Resignation Over Holiday Pay Issues Was Unfair

The ET ruled that an employee who resigned after 9 years of holiday pay issues was unfairly dismissed.

Resignation Over Holiday Pay Issues Was Unfair Dismissal A helpline advisor who had “no option but to resign” after holiday pay miscalculations and issues went on for nine years was unfairly dismissed, a tribunal has ruled. The Judge said the ongoing situation caused ‘uncertainty and stress’ when the employee couldn’t take holiday without fear of the consequences

The London Central tribunal found that the employer, ACAS, was “in fundamental breach of the implied term of trust and confidence by creating and then allowing this situation to continue up to the date of the final resignation”. The particular breaches included “persistent failures to allow her the correct amount of paid holiday” and failure to “fully and completely investigate her complaints about this within a reasonable period”, the tribunal ruled. Claims of unfair dismissal and holiday pay succeeded.

Background

Ms M Tracey was employed as a grade 10 helpline advisor at ACAS from 1 May 2013 until her resignation on 10 February 2022.

Her initial contract for the grade 10 role was fixed-term and only lasted for a year, which she signed by “way of acceptance”. It stated that she was entitled to 125 hours of annual leave per year, as well as to paid absence on public holidays and on 2.5 other days known as “privilege days”.

Tracey’s employment continued after the year and on 9 September 2014, she was offered a new draft contract which stated entitlement to 111 hours of paid leave each year, rising to 132 hours after five years continuous service. It also said she would be paid absence on public holidays and the Queen’s birthday – which was known as a “privilege day”.

But Tracey did not sign and return the contract as she had “various queries”, such as wanting to have her specific hours specified. ACAS amended the contract but Tracey refused to sign it. She emailed a manager saying that she believed it was a “reduction of 1.5 days annual leave which I don’t agree to”.

The tribunal heard that ACAS did not “press the point” and no new written contract was ever concluded, which meant Tracey had no written contract after April 2014.

At some point, the employer started using a new software system to administer holidays and absences. But the tribunal found that “the persons in control of the system did not know how to properly record the holiday entitlement” and no thorough records of Tracey’s leave were kept.

In early January 2018, Tracey and her then manager became aware that her leave records could not be found, so Tracey started trying to reconstruct these manually, going back to 2013.

After she was promoted in September 2018, Tracey had a conversation with the manager about her leave entitlement, asking for clarification of her leave.

On 14 November 2018, the manager sent an email to pay enquiries about this. In response, payroll initially suggested that Tracey may have been overpaid. When she challenged this, they confirmed that they would not seek to recover an overpayment. She did not receive a response to her leave entitlement query.

Tracey eventually had a meeting with pay officer M Taher in June 2021 who told her that she would have to give credit against her annual entitlement for any bank holidays, but Tracey did not accept this.

While none of the managers were able to provide a clear answer, Tracey wrote in an email that she felt the ongoing issues with her holiday pay had left her with no option but to resign, doing so on 13 September 2021.

However, her then line manager Ms L Claxton asked her to reconsider her position and assured her that the pay issue would be resolved. Tracey retracted her resignation on 14 September 2021 on condition that this would be resolved by early January 2022.

On 19 October 2021, Tracey had a meeting with Claxton and other senior staff who informed her that her payroll records would be checked and that a final figure for her current leave entitlement would be provided.

Tracey asked if HR would also issue a letter confirming that the final figures would stand and that ACAS would not be able to change its stance later and claim repayment if an error was discovered. This was agreed by the managers.

On 25 November 2021, Tracey received an email from Claxton enclosing a draft letter stating that she was owed 124.32 hours leave and that her ongoing leave was 133.64 hours per year. Tracey once again asked for the HR letter to be finalised.

When this did not happen, she chased the matter in January 2022. Claxton said it would be provided by the end of that month.

However, on 1 January 2022, Mr T Hogue, a payroll administrator, who had just taken over, started corresponding with Claxton about Tracey’s entitlement and stated again that various bank holidays would have to be deducted from her entitlement.

When she was copied in, Tracey took the view that as all but one of these bank holidays fell during the time she was not at work, they should not have been deducted. She felt that she had already explained this.

On 31 January 2022, Claxton sent Tracey an email attaching a draft letter with the request “please let me know if the letter is agreed…”. The email also asked Tracey to provide the leave she had taken that year.

Tracey replied the same day asking if the draft will be finalised saying “it is just that I have been through so many HR individuals and each has something different to say. I don’t wish to take leave and [for] ACAS to say please pay us back ”.

In early February 2022, Tracey started to experience an increase in migraine headaches which she attributed to the stress caused by the ongoing pay issue.

On 4 February 2022, Hogue sent an email to Claxton asking that Tracey confirm her contracted hours and annual weeks worked from 1 May 2018. His email stated that the information was not on the system.

Tracey then became upset since she had previously provided this information on several occasions – to two different staff members in 2018, once in 2019, and once in 2021.

Claxton then told Tracey that Hogue had queried the school term dates which she had previously provided to payroll, with Claxton also asking Tracey if she had done something she shouldn’t have. She asked Tracey to provide proof of the school term dates and despite that request being withdrawn a short time later, Tracey felt her integrity was being questioned.

On 7 February 2022, Tracey sent an email to Claxton again requesting clarification of her leave entitlement for the next year. This was followed by a conversation with Claxton on 9 February 2022, where Tracey showed an indication that the company had still not resolved the holiday entitlement.

On 10 February 2022, Tracey sent her resignation email and during her notice period raised a formal grievance which was dealt with by Claxton who decided to approach the matter informally at first instance as she was permitted to do under ACAS’s grievance procedure.

Then the payroll department approached the matter and HR advisor Mr P Byford found that Tracey’s holiday pay had been miscalculated from the beginning of her employment, as a consequence of which the employer owed her £9625.67 which was paid to her on 31 May 2022. This calculation excluded the Queen’s Birthday, which in Byford’s view was not a contractual entitlement.

On 1 June, Claxton sent a detailed grievance outcome confirming that ACAS had made errors and that Tracey had been paid the settlement. This outcome was not sent to Tracey but to her TU advisor in accordance with her request.

The advisor received the email but did not read the outcome letter until August, at which point he wrote to Claxton asking for an extension of time for lodging an appeal.

Claxton having consulted with HR did not consent to a late formal appeal, but on 10 August, sent a message to the TU advisor that if Tracey wished to send submissions through her solicitor relating to her grievance or its outcome, these would be reviewed. Tracey decided not to take up this offer.

She was awarded compensation for successful claims of £24,847.58.

Tribunal Decision

Employment Judge Burns outlined that Acas “failed to enter into a written contract with [Tracey] for any period after 30 April 2014”, and it “also failed to keep any proper leave records for [Tracey] for years despite the fact that it knew that its ITrent system was not working in relation to [her] leave.”

Burns also explained that “[ACAS] was in fundamental breach of the implied term of trust and confidence by creating and then allowing this situation to continue up to the date of the final resignation”.

“The ongoing situation exposed [Tracey] to uncertainty and stress and had a negative impact on her health, and an inability to take holidays without worrying about the consequences,” Burns said.

Comments

This judgement is a good example of how not to deal with employee’s legitimate concerns. The process involved too many people, long delays, an inadequate investigation and conflicting messages sent to the employee. [Tracey’s] resignation was clearly a constructive dismissal and it is difficult to see how it could have been defended.

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