“Time, Gentlemen, please” – Late Claims for Redundancy Payments

I acted recently in a case for an employer faced with a claim for a statutory redundancy payment which arose from somewhat peculiar facts.

The Facts

Mr X was employed as a bar manager in a members’ Club operated from a property owned by a charitable Community Association; the Association’s charitable status meant had meant that the Club (and its bar) had to be run by a separate organisation at “arm’s length” from the Association. The Club was, to say the least, very badly run (and the Association wasn’t much better) with bar staff operating virtually unmanaged, helping themselves to cash from the till, failing to account for the takings and running up hefty debts with HMRC (amongst others) and eventually some of the members (anonymously, but on behalf of the Club) terminated their licence to occupy the property which the Community Association gratefully accepted.

Claiming Redundancy Payments

Mr X was therefore out of a job and although he had been responsible for running the Club (into the ground as it turned out), he would have been entitled to a redundancy payment of over £5,000 to reflect his 10 years’ service. For reasons that are not clear he did nothing for nearly two years, except write a few letters to the Community Association (who now had a new management team in place) saying “Can I have my redundancy pay?”. They replied saying “No” because they hadn’t employed him – he’d been employed by the Club, an “unincorporated association” made up of the members at the time being (including Mr X).

Employment Claims in the County Court

After two years Mr X issued a claim in the County Court against the Association for holiday pay (about £1,200) and redundancy pay (about £5,000) and the Association repeated their defence that they hadn’t been his employer and weren’t responsible. They unfortunately decided to represent themselves in the County Court and the District Judge (not an employment law specialist) found that they had employed Mr X and ordered them to pay about £6,000 comprising holiday pay and notice pay (which Mr X hadn’t originally claimed). The Judge, correctly, refused to award him any redundancy pay as that is a statutory claim which must be made in the Employment Tribunal but suggested that Mr X should make an “out of time” claim to the Tribunal. The Community Association decided (without taking proper advice) not to appeal the District Judge’s decision.

The Employment Tribunal

Mr X, represented by the CAB, then made an application to the Employment Tribunal and the matter came before an Employment Judge and the Association instructed me to attend (the day before the hearing – but better late than never). The CAB said that even though the claim was over two years’ late, Mr X should still be allowed to make a claim and that the District Judge’s decision that the Association were the employer was the first time that Mr X knew who his employer was. They also said that the fact that the Association were paying the County Court judgment meant they accepted they were the employer and argued (completely wrongly) that the Club couldn’t be an employer because they were an unincorporated association, i.e. a collection of individuals, rather than say a company or a person.

We argued that Mr X was too late to make a claim as section 164 of the Employment Rights Act 1996 meant that Mr X should have claimed within six months of being made redundant, extended by a further six months as he had written to the Association asking for the redundancy money, but he was still more than a year late, and having had advice (albeit inaccurate) from the CAB he should and could have made a claim within that one-year period. Also, that the District Judge’s decision (made without hearing legal argument) was wrong and was not, in any event, binding on the Employment Tribunal, and that any payment under that order was not an acceptance that the Association employed Mr X; he had been employed by the Club. The Employment Judge agreed and dismissed the claim.

Conclusion

The moral of the story is, whether you are an employer or employee, you should get expert independent legal advice about your rights, obligations and options early; if Mr X had done so he could have got over £11,000 in holiday, notice and redundancy pay (from the members of the Club who were actually his employer). If the Association had done, so they could have saved themselves the £6,000 County Court judgment.