Industrial Tribunals Northern Ireland Decisions

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Cite as: [2013] NIIT 01601_12IT, [2013] NIIT 1601_12IT

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THE INDUSTRIAL TRIBUNALS

CASE REF: 1601/12

CLAIMANT: John Alister Cameron

RESPONDENT: Department for Employment & Learning

DECISION

The decision of the tribunal is that the claimant’s complaint, pursuant to Article 233 of the Employment Rights (Northern Ireland) Order 1996, against the decision of the respondent not to make to the claimant any redundancy payment, notice pay, holiday pay and arrears of pay out of the Northern Ireland National Insurance Fund is dismissed, as the tribunal was not satisfied that the claimant, at the material time, was an employee within the meaning of Article 3 of the Employment Rights (Northern Ireland) Order 1996.

Constitution of Tribunal:

Chairman (sitting alone): Mr N Drennan QC

Appearances:

The claimant appeared in person and was not represented.

The respondent was represented by Mr P McAteer, Barrister-at-Law, instructed by The Departmental Solicitor’s Office.

Reasons

1.1 The claimant gave oral evidence. The respondent called no evidence. In addition, the claimant and the respondent’s representative made oral submissions to the tribunal at the conclusion of the hearing. In reaching my decision I also had regard to the documents contained in the agreed tribunal bundle, to which I was referred during the course of the hearing by the claimant and the respondent’s representative, together with the further documents produced by the claimant during the course of the hearing.

1.2 It was not disputed from on or about 1 January 2009 the claimant was a Director of the Glover Site Investigations Ltd (‘the company’). Further, it was agreed, on 11 January 2012, the company went into liquidation. The claimant made an application, dated 11 January 2012, to the respondent (Redundancy Payments Service) for a redundancy payment, notice pay, holiday pay and arrears of pay to be paid by the respondent out of the Northern Ireland National Insurance Fund. On 31 May 2012 the respondent refused the application on the grounds that it was not satisfied the claimant, at the material time, was an employee, as defined by Article 3 of the Employment Rights (Northern Ireland) Order 1996 (‘the 1996 Order’). Following further correspondence between the parties, to which further reference shall be made elsewhere in this decision, the claimant brought a complaint to the tribunal on 22 August 2012, pursuant to Article 233 of the 1996 Order, that the respondent had failed to make the said payments.

1.3 There was no dispute that the company, for the purposes of the 1996 Order, was, at the material time insolvent. It was further not disputed that, in determining the complaint, which was in essence an ‘appeal’ of the respondent’s decision, that the main focus of this hearing related to whether, at the material time, the claimant was an employee, as defined by Article 3 of the 1996 Order, which states as follows:-

“(1) In this Order ‘employee’ means an individual who has entered into or works under (or, where the employee’s employment has ceased, worked under) a contract of employment.

(2) In this Order ‘contract of employment’ means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing.

…

(4) In this Order ‘employer’, in relation to an employee …, means a person by whom the employee … is (or, where the employment has ceased, was) employed.

(5) In this Order ‘employment’ –

(a) in relation to an employee, means … under a contract of employment, and

…

and ‘employed’ shall be construed accordingly.”

1.4 The amounts claimed by the claimant, on foot of his application to the respondent for redundancy pay, notice pay, holiday pay and arrears of pay and/or the calculation of these sums by the claimant were not agreed by the respondent. In the circumstances, it was agreed, if it was necessary to do so, in light of the tribunal’s decision on liability, there would be a remedy hearing to determine the payments, if any, to be paid by the respondent to the claimant.

2.1 The following case law is of particular relevance to the determination of the issues in this matter, namely:-

(i) Clark v Clark Construction Initiatives Ltd and Utility Consultancy Services Ltd [2008] IRLR 364, which is a decision of the Employment Appeal Tribunal

(ii) Secretary of State for Business Enterprise and Regulatory Reform v Neufeld [2009] IRLR 475, which is a decision of the Court of Appeal in England & Wales.

(iii) Autoclenz Ltd v Belcher [2011] UKSC 41, which is a decision of the Supreme Court.

In the absence of any relevant decision of the Northern Ireland Court of Appeal, and since the relevant legislation in Great Britain and Northern Ireland is in similar terms, I was satisfied that the guidance set out in the above case law should be followed by this Tribunal.

2.2 In Clark, Elias P set out the following guidance:-

“96 Support for the notion that the tribunal’s are entitled to refuse to recognise the contract as a contract of employment if it fails to reflect the true nature of the relationship is supported by the fact that the guidance in Bottrill twice emphasises the potential relevance of whether the conduct of the parties is consistent with the contract. That is not to say that any minor breach of the terms will invalidate the contract. However, if the controlling shareholder acts in a manner which suggests that the contract is being set at nought, or is treated as no more than an irrelevant piece of paper, then the tribunal will be entitled to refuse to give effect to it.

98 How should a Tribunal approach the task of determining whether the contract of employment should be given effect or not? We would suggest that a consideration of the following factors, whilst not exhaustive, may be of assistance:

(1) Where there is a contract ostensibly in place, the onus is on the party seeking to deny its effect to satisfy the Court that it is not what it appears to be. This is particularly so where the individual has paid tax and national insurance as an employee; he has on the face of it earned the right to take advantage of the benefits which employees may derive from such payments.

(2) The mere fact that the individual has a controlling shareholding does not of itself prevent a contract of employment arising. Nor does the fact that he in practice is able to exercise real or sole control over what the company does (Lee).

(3) Similarly, the fact that he is an entrepreneur, or has built the company up, or would profit from its success, will not be factors militating against a finding that there is a contract in place. Indeed, any controlling shareholder will inevitably benefit from the company’s success, as will many employees with share option schemes (Arascene).

(4) If the conduct of the parties is in accordance with the contract that would be a strong pointer towards the contract being valid and binding. For example, this would be so if the individual works the hours stipulated or does not take more than the stipulated holidays.

(5) Conversely, if the conduct of the parties is either inconsistent with the contract (in the sense described in Para 96) or in certain key areas where one might expect it to be governed by the contract is in fact not so governed, that would be a factor, and potentially a very important one, militating against a finding that the controlling shareholder is in reality an employee.

(6) In that context, the assertion that there is a genuine contract will be undermined if the terms have not been identified or reduced into writing (Fleming). This will be powerful evidence that the contract was not really intended to regulate the relationship in any way.

(7) The fact that the individual takes loans from the company or guarantees its debt could exceptionally have some relevance in analysing the true nature of the relationship, but in most cases such factors are unlikely carry any weight. There is nothing intrinsically inconsistent in a person who is an employee doing these things. Indeed, in many small companies it will be necessary for the controlling shareholder personally to have to give bank guarantees precisely because the company assets are small and no funding will be forthcoming without them. It would wholly undermine the Lee approach if this were to be sufficient to deny the controlling shareholder the right to enter into a contract of employment.

(8) Although the Courts have said that the fact of there being a controlling shareholding is always relevant and may be decisive, that does not mean that the fact alone will ever justify a Tribunal in finding that there was no contract in place. That would be to apply the Buchan test which has been decisively rejected. The fact that there is a controlling shareholding is what may raise doubts as to whether that individual is truly an employee, but of itself that fact alone does not resolve those doubts one way or another.”

In the Neufeld case, Rimmer LJ stated in his judgment:-

“36 As to the circumstances in which the contract might be regarded as a sham, the classic case will be that described by Diplock LJ in Snook v London & West Riding Investments [1967] 2 QB 786, at 802:-

‘As regards the contention of the plaintiff that the transactions … were a ‘sham’, it is, I think, necessary to consider what, if any, legal concept is involved in the use of the popular and pejorative word. I apprehend that if it has any meaning in law, it means acts done or documents executed by parties to the ‘sham’ which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create … but one thing, I think, is clear in legal principle, morality and the authorities ( … ), that for acts for documents to be a ‘sham’ with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create legal rights and obligations which they give the appearance of creating. No unexpressed intention of a ‘shammer’ affect the rights of a party whom he deceived.’.

37 In most cases in which there arises a question as to whether the claimed employment contract is a ‘sham’, there will be what purports to be a formal written contract, or at least a board minute or memorandum purporting to evidence or record the contract: a ‘shammer’ is hardly likely to rest his case on the claim that his contract was an oral one. An enquiry into whether any purported contract does amount to a ‘sham’ does not limit the court or tribunal to a consideration of the evidence as at the time of its making. It will usually also be highly material to see what the company on the one hand and the shareholder/director on the other have actually done under the purported contract: that will be likely to shed light on its genuineness or otherwise. In principle, however, a similar problem could arise with the alleged employment contract as an oral one, for it might be said in response that the basis on which such a contract is alleged is a mere pretence and is false.

… .”

“76 In his judgment on the appeal to the appeal tribunal, Elias J reviewed the authorities and cited the guidance given by this court in Bottrill. He referred to Connolly (as a case in which the employment tribunal ‘had been unduly swayed by the single feature of the controlling shareholding’), Gladwell and Nesbitt. Elias J then suggested three circumstances in which it may be legitimate for a tribunal or court not to recognise what is on its face a legitimate employment contract. First, the exceptional case in which the company is itself a ‘sham’ (which we understand to mean the case in which it is regarded simply as the alter ego of the individual). Second, where the contract was entered into for an ulterior purpose, for example to secure some statutory payment from the Secretary of State. Third, where the parties do not conduct their relationship in accordance with the contract. This will either be because they never intended to and the purported contract was a sham in the sense of Diplock LJ’s description in Snook v London & West Riding Investments [1967] 2 QB 786, at 801; or because the relationship has ceased to reflect the contractual terms. The latter type of case is the one that the Bottrill guidance had in mind in Price emphasising the potential relevance of whether the conduct of the parties is consistent with the contract.

77 We respectfully agree with Elias J’s summary of the types of cases in which the court or tribunal may find on the facts that the purported contract is not a genuine contract. But, as we have said, that type of issue does not arise under either appeal before us, we received no argument on it and we were not invited to attempt to provide general guidance on it. We propose, therefore, to say no more about Elias J’s suggested category save two things. First, we would not wish to be taken as saying that there may never be other factual circumstances in which a conclusion of ‘sham’ might be made. Second, an investigation of how the parties have conducted themselves under the purported contract may prove different things … .”

“88 We respectfully agree with the essence of the factors referred to by Elias J in Paragraph 98 of his judgment although we add a comment on four of them. Mr Tally criticised his first factor as amounting to a suggestion that the mere production of a written contract purporting to be a contract of employment will shift to the opposing party the burden of proving that it was not a genuine such contract. We doubt if Elias J was intending to refer to a legal burden. In cases where the putative employee is asserting the existence of an employment contract, it will be for him to prove it; and, as we have indicated, the mere production of what purports to be a written service agreement may by itself be insufficient to prove the case sought to be made. If the putative employee’s assertion is challenged the Court or Tribunal will need to be satisfied that the document is a true reflection of the claimed employment relationship, for which purpose it will be relevant to know what the parties have done under it. The putative employee may, therefore, have to do rather more than simply produce the contract itself, or else a board minute or memorandum purporting to record his employment.

89 We consider that Elias J’s sixth factor may perhaps have put a little too high the potentially negative effect of the terms of the contract not having been reduced into writing. This will obviously be an important consideration but if the parties’ conduct under the claimed contract points convincingly to the conclusion that there was a true contract of employment, we would not wish Tribunals to seize too readily on the absence of a written agreement as justifying the rejection of the claim. In both cases under appeal there was no written service agreement, but the Employment Judges appear to have no doubt that the parties’ conduct proved a genuine employment relationship.

90 As for Elias J’s seventh and eighth factors, we say no more than we regard them as saying essentially what we have said above in our ‘never say never’ paragraph.”

2.3 Both the Clarke and Neufeld cases were primarily concerned, on their particular facts, with the issue which arises when a controlling shareholder asserts that he is an employee. However, I am satisfied the principles, which emerge from those two cases, are also relevant in a situation, like the present case, in which there is dispute regarding the legal effect of a purported contract of employment, between a company and someone who is not a major shareholder. The Autoclenz case arose in the context of a dispute as to whether individuals were workers within the meaning of the National Minimum Wage Regulations 1999 and the Working Time Regulations 1998 and the correct approach to written contracts in an employment context where there is a dispute as to the genuineness of a written term. In the case, the Supreme Court (Lord Clarke gave the judgment of the Court) agreed that the Employment Tribunal, on the particular facts of the case, had been entitled to disregard the terms included in the written agreement between the parties, on the basis that the documents did not reflect what was actually agreed between the parties. In his judgment, Lord Clarke emphasised that, in the employment context, the Courts must be alive to the possibility that written documentation might not accurately reflect the reality of the relationship between the parties. For example, employers may include terms aimed at avoiding a particular statutory result, even where such terms do not reflect the real relationship. Where one party to an employment contract seeks to challenge the genuineness of the terms there is no need to show an intention to mislead anyone; it is enough that the written term does not represent the intentions or expectation of the parties; and the question in every case is what was the true agreement between the parties. To do so, he emphasised, the Tribunal would have to examine all the relevant evidence, which would include the written term itself, read in the context of the whole agreement, as well as evidence of how the parties conducted themselves in practice and what their expectations of each other were.

3.1 Insofar as relevant and material for the determination of the claimant’s claim, I made the following findings of fact, as set out in the following sub-paragraphs.

3.2 In his application to the respondent, dated 11 January 2012, the claimant attached to it, inter alia, a letter of offer of employment with the company on the terms set out in the letter and in accordance with the attached statement of terms and conditions of employment. The said letter of offer, attached to the application, was dated 25 February 1997, and was addressed to the claimant at:-

6 Conagher Road

Dunaveney

Ballymoney

Co Antrim

BT53 8HQ;

and stated:-

“Job Title : Geotechnical Engineer

Location : Balnamore

Date of Commencement : 26^th of March 1997

Date of Continuous Service : As above

Starting Salary : £25,000 per annum

…

Yours sincerely

… for Global Site Investigation Ltd

David Cameron

Managing Director

…

I accept this offer of employment on the terms and conditions outlined in this letter of offer and the enclosed statement of terms and conditions of employment.

Signed John Cameron

Date 1/3/97.”

3.3 In addition there was attached to the application a job remit, which stated, inter alia:-

“Name : Mr J Cameron

Job Title : Senior Geotechnical Engineer/Senior Engineering Geologist

Reporting to Geotechnical Director

…

This is to certify I have read and understood the roles and responsibilities as detailed in my job remit and that I have received a copy of the Staff Handbook.

Name John Cameron

Signed John Cameron

Date 26.4.07.”

3.4 As stated above, there was attached to the application the said statement of main terms and conditions of employment, which stated, inter alia:-

“Employee’s Name : John Alister Cameron

Employee’s Address :

6 Conagher Road

Dunaveney

Ballymoney

BT53 8HQ;

1. Date of appointment

Your employment began on : 26^th March 1997

No other employment constitutes part of your continuous employment.

…

This statement together with the company’s Staff Handbook and other written and unwritten policies and procedures relating to the company constitutes as a contract.

I acknowledge receipt of my statement of terms of employment and Staff Handbook, Sections 1.0 to 4.3 and associated appendices.

Signed (employer) Colin Walker

HR Manager

Date : 26/04/07

Signed (employee) John Cameron

Date : 26/04/07.”

3.5 By letter dated 31 May 2012, the respondent wrote to the claimant and stated:-

“ … having considered the information provided in your application with that acquired from the Companies Insolvency Practitioner, Pricewaterhouse Coopers, Companies House, Land Registry and HMRC the Department is not satisfied that you were an employee as defined by Article 3 of the Employment Rights (Northern Ireland) Order 1996. Specifically, but not exclusively, a letter of offer dated 25^th of February 1997 pertaining to your contract of employment with Geotechnical Engineer gives your address as 6 Conagher Road, Dunaveney, Ballymoney. The Department understands from the Registry that you did not become the registered owner of that property until 3^rd of August 1998. We have therefore reason to doubt the authenticity of that letter of offer and, as a consequence, I am not satisfied of the validity of your purported terms and conditions of employment. Your contract of employment as Senior Geotechnical Engineer dated 26^th of April 2007 states that your rate of pay on commencement will be £42,500.00 p/a for 45 hours per week. HRMC records have declared earnings show, with the exception of the company’s last year of trading, that you were not paid in accordance with the terms and conditions of your contract, ie your average annual earnings declared to HRMC between 2003/04 and 2009/10 was £29,703.85. On that basis the Department believes the mutuality of obligation between you and your employer was broken. Further, your P60 for 2008/09 reports earnings of £51,499.99 however HMRC records show a declared salary of just £38,343.00.

I therefore regret to inform you that your claim for payments from the National Insurance Fund has been rejected. … .”

3.6 By letter dated 22 August 2012, the claimant wrote to the respondent in which he stated, inter alia:-

“ …

(1) I believe that I meet the requirements of Article 3 of the Employment Rights (Northern Ireland) Order 1996 and the position taken by you arises out of the apparent contradiction in figures in relation to salary to which I will refer below.

(2) The letter of offer dated 25^th of February 1997 refers to an address which I agree did not come within my ownership until 3^rd of August 1998. The reason is that in April 2007 Colin Walker was retained as Human Resources Manager by the company and in the absence of existing written contracts proceeded to ‘tidy up’ matters. The letter of offer dated 25^th of February 1997 was prepared by Colin Walker at the start of 2007 to reflect the position taken by me when I joined the company at 26^th of March 1997. Details contained in the letter of 25^th of February 1997 are correct with the exception of the address. I confirm again that the address was my address early in 2007 when the letter of offer was created by our HR Adviser to reflect the position taken by me at 26^th of March 1997. I was guided by him in this matter and the with the exception of the address everything else on the form is correct.

(3) You refer to the contract of employment dated 26^th of April 1997 where the rate of pay was £42,500.00. There is a purported contradiction between this figure and average annual earnings declared to HRMC between 2003/04 and 2009/10, being £29,703.85. The lower figure reflects average earnings over a period of some years where the earnings were at their height at £42,500.00 at 2007. I refer to the attached documents and tables of earnings that show that my salary proves the contract of employment was equal to or exceeded the rate of pay stated in the contract of employment.

(4) You refer to my P60 for 2008/09 purporting earnings of £51,499.99 against a declared salary of £38,343.00. I rang HMRC Self Assessment Section on 15.8.12 to query the apparent discrepancy in the figures. HMRC confirmed that they did not know where the figure of £38,343.00 came from and their record show that my pay from all employments was £51,885.00 (as submitted in my self-assessment return).

Looking over my return it appears that I erroneously included by benefits and expenses (P11D) £386.00 in along with my pay (P60) taking the figure up from £51,499.00 (plus £386.00) to £51,885.00.

… .”

3.7 By letter dated 13 September 2012, the respondent replied to the claimant stating, inter alia, as follows:-

“ … based on the information contained in your letter I have taken the opportunity to review your application and the decision communicated to you by the Department.

To qualify for redundancy/insolvency payments from the National Insurance Fund an applicant is required to have been an employee of the company or business to which the applicant relates. The payment of Income Tax and National Insurance contributions by an individual in employment does not necessarily confer employee status or, thereby, an automatic right or entitlement to redundancy/insolvency payments from the National Insurance Fund. Income acquired by an individual in the UK is liable to consideration for tax by HMRC whether or not that individual is an employee, eg self-employed, sub-contractor or a company officeholder. The Department however recognises that officeholders, for example a company director, can be both an officeholder and an employee. In all cases however it means the responsibility of the applicant to demonstrates their status as an employee and, thereby, their eligibility for payments from the National Insurance Fund.

Having reviewed your original application and the content of your letter of 22^nd of August 2012, it is my consideration that the Department’s decision to reject your application for payments from the NIF should stand.

… .”

3.8 The claimant made his claim to the tribunal on 22 August 2012, in which he stated, inter alia:-

“I was a full-time of Global Site Investigations Ltd from March 1997 to January 2012, when the company went into liquidation. Along with all the other employees I submitted a payment for redundancy in lieu of notice form to the Redundancy Payments Service (‘RPS’). Most of the other employees have received payments of their claims, however my application was rejected by RPS’ letter of 31.5.12 … I’ve responded to their letter to clarify/ refute the points raised by RPS … but have not yet received a response. In their letter RPS stated:-

‘The Department is not satisfied that you were an employee as defined by Article 3 of the Employment Rights (NI) Order 1996’.

I was undeniably an employee of Global Site Investigations Ltd from March 1997 to January 2012, as it was my sole employment in that period, and having paid all tax and National Insurance through the PAYE Scheme.

I’m only seeking to be treated the same as the other former employees of the company who have received their entitlement. I’ve now gone self-employed as there are no full-time or part-time positions currently available to me … .”

On 25 September 2012 the respondent presented to the tribunal a response to the claimant’s application, in which it stated, inter alia:-

“ … the claimant was a director of, and shareholder in, the company Global Site Investigations Ltd (here and after ‘the Company’). He applied to the respondent for a redundancy payment, notice pay, holiday pay and arrears of pay by him by way of an RP1 application received by the Department on 2^nd of February 2012. Following consideration the application was rejected and the claimant was notified of the rejection by letter dated 31^st of May 2012.

The respondent rejected the claimant’s application because it was not (and is still not) satisfied that the claimant was an employee of the Company as defined by Article 3 of the Employment Rights (Northern Ireland) Order 1996, and he was not (and is not) therefore entitled to payments from the National Insurance Fund’s Statutory Guarantee Scheme.

The director is the holder of an office and will not, merely by virtue of such office, be an employee.

The respondent was not, and is not, satisfied that the veracity, origin or providence of putative contractual documents provided by the claimant to support his claim of employment. The respondent is not satisfied with the claimant’s subsequent purported explanation of how he came to provide a falsely dated letter of offer in support of his claim.

The respondent contends in the first instance that the putative contract and contractual documents relied upon (in particular the letter of offer dated 25^th of February 1997 and purportedly signed by the claimant on 1^st of March 1997) are not genuine but are rather a sham.

The respondent is furthermore not satisfied that the reality of the claimant’s dealings and relationship with the company were consistent with the purported terms and conditions of his employment, particularly as regards the formalities surrounding the creation of the alleged contract and the payment of remuneration there under. The respondent also reserves the right to rely on other matters of inconsistency as may be evidence for the documents produced at hearing and the evidence of the claimant and his witnesses.

The fact that payments were made to the claimant under the PAYE system is not indicative of the payment of employment wages. Directors remuneration is (like wages) taxable as a Class 1 liability under Schedule E through the PAYE system and requires to be returned under the PAYE system.

In summary, the respondent contends the claimant was not an employee of the company. The claimant did not work under a contract of employment with the company, whether written or not. Rather, he acted at all material times on behalf of the company as one of its directors and for the benefit of the company and its shareholders, including himself. All of fees, remuneration and payments he received from the company were by way of director fees, emoluments and remuneration or by way of dividend as a shareholder.

… .”

3.9 The Managing Director of the company and a majority shareholder from in or about 1993 was David Cameron, a brother of the claimant. The letter of offer of employment to the claimant, dated 25 February 1997, and relied upon by the claimant in relation to his application to the respondent is signed by David Cameron in that capacity. Another brother, Paul Cameron, was appointed a Financial Director in or about 1999. Like the claimant, he was also a minority shareholder. The company was founded by the late father of the Cameron brothers.

The claimant, throughout his evidence, sought to play down his relationship with his brothers, David and Paul, and, in particular, the former, which I found less than convincing. Indeed, as referred to later in this decision, I am satisfied that this was done in an attempt to distance himself from similar applications made to the respondent by both David and Paul, and, in particular, the former, which the claimant knew had been unsuccessful. Indeed, when this hearing had to be suddenly adjourned, during cross-examination of the claimant, due to the illness of a family member, it became apparent, from the claimant’s evidence, on the resumption of the hearing, that the relationship between the claimant and his brother, Paul, at least, was closer than he had earlier sought to suggest, prior to the adjournment. At the resumed hearing, the claimant admitted that he and Paul had discussed, which he had previously not admitted, the outcome of David Cameron’s application, when Paul Cameron had told him that David Cameron had made ‘a mess of it’. The claimant was unclear when this conversation with his brother, Paul, had taken place but admitted it was after he had put in his application to the respondent on 11 January 2012 but certainly before he wrote to the respondent in his letter of 22 August 2012 and first admitted that the letter dated 25 February 1997 had not been prepared and signed until 2007. Despite the fact he was told by his brother, Paul, that David Cameron had a ‘mess of it’, the claimant suggested he did not ask his brother to elaborate on what he meant or the reasons why he was suggesting his brother had a ‘mess of it’, I found this totally unconvincing and less than credible, in particular in circumstances where his own application was the subject of challenge by the respondent as set out in the respondent’s letter dated 31 May 2012. There was also no explanation by the claimant why it had taken him nearly three months to reply to the respondent.

3.10 The claimant joined the company as an employee in or about March 1997, at the verbal invitation of his brother, David. He did not receive any Letter of Offer at that time nor did he sign any contractual documents and/or statement of terms and conditions of employment and/or job remit. Upon his appointment as a Director of the company on or about 1 January 2009, the claimant did not enter into any Director’s Service Agreement, nor was there any memorandum of such an agreement nor was there any evidence that he signed at that time, or subsequently, any other contractual document referring to him as an employee of the company.

3.11 In his application to the respondent, dated 11 January 2012, the claimant relied, in particular, on the Letter of Offer dated 25 February 1997, as signed by his brother, David Cameron, the Managing Director, and his signed acceptance of the offer dated 1 March 1997, together with his signed acceptance of the job remit, dated 26 April 2007, the statement of terms and conditions signed by him and Colin Walker, the Human Resources Manager on 26 April 2007. There was no evidence of any other contractual documents relied upon by the claimant in relation to this application to the respondent. When enclosing these documents to the respondent, as part of his said application, the claimant did not give any indication that the dates on the Letter of Offer were not as set out or that the said document had not been signed by him on the date as set out.

3.12 At this stage, it is necessary to digress and consider similar applications made by other Directors of the company to the respondent and the brief history of same, insofar and relevant and material to the determination of this claim:-

(a) David Cameron left the company on or about 18 January 2011, in circumstances which are not material to the determination of this claim. He made an application, dated 25 February 2011 to the respondent arising from the said termination in respect of a claim for holiday pay, notice pay and redundancy pay from the National Insurance Fund. No contractual document was attached to the said application and he did not state whether or not he had a written contract of employment, although there was the opportunity to do so on the said document. The application was subsequently refused by the respondent and David Cameron then brought to the tribunal a claim, similar to that now brought by the claimant, on or about 12 October 2011. In his claim form, to the tribunal, David Cameron expressly stated he had never been subject to any written contract of employment.

(b) Philip Rainey, Director of Corporate Services and the Chief Executive Officer of the company also left the company in or about January 2011. He also made a similar application to the respondent on or about 21 January 2011 in which he expressly noted he had a written contract of employment. Initially, the application was refused by the respondent, but, following clarification and production of a number of documents referred to in the application, the respondent, by letter dated 23 November 2011, accepted the application of Mr Rainey. In particular, Mr Rainey produced to the respondent a Letter of Offer, on company headed notepaper, dated 26 February 2002 signed by David Cameron and which Philip Rainey had signed on 27 February 2002 as acceptance of the said offer. It is to be noted that the Letter of Offer, dated 25 February 1997, relied upon by the claimant, was in a similar format, albeit was not on company headed notepaper. Mr Rainey also produced a statement of main terms and conditions of employment, which was signed by David Cameron, his employer, and Philip Rainey as employee, on 27 February 2002.

(c) On 30 January 2012, shortly before the hearing of the claim, David Cameron wrote to the tribunal, in relation to his tribunal proceedings enclosing, inter alia, a statement of main terms and conditions of employment which was stated to be signed by David Cameron as employer on 6 July 1997 and by David Cameron as employee on the same date.

(d) Paul Cameron made a similar application to the claimant on or about 11 January 2012, following the liquidation of the company. The application was also refused by the respondent in a letter dated 31 May 2012 and was the subject of subsequent tribunal proceedings brought by Paul Cameron. A decision by the tribunal in respect of the claimant, Paul Cameron, was registered and issued to the parties on 1 November 2012, following a hearing on 28 August 2012; but, following a review, this decision was subsequently revoked. In the circumstances, I do not consider it appropriate to refer further to the decision made by the tribunal on 1 November 2012, as set out above.

(e) By a decision recorded in the Register and issued to the parties on 15 February 2012, following a hearing on 13 February 2012, the Chairman confirmed his oral decision given on 13 February 2012 refusing the claim of David Cameron and setting out his summary reasons for doing so.”

In particular, the Chairman stated:-

“ … First I was satisfied that the document dated 6 July 1997 was not signed on or about that date, and I had no credible evidence as to the date in which in fact it was signed. Secondly, I was satisfied that the document did not, in reality reflect the relationship between the claimant and the company. (In that connection, I noted that, at the time the claimant presented his claim in the present proceedings he was asserting that he had never been subject to any written contract of employment … .”

3.13 The claimant contended, in evidence, that he was unaware either David Cameron, his brother and Managing Director or Philip Rainey, his fellow Director, had ever made applications for redundancy payments etc from the respondent at any time in 2011 and had only become aware of this on the date the company went into liquidation and he filled in his own application to the respondent on 11 January 2012. I found this alleged absence of knowledge by the claimant less than credible and I concluded that, in particular, he was fully aware, when making his application to the respondent, that Mr Rainey’s application to the respondent had been successful, but only after he been able to produce written contractual documents. I am satisfied he was therefore fully aware, when making his application, he required to be able to attach to his application to the respondent some written contractual documentation, which, as I have set out previously, the claimant attempted to do so.

3.14 In light of the foregoing, the main focus of these proceedings became the authenticity, or otherwise, of the documents so produced by the claimant in connection with his application to the respondent dated 11 January 2012.

The claimant admitted, in evidence, when he sent in these documents he at no time explained to the respondent that in relation to the Letter of Offer it was not what it purported to be. In particular, he accepted, in evidence, that anyone reading the said Letter of Offer would have believed it had been written on 25 February 1997 by David Cameron and the offer had been accepted by him, in writing when he signed it on 1 March 1997. He further accepted it was not until the respondent, in its letter of 31 May 2012, challenged the authenticity of the Letter of Offer that in his response dated 22 August 2012 he admitted that:-

“The Letter of Offer dated 25^th of February 1997 was in fact prepared by Colin Walker [the Human Resources Officer] to reflect the position taken by me when I joined the company at 26^th of March 1997.”

The claimant could give no explanation why, if this was correct, it had not been stated by him at the outset when the application was made. He could give no explanation why it had been necessary to date the letter 25 February 1997 and for him to state that he had signed it on 1 March 1997, neither of which dates were true; albeit he acknowledged by providing such an apparent delay, it would have given a greater impression to the respondent of the authenticity of the document. The respondent, upon receipt of the application as part of its investigation of the claimant’s application, ascertained that the address of the claimant on the Letter of Offer related to a property where the claimant had not become the registered owner until some time later. If the claimant was signing the document in 2007, as he subsequently suggested, one might have expected he would have noted this error and had it amended. Of course the address on the letter was the claimant’s address at the time of his application to the respondent.

3.15 It has to be noted, when the claimant admitted in his letter of 31 May 2012 the Letter of Offer was not as it purported to be, as set out above, the tribunal had already rejected the claim of David Cameron for the reasons set out above. I do not accept that this was a matter of coincidence of timing, as suggested by the claimant, and I have concluded that, despite the claimant’s protestations to the contrary, the claimant was fully aware at that time that David Cameron’s claim had been rejected by the tribunal for the reasons, set out above, and he therefore considered it necessary to reply accordingly to the respondent in his response dated 22 August 2012. Indeed, by this time, even on his own admission, he had been told by his brother, Paul Cameron, that David Cameron had ‘made a mess of it’.

3.16 Although, in light of the correspondence by the respondent on 31 May 2012 and the claimant’s reply thereto on 22 August 2012 together with the terms of the respondent’s response form in the tribunal proceedings, the issue relating to the necessity to establish the authenticity of the Letter of Offer and how it had come to be prepared by Mr Walker in 2007 and signed by the claimant in 2007, was well known to the claimant by the date of this hearing, Mr Walker was not called as a witness by the claimant. There did not appear to be any reason why the claimant had not done so, although the tribunal was informed he was resident in the jurisdiction.

3.17 The claimant contended, in evidence, albeit he was somewhat vague on the details, that when Mr Walker became the Human Resources Manager of the company in or about 2007 he had found, as part of some sort of audit by Invest NI that the claimant, in order to obtain some form of grant, and others, did not have contracts of employment and, in particular, did not have Letters of Offer and signed acceptance of same. The claimant could give no explanation why Mr Walker, as a responsible Human Resources Manager and former Army Officer, would have considered it appropriate to draw up such a document with fictitious dates and then ask the claimant to sign them long after the event. The claimant did not dispute that Invest NI would not have asked for such a document to be drawn up in that way. I could not accept, as the claimant tried to suggest, that this was some sort of box-ticking exercise and he merely signed it on the instructions of Mr Walker. The claimant did not dispute that relevant documentation could have been drawn up to explain to Invest NI the absence of such a Letter of Offer and acceptance without preparing a Letter of Offer and signed acceptance which did not reflect the true circumstances.

3.18 In the course of the evidence on the second day of the hearing, it an issue arose about some discrepancy in the company records produced by the claimant on the second day of hearing. He had done so as he had realised the importance of Mr Walker to the issues in this case in relation to when Mr Walker began his employment with the company. The claimant had apparently obtained personnel records relating to Mr Walker from the old offices of the company in relation to when Mr Walker had commenced his employment with the company during the period of the adjournment. Despite taking these steps, the claimant still did not find it necessary to call Mr Walker as a witness. In the event, I was prepared to accept, on the documents produced by the claimant, that Mr Walker started his employment with the company on or about 20 March 2007, albeit, for reasons not fully explained relating to his discharge payments from the Army, he did not receive any salary and did not ‘go on the company books’ until on or about 2 July 2007. I therefore accept that he would have been in the position of Human Resources Manager on 26 April 2007, when the claimant apparently signed the job remit and statement of terms and conditions of employment. Of course, the said statement could not have been in existence and enclosed with the said Letter of Offer, when the claimant purported to accept on 1 March 1997 the offer on the terms outlined in the letter and the enclosed statement.

3.19 The claimant, despite his reliance on these documents, could give no explanation why the Letter of Offer referred to a three month notice period and the statement of terms and conditions only referred to notice of one month. He was vague, in his evidence of his knowledge of the holidays to which he was entitled under the statement and/or which he had taken at any time and/or entitlement to overtime and/or the hours of work under the said statement. In his application to the respondent he had said he did not work overtime; but, in his evidence, he indicated he did in fact work overtime but did not get paid for the overtime in accordance with the said statement and was merely required to ‘work the hours and get the job finished’. These were all matters I would have expected an employee governed by a statement of terms of employment to be familiar with; but yet surprisingly the claimant did not appear to be and he did not seem to have sought to require the company, at any time, to comply with them. Indeed, given his absence of knowledge of the contents of the said statement, I concluded that the first time his attention had ever been drawn to them was during the course of the tribunal hearing.

3.20 The payment of the claimant of his remuneration by the company by way of the PAYE system did not assist me in determining this matter, as Director’s remuneration is (like wages) taxable as a Class 1 liability under Schedule E through the PAYE system and requires to be returned under the PAYE system. In determining this matter and therefore took no further account of this method of payment.

4.1 I reached the following conclusions, in light of the findings of fact made by me, the legislative provisions and the case law, referred to in the previous paragraphs of this decision.

4.2 There was no dispute that he legal burden was upon the claimant to show he was an employee at the material time (see Neufeld – Paragraph 88). The Director is not an employee of a company, he is an office holder and requires to establish that as well as being a Director he was also an employee.

I am satisfied the claimant knew, when he made his application to the respondent, relying on the Letter of Offer that it was a fictitious document. It was intended by him, in my judgment, to mislead the respondent, whom he expected to accept it at face value and, in particular, that it had been written on 25 February 1997 and signed by on 1 March 1997 as an acceptance of the offer contained in the letter. I am satisfied the claimant knew, at the date of his application to the respondent, Mr Rainey had produced a similar Letter of Offer, which had been genuinely dated in 2002 and after it was produced had been able to obtain payment from the respondent. I do not think it was without significance, when considering the genuineness of the document that Mr Rainey’s letter contained the company letter heading, whereas the Letter of Offer relied upon by the claimant did not. There was nothing to have prevented the claimant, when making his application to the respondent, to have explained, if there was a genuine explanation, how, despite appearances to the contrary, the letter had only been prepared by Mr Walker and signed by the claimant until 2007. When he sought to do so, in response to the respondent in his letter dated 22 August 20012, I am satisfied he knew what had happened in relation to the application and subsequent tribunal proceedings brought by his brother, David Cameron. He knew, as his brother, Paul Cameron, had told him, David Cameron had made ’a mess of it’. Yet, it was only, on the second day of the hearing, he made this admission. I have concluded that, whilst David Cameron and the claimant may not have been close, I am satisfied the claimant was at all times fully aware of what was taking place in relation to not only David Cameron’s application but also the earlier application of Philip Rainey. He had been kept fully in the picture in relation to David Cameron’s application by Paul Cameron, to whom he was close and who also had a similar application, and who had, on the claimant’s eventual admission, been following developments in relation to the unsuccessful claim of David Cameron and was able to tell the claimant, if he had not previously known, that David Cameron had ‘made a mess of it’.

4.3 I am not satisfied the Letter of Offer came to be prepared by Mr Walker as part of a box-ticking exercise for Invest NI and signed by the claimant at his direction in 2007. Mr Walker was not called as a witness to support what the claimant had suggested. Indeed, the claimant’s evidence about the reasons for Mr Walker’s suggested actions were vague and uncertain. Invest NI clearly would not have suggested such a false document be prepared especially when the claimant suggested it was prepared to complete paperwork to obtain grant/assistance from Invest NI. I would be hopeful Mr Walker, as a retired Army Officer and the Human Resources Manager of the company, would not have been in the business of preparing and having such a document prepared and signed for such purposes. If there was such a gap in the paperwork, which Invest NI required to be rectified in order for the company to obtain a grant, the truth, as the claimant acknowledged, could have been stated to Invest NI and, if necessary, relevant documents drawn up and signed on the proper date, without embarking on the false and untruthful exercise the claimant suggested had been carried out.

4.4 I found the claimant a most unimpressive witness, who was evasive and inconsistent in his evidence, not least in relation to his relationship with his brother, Paul Cameron, which was clearly greater than he tried to suggest; but also in relation to what he knew about the application and subsequent unsuccessful tribunal proceedings brought by David Cameron and the earlier successful application of Philip Rainey. On the evidence before me, I was not satisfied, in the circumstances, the Letter of Offer was prepared by Mr Walker and/or signed by the claimant in April 2007; but rather I have concluded it was prepared by the claimant, not by Mr Walker but by the claimant and signed by the claimant at some date before making his application to the respondent on 11 January 2012 in the full knowledge, following the successful application of Mr Rainey, that such documentation would be necessary to obtain payment. He did so deliberately in order to mislead the respondent in relation to his application for payment from the National Insurance Fund. When he was challenged by the respondent in its letter dated 31 May 2012, he sought, in response, to involve Mr Walker, who has not given evidence, in relation to an explanation of how this document came about, which, as set out above, I do not accept in the circumstances. The claimant was not a credible witness and, with full knowledge of what he was doing, has sought to make an application to the respondent for relevant payments from the National Insurance Fund, relying on a manufactured document, which at all times he knew to be false. It is fortunate the respondent, having regard to its statutory responsibilities, properly investigated the application.

4.5 In the circumstances, I have come to the conclusion that, what has been produced by the claimant to show he was an employee at the material time was a ‘sham’ (see Neufeld – Paragraph 36) intended by him to give to the respondent the appearance of a genuine contract of employment and did not reflect the relationship between the claimant and company of employer and employee. Further, the claimant’s lack of knowledge of the specific terms and conditions set out in the documents attached to his application to the respondent and the failure of the claimant to follow them/act in accordance with them was a further demonstration that the documents were not a true reflection of the claimed employment relationship (see Neufeld – Paragraph 88) of the claimant with the company at a time when he was also a Director of the company.

4.6 In the circumstances, I have therefore concluded the claimant, at the material time, was not an employee, within the meaning of Article 3 of the 1996 Order.

4.7 The application by the claimant, pursuant to Article 233 of the 1996 Order, against the decision of the respondent not to make any payments to him out of the National Insurance Fund is dismissed.

Chairman:

Date and place of hearing: 7 November 2012; and

14 December 2012, Belfast

Date decision recorded in register and issued to parties: