THE INDUSTRIAL TRIBUNALS

CASE REF:	2488/12  

CLAIMANT:			Rodney Young

RESPONDENTS:		1. Alu-Fix Contracts Ltd (in receivership)
				2. Department for Employment and Learning

DECISION 

(A)	Pursuant to the claimant’s application under Article 205 of the Employment Rights (Northern Ireland) Order 1996 (“the Order”), I have determined that the respondent company (“the Company”) is not liable to the claimant in respect of any redundancy payment.
(B)	The claimant’s appeal (“complaint”) pursuant to Article 233 of the Order is dismissed.

Constitution of Tribunal:

Chairman (sitting alone):		Mr P Buggy

Appearances:

The claimant was represented by Mr C Hamill, Barrister-at-Law, instructed by Worthingtons Solicitors.

The respondent Department was represented by Mr P McAteer, instructed by the Departmental Solicitor’s Office.

REASONS

1.	The proceedings, in effect, involve two different types of legal proceedings:

(1)	The claimant makes claims against Alu-Fix Contracts Ltd (in receivership), which is referred to below as (“Alu-Fix”).

(2)	The claimant appeals against decisions which were made by the respondent Department, in that Department’s role as the statutory guarantor in respect of certain debts.

2.	A separate hearing was held in relation to the claimant’s appeals.  This is my decision in relation to those appeals.  No hearing has been held in relation to the claimant’s claims against Alu-Fix Contracts Ltd (“Alu-Fix”).  

The context

3.	Alu-Fix went into administrative receivership in November 2011.  Prior to that, throughout a very lengthy period, the claimant spent a very substantial part of his working hours carrying out work for Alu-Fix.  The receivers (under the administrative receivership) purported to dismiss the claimant, on the assumption that he was an employee of Alu-Fix.  (In the present context, an “employee” means a person who works under a contract of service, as distinct from a person who carries out work for another under a contract for services).

4.	The claimant’s brother, Philip Young, owns 100% of the shares in Alu-Fix.  The claimant never owned any shares in Alu-Fix.

5.	However, alongside his brother, he was a director of Alu-Fix, for a number of years, up to and including the date on which the company went into administrative receivership.

The legislation and the applications

6.	Under Articles 201 and 202 of the Employment Rights (Northern Ireland) Order 1996, the Department may, where an employer is insolvent, pay to an employee the unpaid amount of a redundancy payment owed (to that employee) by that insolvent employer.  Under Part XIV of the Order, the same system is extended to a number of other debts owed to the employee by the insolvent employer, including wages debt, holiday pay debt and notice pay.  Articles 201 and 202 and Part XIV are often collectively referred to as the statutory guarantee legislation.  An employee can complain to an industrial tribunal in respect of a failure on the part of the Department to make amounts payable to that employee, pursuant to an application made by that employee, to the Department under the statutory guarantee provisions.  In effect, any such complaint is in the nature of an administrative appeal.  Pursuant to that appeal, the tribunal (the Chairman sitting alone) makes the relevant decision afresh, on the basis of the evidence then available to the tribunal: in effect, the tribunal is then substituted as the decision-maker, in relation to the relevant statutory guarantee provisions, in place of the Department.

7.	In an application dated 1 November 2011, the claimant applied to the Department, in its statutory guarantee role, for payments which he alleged were due to him from Alu-Fix in respect of wages, holiday pay, notice pay and redundancy pay.

8.	The Department refused to make any payments pursuant to those applications, because the Department was not satisfied that the claimant was an employee of Alu-Fix at any relevant time.

9.	The claimant’s appeal in relation to the redundancy payment aspect of the application to the Department is made pursuant to Article 205 of the Order.

10.	Article 205 in effect, provides as follows.  Where, on an application made to the Department for a payment in respect of a redundancy payment, it is claimed that an employer is liable to pay a redundancy payment, there must be referred, to an industrial tribunal, any question as to the liability of the relevant employer to pay the redundancy payment.

11.	
Article 227 of the Order creates an obligation on the Department to make payments to an employee, in respect of wages, holiday pay and notice pay, if the Department is satisfied, in the context of an application made by the claimant pursuant to the statutory guarantee, that the preconditions set out in Article 227 are satisfied.

12.	Article 233 of the Order provides for appeals in respect of unsuccessful Article 227 applications.  Article 233(3) provides that, where an industrial tribunal finds that the Department ought to make a payment under Article 227, the tribunal must make a declaration to that effect.

The issues

13.	The parties to these appeals are agreed that the claimant is entitled to have his appeals upheld if, and only if, I am satisfied that he was an employee of Alu-Fix at the times which are material in the context of his statutory guarantee applications.

14.	The Department does not oppose the claimant’s appeals on any other ground (on any ground apart from that “employee” ground).

15.	It was accepted on behalf of the claimant that the onus of proof, on the question of whether he was an employee at the relevant times, was upon the claimant.

The evidence

16.	I received oral testimony from the claimant.  

17.	I also saw an agreed bundle of documents.  I told the parties that I would not have regard, for evidential purposes, to any document contained within the bundle, unless that particular document had been drawn to my attention by one of more of the parties.

The arguments

18.	The arguments of the parties can be summarised as follows.  

19.	Both parties agreed, for the purposes of the present proceedings, that the legal principles as set out in my Decisions in Watson v Carter Clothing Ltd (in Administration) and Another [839/11] and in Orr v Department for Employment and Learning [1629/11] were correctly stated there.

20.	In deciding this case, I have had regard to the statements of legal principle which were set out in Watson and in Orr.

21.	The case put forward on behalf of the claimant can be summarised as follows.  The claimant had provided a truthful and accurate account of his relationship with the company, in the course of his oral testimony to the tribunal, and in the course of his interactions with the Department, at various stages of the application process.  The account given by the claimant, as supplemented by the documentary material which was available to the tribunal, indicated that there was a genuine employment relationship, under which the claimant was an employee, between Alu-Fix and the claimant.  That evidence indicated that the purported contract of employment was indeed a legally effective contract.

22.	
The arguments on behalf of the respondent can be summarised as follows.  First, the claimant was not a reliable witness.  Secondly, even if I were to accept the claimant’s version of events, he was not describing a situation in which there was a genuine and legally effective contract of employment between himself and Alu-Fix.

The law

23.	The Watson and Orr cases have already been referred to above.  For the purpose of determining this case, I, have in particular, had regard to the statements of the law which are contained at paragraphs 95 - 135 of Watson, and at paragraphs 21 - 43 of Orr.

The facts and my conclusions

24.	When the claimant made his application to the Department, in November 2011, he stated that he had started “working with this employer” from the year 2000.  However, by the time the claimant presented his application form in these proceedings, to the industrial tribunals, he was specifying that his employment with Alu-Fix had begun only in November 2007.  

25.	According to the claimant, until November 2007, he had been working on a self-employed basis but from then onwards, until the date of his “dismissal”, he had been working for Alu-Fix as an “employee”.  

26.	Why the changeover (from self-employed status to the employee status)?  That was never satisfactorily or convincingly explained to me.  As Mr McAteer pointed out, the claimant was inconsistent in his accounts, on the question of who had made the first move, himself or his brother.  In his examination-in-chief, he said that he had made the approach to his brother on the question of working as an employee, whereas in his cross-examination, he stated that his brother had approached him to begin working as an employee.  

27.	I asked a number of questions, with a view to clarifying issues relating to the claimant’s rates of remuneration from the company, over the years.  The answers which the claimant provided were unconvincing.  For example, he told me that for a time, in 2005-2006 his earned income from Alu-Fix was only £30,000-£40,000, and that it was £50,000-£60,000 during another period.  His account in relation to his remuneration was extremely vague.  He told me that he was being paid a salary of £74,100 in 2011.  Why that amount exactly?  I was never told why.

28.	As was noted in Neufeld, whenever there is a dispute as to whether a putative contract of employment is a real contract of employment, the fact that the parties have not bothered to reduce it to writing is a negative factor (although obviously it is not necessarily a fatal factor), from the perspective of the party who is attempting to show that at the time when the alleged contract was allegedly operative, the purported contract represented the true intentions and expectations of the alleged parties.  

29.	I listened carefully to the claimant’s sworn testimony about what he did for Alu-Fix, about the organisational framework within which he did those things for Alu-Fix, and about the contexts in which he did those things for Alu-Fix.  Having done so, I concluded that there was no difference between the situation which existed before November 2007 and the situation which existed thereafter.  In other words, the purported contract of employment had no practical effect on the organisational or working relationships between the claimant and Alu-Fix.  I am driven to the conclusion that the purported contract of employment had no practical effect whatsoever on the conduct of the alleged parties to it (the claimant and Alu-Fix).  The present case is a case in which the parties to the purported contract have acted in a manner which suggests that the so-called contract was being treated as an operationally irrelevant matter.  (See paragraph 96 of Clark v Clark Construction Initiatives Ltd [2008] UKEAT 0225 07 2902).  

30.	It is true that, from November 2007 onwards, in relation to a significant amount of remuneration which he received from the company, the claimant was paying tax and national insurance in a manner which was consistent with the claimant being employed under a contract of service.  In arriving at my overall conclusions in this case, I have taken due account of that factor.  

31.	In applying the principles which were referred to above (at paragraph 23 above), I have taken due account of the fact that the claimant, in this case, did not have any shareholding in Alu-Fix.  

32.	Overall, I can summarise my ultimate conclusions in the following manner.  First, I regarded some key aspects of the claimant’s testimony as lacking credibility or candour.  (See above).  Secondly, even the claimant’s account of events is indicative, in my view, of a situation in which the so-called contract was contemporaneously regarded by the purported parties to it as being of merely symbolic, as distinct from operational, significance.

33.	Against the background outlined above, and for the reasons specified above, I have concluded that the claimant was not employed under a contract of employment with Alu-Fix at any material time.  Accordingly, the appeals must be dismissed.

General comments

34.	On the basis of the claimant’s oral testimony and on the basis of the other evidence in this case, I am satisfied that, for many years, the claimant spent a considerable proportion of his working hours in carrying out work for, and at the premises of, Alu-Fix.  I could understand if, in those circumstances, he felt that he had a moral entitlement to State assistance, in relation to unpaid wages, holiday pay and redundancy pay, which was at least as great as any moral entitlement owed to a person who everybody would recognise, without question, as having always been a “servant” of the company.  However, we are not dealing with moral entitlements here.  The relevant legal entitlement is available only in respect of people who, at the material times, were employed under a contract of service.  My task was to decide whether I was satisfied that the claimant was working under such a contract at the material times.  My task was to apply the law, not to decide what the law should be.

Chairman:

Date and place of hearing:	21 March 2013, Belfast.	

Date decision recorded in register and issued to parties: