sole shareholder, but Mr Bell refused to co-operate.

7.	At this time, Mr Bell was not attending the business on a daily basis.  Mr Thompson’s evidence was that he saw Mr Bell on only one occasion between March 2013 and March 2014, when he was dismissed.  On that occasion Mr Bell called him in and told him off for having criticised the mechanic who had done work on Mr Thompson’s company car, in front of the mechanic concerned.  Mr Thompson said that he subsequently spoke to Mr Bell about this matter and told him he considered the way he had been spoken to inappropriate in the circumstances.  Mr Thompson indicated that Mr Bell had then not spoken to him after that.

8.	In early 2014, Mr Thompson had bought a wooden floor from Haldane Fisher through the respondent’s trade account together with some railway sleepers.  He had done so with Mr Adamson’s express permission.  Mr Adamson also indicated that because Mr Thompson had worked a lot of unpaid overtime over the Christmas break in 2013, he had told Mr Thompson that he could have the flooring in lieu of payment for his overtime.  

9.	Around the same time Mr Thompson’s son had a car accident when his car crashed in ice, damaging a fence.  Again with Mr Adamson’s permission and approval, the claimant had got the fence fixed using materials purchased from J P Corry, Dromore on the respondent’s trade account and using labour from the company.  Mr Thompson explained that this was done so that he could get the benefit of a trade discount and again it was done for him as part-payment in lieu of his overtime.  He said, and Mr Adamson agreed, that Mr Thompson regularly worked week-ends and worked in excess of 60 hours per week on occasion, to facilitate the company.

10.	Mr Thompson also said, and it was confirmed by Mr Adamson that Mr Bell had previously allowed Mr Thompson to buy a kitchen, bathroom suite and ensuite sanitary wear at a cost of over £15,000 through the trade account, and that Mr Thompson had repaid him for these goods.  Regarding the items purchased in early 2014, Mr Thompson indicated they were not yet due for payment but that in any event Mr Adamson had indicated that these would count as payment in-lieu for his overtime.  

11.	Both Mr Thompson and Mr Adamson confirmed that neither of them had written contracts of employment.

12.	On 3 March 2014 both claimants were onsite when Mr Adamson received a telephone call from Mr Bell instructing them to return to the office.  On their return, Mr Adamson went to speak to Mr Bell in his office upstairs.  At that stage Mr Adamson said that Mr Bell told him he was coming back to the firm, that he suspected financial irregularities and that Mr Thompson had stolen flooring and fencing.  Mr Adamson told Mr Bell that he was aware of all of those things and had approved them personally, explaining why.  Mr Bell said that as far as he was concerned, “Thompson was history”.  Mr Adamson said that he disputed this with Mr Bell saying that this was totally wrong and that Mr Thompson was the most loyal employee that they had.  His unchallenged evidence was that Mr Bell then said “As far as I am concerned you have nothing more to do with the day-to-day running of the business and I will run it as I see fit.”  Mr Adamson went down to his own office.  Mr Thompson was then called to Mr Bell’s office, and at that stage Mr Bell accused him of stealing the wooden flooring, the railway sleepers and getting a fence fixed using company labour and equipment.  Mr Thompson was given no opportunity to respond, or put his side of the story.  Mr Thompson’s unchallenged evidence was that Mr Bell told him he had no option but to dismiss him with immediate effect and asked him to clear his desk.  This was disputed in the notice of appearance in this matter, but having heard Mr Thompson’s evidence and Mr Adamson’s evidence in this matter, we found them credible and clear witnesses and we accept their evidence on this point.  Mr Thompson then went down to clear his desk and spoke to three other colleagues, telling them that he had been sacked.  He also told Mr Adamson at that stage that he had been sacked.  On his way back home, he received a telephone call from Mr Bell, asking him to leave off his company telephone.  
13.	Shortly after this Mr Adamson spoke to Mr Bell and told him that he felt Mr Bell had undermined his trust, that Mr Bell had moved employees from site to site without consulting him, in spite of the fact Mr Adamson had been keeping the business going for the previous year.  He also pointed out to Mr Bell that he had sacked Mr Thompson who was his “right hand man” and that he no longer had any trust in him.  He had no alternative he said but to move on at that time.  Mr Adamson said, and we accept, that due to cash flow difficulties within the respondent company he had not taken his salary for the previous three months and that he had also invested about £12,000 in the business in order to keep it trading.  Mr Adamson’s take home pay was £4,000 per month and he also had a company car.  

14.	Mr Thompson earned £24,000 per annum gross and his take home pay was £1,555 per month.  He also had a company car.  Following their dismissal, Mr Adamson set up a new company trading from approximately 11 March 2014.  Mr Thompson went to work for him, initially without pay.  Mr Thompson said that he had not been paid for the first three months and had only been paid from June 2014.  His take home pay in his new employment was £2,000 per month, so he had no ongoing loss.

15.	Mr Adamson indicated that in the course of the first year’s trading, and given that they had started “from scratch”, the accounts showed a gross profit of £15,000 for the first year.  Neither claimant had claimed any state benefits in the interim.  

Decision

16.	We are satisfied on the basis of the evidence we have heard that both claimants were unfairly dismissed.  We are satisfied that Mr Thompson was unfairly dismissed by Mr Bell in being summarily dismissed without the Statutory Disciplinary and Dismissal Procedures having been followed contrary to Article 130A(1) of the Employment Rights (NI) Order 1996 and that he is entitled to compensation for being unfairly dismissed.  He advised us that he had not been paid a “lying month’s” salary and on the evidence before us he was dismissed without notice.  Furthermore he had not been given written terms and conditions of employment.  Accordingly we order the respondent to pay to the claimants the following amounts.

Mr Thompson

17.	The claimant Mr Thompson had been employed by the respondent for 13 complete years and was aged 46 at the date of dismissal.  His gross pay was £461.53 per week, £358.84 nett on the figures given to us.

18.	Accordingly he is entitled to the following amounts.

(1)	Basic Award

The claimant is entitled to 15.5 weeks gross pay in respect of a basic award made up as follows:

	5 years’ service aged 41or over = 5 x 1.5 weeks pay = 7.5 weeks
8 years service under the age of 41 = 8 weeks
i.e. 15.5 weeks @ £461.53 =					  £7,153.71	

On the evidence before us the respondent failed to comply with the Statutory Disciplinary and Dismissal Procedures and accordingly the claimant is entitled to an uplift on the monetary award under Article 17(3) of The Employment (Northern Ireland) Order 2003.  In this case we consider it would be appropriate to award an uplift of 25% as follows:			  £1,788.42

Total Award for Unfair Dismissal					  £8,942.13

(2)	Arrears of Pay

In addition the claimant is owed one month’s 
wages as follows:							  £1,555.00

Loss of Statutory Rights						  £   500.00

Notice Pay

The claimant is entitled to 12 weeks’ notice pay at the rate 
of £358.84 per week i.e. 						 £4,306.08

The claimant advised he was paid from June onwards and therefore has no ongoing loss, so we make no further amendment in respect of a compensatory award.

19.	An employee is entitled to receive written terms and conditions of employment by virtue of Articles 33(1) and 36(1) of The Employment Rights (Northern Ireland) Order 1996.  By virtue of Article 27 of The Employment (Northern Ireland) Order 2003, where the tribunal finds that no contract has been provided it shall award two weeks’ gross pay and may award up to four weeks’ gross pay by way of compensation if it considers it just and equitable to do so.  In this case we consider it would be just and equitable to award four weeks’ gross pay due to the failure of the respondent to provide the claimant with written terms and conditions of pay and accordingly we order the respondent to pay to the claimant the sum of £1,846.12 in this regard.  

20.	In total therefore we order the respondent to pay to the first-named claimant the sum of £17,149.33 by way of compensation.

Mr Adamson

21.	In relation to Mr Adamson, we are satisfied that he was constructively dismissed by the respondent in the way that the respondent treated him on 3 March 2014, if not before, contrary to Article 127(1)(c) of the 1996 Order.  Mr Anderson made it clear that he had worked additional hours and kept the business running for some years in Mr Bell’s absence, to the extent of investing his own money in the business.  He indicated that he had not been paid for approximately three months up to 3 March 2014 because of cash flow problems and he was therefore owned £12,000 in respect of salary at the date his employment ended.  

22.	We are satisfied that the action of the respondent towards Mr Adamson constituted a fundamental breach of contract.  First of all, Mr Bell did not take steps to ensure that Mr Adamson was being paid although he still retained financial control of the company.  Secondly, when Mr Adamson went to speak to Mr Bell on 3 March and was told of the allegations of theft against Mr Thompson, Mr Adamson clearly explained the situation to Mr Bell, but his explanation was brushed aside and he was told that Mr Thompson was “history”.  We accept also Mr Adamson’s evidence that he had been undermined by Mr Bell moving men on sites without reference to him and by his action dismissing Mr Thompson, who Mr Adamson looked on as a long standing and loyal employee.  On his unchallenged evidence before us, Mr Adamson made it clear to Mr Bell that in light of the fact that he had been undermined in such a way, he felt that all trust was gone and he could not continue working for the respondent.  Accordingly it is our finding that there was a fundamental breach of contract first, in that Mr Adamson was not paid, which is a breach of an express term of the contract, and secondly, in that the implied duty of trust and confidence was destroyed or at least severely damaged by Mr Bell’s actions.  It is our finding that Mr Adamson resigned promptly in response to that breach, and that he was constructively dismissed.

23.	Accordingly we find that Mr Adamson was constructively dismissed and that his dismissal was unfair in all the circumstances of the case.  We have heard no evidence on behalf of the respondent to suggest the dismissal was fair.  Accordingly we order the respondent to pay to the claimant Mr Adamson the following amounts.  Because this is a claim of constructive dismissal, we award an uplift for failure to follow the statutory disciplinary and dismissal procedures.

	(1)	Arrears of Pay

	Three months’ pay @ £4,000 per month 				
	Subject to the statutory cap of £470
	per week – 13 weeks x £470				=			£ 6,110
	
	Notice Pay 12 weeks @ £470 per week		=			£ 5,640

	(2)	Unfair Dismissal

		Basic Award 

		Mr Adamson’s pay was well above the statutory cap of £470 on one week’s 	pay which was applicable at the time and therefore his loss in this regard is 	capped at that level.

		Mr Adamson had 19 complete years service and was aged 58 at the date of 	dismissal.  His basic award is therefore made up as follows.

		17 years’ service aged 41or over x 1.5 weeks’ pay = 25.5 weeks 
		2 years under the age of 41 at 1week’s pay per year = 2 weeks
		27.5 weeks’ pay x £470 =							£12,925

		Given the award above for notice pay, we consider it would 
		be appropriate to make a compensatory award for a further 
		nine months from June 2014 to March 2015. 
		i.e. 9 months x £4000 per month =						£36,000

		Less earnings for the year from March 2014 to March 2015              - £15,000
 
		Net compensatory award 							£21,000

		Loss of Statutory Rights							£     500
											  		  
As the amount of the compensatory award is over £30,000, it is necessary for us to “gross up” that award for tax purposes.  The case law, in particular the decision in Jones v Global Crossing (UK) Telecommunications Ltd [2008] ALL ER 19 directs that any compensatory award over £30,000 is subject to grossing up as the first £30,000 of the award is tax free, but any balance will be subject to income tax at the claimant’s marginal tax rate in the year of dismissal.  The claimant Mr Adamson earned £4,000 per month nett and had a company car, so his net annual income should have been £48,000, although he had not received 3 months pay and presumably did not receive any pay for March 2014, so his net income was probably about £32,000 (£48,000 - £16,000 = £32,000).  Given that in the 2013-2014 tax year, the first £32,010 of taxable income (after deduction of the personal allowance of £9,440) was taxable at the basic rate of 20%, we assume that Mr Adamson was liable for higher rate tax of 40% on at least some of his income.  The compensatory award is £33,925, of which £30,000 is tax free.  The balance of £3,925 is liable to tax at 40%, which equals £1,570.  This amount is to be added to the total award. 
													£ 1,570

	Sub-Total Award									£47,745

24.	No written terms and conditions of employment.  As set out above we believe it would be appropriate to make an award of four weeks’ gross pay in respect of the respondent’s failure to provide written terms and conditions of employment.
	i.e. £470 x 4 = £1,880.								
													£  1,880

	Total award 										£49,625

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

Employment Judge:       

Date and place of hearing:  29 June 2015, Belfast.		

Date decision recorded in register and issued to parties: