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Industrial Tribunals Northern Ireland Decisions
You are here: BAILII >> Databases >> Industrial Tribunals Northern Ireland Decisions >> Toner v TNR Systems Ltd... [2011] NIIT 01238_11IT (18 December 2011)
URL: http://www.bailii.org/nie/cases/NIIT/2011/01238_11IT.html
Cite as: [2011] NIIT 01238_11IT, [2011] NIIT 1238_11IT
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THE INDUSTRIAL TRIBUNALS
CASE REF: 1238/11
1241/11
CLAIMANTS: 1. Damian Toner
2. Aidan Toner
RESPONDENTS: 1. TNR Systems Ltd (in liquidation)
2. Department for Employment and Learning
DECISION
(A) All of the claims, of both of the claimants, against TNR Systems Ltd (“the Company”) are not well-founded. Accordingly, all of those claims are dismissed.
(B) The claimants’ appeals (against the Department’s decisions, in the Department’s role as a statutory guarantor in respect of certain employment debts) are dismissed.
Constitution of Tribunal:
Chairman (sitting alone): Mr P Buggy
Appearances:
The claimants were represented by Mr P Moore of P M Associates.
The respondent was represented by Mr P McAteer, Barrister-at-Law, instructed by the Departmental Solicitors Office.
REASONS
1. At the end of the main hearing of these cases, I issued my decision orally. At the same time, I gave oral reasons for that decision. Accordingly, what follows is by way of summary only.
2. These claimants/appellants are brothers. Each of them had a 50% shareholding in the Company. Unfortunately, the Company, having done well for many years, got into financial difficulties. Ultimately, it was the subject of a creditor’s voluntary liquidation.
3. In each of these two cases, the relevant claimant:
(1) makes claims against the Company in respect of holiday pay, notice pay and redundancy pay; and
(2) appeals against adverse decisions which were made by the Department (in the Department’s role as statutory guarantor) in connection with that unpaid holiday pay, notice pay and redundancy pay.
On 12 September 2011, it was ordered that Aidan Toner’s various claims and appeals should be heard alongside the various claims and appeals of Damian Toner
4. I received oral testimony from Mr Aidan Toner only. It was agreed between the parties that the factual context of Aidan Toner’s relationship with the Company was in all material respects identical to the factual context of Damien Toner’s relationship with the Company; against that background, the parties were agreed that no useful purpose would be served by receiving oral testimony from Damian Toner.
5. My attention was drawn to several bundles of documents. I told the parties that I would not have regard, for evidential purposes, to any document within a bundle, unless my attention had been specifically drawn, by one or more of the parties, to that document.
6. As Mr Moore, for the claimants, realistically accepted, neither claimant/appellant could succeed, either in respect of his claims of in respect of his appeals, unless I am satisfied that he was an “employee” of the Company, in the sense in which the term “employee” is used in Article 3 of the Employment Rights (Northern Ireland) Order 1996.
7. Mr Moore argued that the applicable legal principals are mainly to be found in the decision of the English Court of Appeal in Neufeld v Secretary of State for Business Enterprise and Regulatory Reform [2009] EWCA Civ 280. I agree with that proposition.
8. In my view, the applicable legal principles are highlighted at paragraphs 79 to 87 of the Neufeld judgment, and in the Court of Appeal’s commentary (in Neufeld) on Elias J’s “eight factors.” (In Clark v Clark Construction Initiatives Ltd [2008] IRLR 364, Elias J had set out eight factors which, he suggested, should be taken into account in deciding whether a shareholder’s putative contract of employment with his company was truly the framework which governed his relationship with that company).
9. As paragraph 81 of the Neufeld judgment reminds us, there are likely to be two main issues in determining (in circumstances such as the circumstances of the present proceedings) whether a particular shareholder/director is an employee of a company. The first issue is whether or not any putative contract of employment is a genuine contract or a sham. The second issue will be whether any such contract (if genuine) amounts to a contract of employment.
10. In these cases, I never got to the second issue. I felt constrained (because of the applicable legal principles) to determine the first issue in a manner which was adverse to the claimants/appellants.
11. I was not satisfied, on the balance of probabilities that either claimant carried out work for the company pursuant to any contractual framework other than the framework which in all instances necessarily exists between any company and its shareholders,
12. I noted that there was no written document which purported to incorporate the terms of any contract of employment between either of the claimants and the Company. During the course of Aidan Toner’s oral testimony, I was told that the claimants had asked a particular employment law specialist firm to provide contracts for Aidan and Damien Toner (among others), but I note that no such written contracts were ever drawn up.
13. In deciding that it was appropriate to dismiss the claims and appeals, I have also had regard, in particular to the following matters:
(1) There is a substantial difference between the extent of the claimant’s weekly working hours, specified by him during his oral testimony in these proceedings, on the one hand, and the amount of weekly working hours specified in respect of him in his industrial tribunal claim form and in his application to the Department, on the other hand. That variance tends to support the view that the extent of the claimants’ working hours was a matter for their own discretion, as distinct from being a matter which was the subject of regulation within a contract between themselves and the Company. I have concluded that the latter view is the true position.
(2) There is no available documentary evidence which supports Aidan Toner’s oral testimony in respect of sick pay. (According to that oral testimony, he lost pay if he was sick for a day.) In my view, it is very hard to believe that a 50% shareholder would lose a day’s pay because of sickness. I do not accept that he ever lost any pay on account of sickness.
(3) On the basis of the claimant’s oral testimony, and on the basis of relevant documentary evidence, I was satisfied that the methods and categorisation of the regular payments (the payment regularly made to the claimants by the Company) were designed to minimise tax liabilities, as distinct from reflecting the true nature of the relationship between the claimant sand the Company.
14. In applying the Clark factors, in the circumstances of these cases, I have, in particular, paid due regarded to the following matters:
(1) Factor 1 has to be read subject to the observations made by the Court of Appeal at paragraph 88 of Neufeld.
(2) Factor 6 has to be read subject to the Neufeld comments at paragraph 89.
Chairman:
Date and place of hearing: 15 November 2011, Belfast.
Date decision recorded in register and issued to parties: