Duncan v Duncan (Unauthorised Deduction of Wages)

Factual and Procedural Background

The claimant was a director, shareholder, and employee of the respondent company, Company A, which operated in the hairdressing business. The claimant commenced sick leave in January 2016 due to back pain and received full pay until 27 January 2017. The claimant alleged that the respondent breached its duty of care, creating a toxic working environment, and contended that she was unfairly dismissed following the cancellation of her weekly wage payment. The respondent denied dismissal, unlawful deduction of wages, and asserted the claimant had not resigned. The claimant attempted to return to work in February 2017 but faced hostility and restricted access to premises and computer systems. A dispute over shareholder valuation and payment arrangements ensued. The claimant lodged a claim alleging unfair dismissal, unlawful deduction of wages, notice pay, holiday pay, and breach of contract. The tribunal heard evidence, including witness statements and oral testimony, and reviewed documents and agreed chronology.

Legal Issues Presented

1. Whether the claimant was dismissed.
2. If so, whether the dismissal was unfair.
3. Whether the claimant suffered an unlawful deduction of wages.
4. Whether the claimant is entitled to receive notice pay and holiday pay.

Arguments of the Parties

Appellant's Arguments

• The claimant was unfairly dismissed on 27 January 2017 when her weekly standing order payment was cancelled.
• The claimant relied on conduct such as changing of door locks, installation of padlocks without providing keys, and changing computer login passwords as evidence supporting dismissal.
• The claimant contended the respondent's explanations for these actions and for non-payment after 27 January 2017 should be rejected.

Respondent's Arguments

• The respondent denied any termination or dismissal, asserting no intention or communication of dismissal occurred.
• The respondent relied on a telephone conversation where the claimant allegedly indicated an intention to resign.
• The respondent argued the claimant received all due wages and more, and that the claimant did not comply with the sickness absence procedure.
• The respondent explained that the cancellation of the standing order was due to moving the claimant onto statutory sick pay and that a mistaken payment to a third party was an administrative error.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Widdicombe v Longcombe Software Ltd [1998] ICR 710	A dismissal is not effective until communicated to the employee.	The court confirmed that no dismissal had occurred as no communication of dismissal was made to the claimant.
Gisda Cyf v Barratt [2010] UKSC 41	Confirmed the principle that dismissal must be communicated to be effective.	Reinforced the court's conclusion that the claimant was not dismissed due to lack of communication.
Martin v Glynwed Distribution [1983] IRLR 198, [1983] ICR 511	Test for determining whether there has been resignation or dismissal.	The court applied this test and found insufficient evidence to conclude the claimant resigned or was dismissed.

Court's Reasoning and Analysis

The tribunal carefully examined the evidence, including witness testimony and documentary submissions. It acknowledged the claimant's complex status as director, shareholder, and employee, which contributed to a lack of clarity over her employment status. The tribunal found that no clear communication, verbal or written, of dismissal was made to the claimant. The cancellation of the standing order payment was intended to transition the claimant to statutory sick pay rather than effect dismissal. The respondent's administrative mistake in paying a third party was accepted as genuine. The tribunal preferred the evidence of the respondent's witnesses regarding the changing of locks and computer passwords, noting that these actions were not intended to dismiss the claimant. The claimant's alleged resignation was not supported by clear evidence, and the tribunal rejected the submission that she resigned. Since no dismissal was found, the tribunal did not consider the unfair dismissal claim or entitlement to notice and holiday pay. The tribunal concluded that the claimant remained employed by the respondent. However, there was a small underpayment of statutory sick pay due to an administrative error, resulting in an unlawful deduction of wages.

Holding and Implications

The tribunal held that the claimant was not dismissed by the respondent and therefore remains an employee of the respondent.

It awarded the claimant £651.02 for unlawful deduction of wages due to a small shortfall in statutory sick pay payments. The claims for unfair dismissal, notice pay, and holiday pay were dismissed as they depended on a finding of dismissal. The decision does not set new precedent but clarifies that dismissal requires clear communication and that administrative errors in sick pay payments can constitute unlawful deductions.