Industrial Tribunals Northern Ireland Decisions

THE INDUSTRIAL TRIBUNALS

 

CASE REF: 1274/16

 

CLAIMANT: John Bogue

 

RESPONDENT: Northern Ireland Association of Citizens Advice Bureaux

 

DECISION ON A PRE-HEARING REVIEW

The unanimous decision of the tribunal is that:-

 

(1) The respondent, Northern Ireland Association of Citizens Advice Bureaux, was not an 'associated employer' with Newtownabbey Citizens Advice Bureau Limited, at the relevant and material time, for the purposes of Article 4 of the Employment Rights (Northern Ireland) Order 1996.

 

(2) The claimant was therefore disqualified from the right not to be unfairly dismissed by the provisions of Article 140 of the Employment Rights (Northern Ireland) Order 1996, regarding a minimum period of continuous employment with the respondent.

 

(3) The tribunal therefore does not have jurisdiction to determine the claimant's said claim of unfair dismissal and it is dismissed.

 

(4) A Case Management Discussion will be arranged, in due course, for the tribunal to give relevant case-management directions/orders to enable the claimant's claims of breach of contract in relation to notice pay and/or holiday pay to be determined.

 

Constitution of Tribunal:

Employment Judge: Employment Judge Drennan QC

Members: Mr J Hughes

Mr A Burnside

Appearances:

The claimant was represented by Mr B McKee, Barrister-at-Law, instructed by Cleaver Fulton Rankin, Solicitors.

The respondent was represented by Mr I MacLean, Senior Ligitation Consultant, of Peninsula Business Services Ltd




Reasons

 

1.1 The claimant presented a claim of unfair dismissal to the tribunal on 4 May 2016. The respondent presented a response to the tribunal on 10 June 2016, in which it denied liability for the claimant's said claim. In particular, for the purposes of this hearing, the respondent stated in its said response:-

 

"The respondent contends that the claimant does not have the necessary length of service to entitle him to bring a complaint that he had been unfairly dismissed. As such the tribunal does not have jurisdiction to hear this part of the claim."

 

1.2 The claimant, in addition to his claim of unfair dismissal, also presented claims for breach of contract in relation to notice pay and/or holiday pay, which said claims are also denied by the respondent; but which claims, for the reasons set out below, it was agreed would not be the subject of this pre-hearing review and would require to be determined, as appropriate, following the determination of the issues, the subject-matter of this pre-hearing review.

 

1.3 At a Case Management Discussion on 29 July 2016, as set out in the Record of Proceedings, dated 1 August 2016, it was agreed by the representatives that, for the tribunal to have jurisdiction to hear the claimant's claim of unfair dismissal, the claimant would have to establish that he was continuously employed by the respondent for a period of not less than one year ending with the effective date of termination, pursuant to Article 140 of the Employment Rights (Northern Ireland) Order 1996 ('the 1996 Order'). It was agreed and the tribunal so directed, that a pre-hearing review would be arranged to consider the following issue:-

 

"Whether the claimant is disqualified from the right not to be unfairly dismissed by the provisions of Article 140 of the Employment Rights (Northern Ireland) Order 1996, regarding a minimum period of continuous employment."

 

It was recognised by the representatives that, in order to determine this issue, the tribunal would, firstly, have to determine whether the respondent was 'an associated employer' of the claimant's previous employer, namely Newtownabbey Citizens Advice Bureau Limited, for the purposes of Article 4 of the 1996 Order.

 

1.4 As set out in the said Record of Proceedings, dated 1 August 2016, the Employment Judge, when directing the pre-hearing review, was satisfied that such a hearing was in accordance with the terms of the overriding objective and it was appropriate in the circumstances, having regard to the guidance set out by the House of Lords in SCA Packaging Ltd v Boyle [2009] UKHL 37. In particular, the representatives agreed that the issues relating to whether the claimant had the relevant period of continuous employment did not involve determination of the many factual issues relating to the reasons for the determination of the claimant's employment by the respondent and the circumstances in which it occurred. It was recognised that, even if the claimant was disqualified from bringing his claim for unfair dismissal, following any such pre-hearing review, the tribunal still would have jurisdiction to determine his said claims for breach of contract relating to notice pay and/or holiday pay; but the representatives were also agreed that the issues to determine any such claims of breach of contract would be limited in comparison to the factual issues which would require to be determined, in relation to any claim of unfair dismissal. It was agreed, following the outcome of the pre-hearing review, that a further Case Management Discussion would have to be arranged to enable the tribunal to give further case-management directions/orders that might be required in relation to the determination, at a substantive hearing, of any such claims which remain to be determined.

 

1.5 Prior to the hearing of this pre-hearing review, at a Case Management Discussion on 16 September 2016, as set out in the Record of Proceedings, dated 16 September 2016, the claimant's representative made an application, pursuant to Rule 18(3) of the Industrial Tribunals Rules of Procedure 2005, that this pre-hearing review should be determined by a full tribunal and not by an Employment Judge, sitting alone, on the grounds that one or more substantive issues of fact were likely to be determined at the pre-hearing review and that it would be desirable for the pre-hearing review to be conducted by such a tribunal. For the reasons, as set out in the said Record of Proceedings, it was agreed, and the tribunal so directed, that this pre-hearing review would be heard and determined by a full tribunal and not by an Employment Judge, sitting alone.

 

1.6 The tribunal heard oral evidence from the claimant and Paul Callaghan, the Chief Executive (previously known as the Executive Director) of the respondent. The tribunal was also greatly assisted, for which it is very grateful, by the detailed skeleton arguments and oral submissions of the representatives.

 

2. Relevant law

 

2.1 Relevant provisions of the 1996 Order:

 

Article 4 of the 1996 Order:-

 

" Associated Employers

 

4. For the purposes of this Order any two employers shall be treated as associated if -

 

(a) one is a company of which the other (directly or indirectly) has control, or

 

(b) both are companies of which a third person (directly or indirectly) has control;

 

and 'associated employer' shall be construed accordingly."

 

Article 6 of the 1996 Order:-

 

" Introductory

 

(1) References in any provision of this Order to a period of continuous employment are (unless provision is expressly made to the contrary) to a period computed in accordance with this Chapter.

 

(2) In computing an employee's period of continuous employment for the purposes of any provision of this Order, any question -

 

(a) whether the employee's employment is of a kind counting towards a period of continuous employment, or

 

(b) whether periods (consecutive or otherwise) are to be treated as forming a single period of continuous employment,

 

shall be determined week by week; but where it is necessary to compute the length of an employee's period of employment it shall be computed in months and years of twelve months in accordance with Article 7.

 

(3) Subject to Articles 11 to 13, a week which does not count in computing the length of a period of continuous employment breaks continuity of employment.

 

(4) A person's employment during any period shall, unless the contrary is shown, be presumed to have been continuous."

 

Article 14 of the 1996 Order:-

 

" Change of Employer

 

...

 

(6) If an employee of an employer is taken into the employment of another employer who, at the time when the employee enters the second employer's employment, is an associated employer of the first employer -

 

(a) the employee's period of employment at that time counts as a period of employment with the second employer, and

 

(b) the change of employer does not break the continuity of the period of employment.

 

... ."

 

Article 126 of the 1996 Order:-

 

" The right

 

( 1) An employee has the right not to be unfairly dismissed by his employer.

 

... ."

 

Article 140 of the 1996 Order:-

 

" Qualifying period of employment

 

(1) Article 126 does not apply to the dismissal of an employee unless he has been continuously employed for a period of not less than one year ending with the effective date of termination.

 

... ."

 

2.2 The provisions of Articles 4, 6, 14(6), 126 and 140 are in similar terms, respectively, to Sections 231, 210, 218(6), 94 and 108 of the Employment Rights Act 1996, which apply in Great Britain. It has long been recognised that decisions of the Employment Appeal Tribunal, the Court of Appeal in England and Wales, the Court of Session in Scotland and relevant decisions of the Supreme Court in non-Northern Ireland appeals are of highly persuasive authority but are not strictly binding on tribunals in this jurisdiction; but would generally be followed, if appropriate to do so, and, in particular, where the relevant legislative provisions, upon which such decisions are based, are in similar terms to the legislative provisions which apply in Northern Ireland and where there are no relevant decisions of the Court of Appeal or High Court in Northern Ireland (see Beaufort Developments (NI) Ltd v Gilbert Ash [1997] NI 142). Given the legislative provisions are in similar terms both in Northern Ireland and in Great Britain, as set out above, and since, but for the decision in Hasley v Fair Employment Agency [1989] IRLR 106, there are no relevant decisions of the Court of Appeal or High Court in Northern Ireland in relation to the issue, the subject-matter of this pre-hearing review, the tribunal considered that it was appropriate to have regard to and to follow where appropriate, the decisions of the Employment Appeal Tribunal and Court of Appeal in England and Wales, as set out in the following sub-paragraphs of this decision.

 

2.3 A number of principles, relevant to the issues, the subject-matter of this pre-hearing review, are to be found in the decisions referred to below.

 

2.4 The definition in Article 14(6) of the 1996 Order (Section 218(6) of the 1996 Act) relates to associated employers and is not restricted to associated companies. However, Article 114(6) of the 1996 Order has to be read in the context of the definition of associated employer contained in Article 4 of the 1996 Order (Section 231 of the 1996 Act), which provides:-

 

"Any two employers are treated as associated employers if -

 

(a) one is a company of which the other (directly or indirectly) has control; or

 

(b) both are companies of which a third person (directly or indirectly) has control."

 

As a consequence of the terms of the said legislation, it therefore requires that, at least one of the employers is a company, and an non-corporate employer can only be associated with a corporate employer where the latter is controlled by the former. Indeed, as seen in Merton London Borough Council v Gardiner [1981] ICR 186, the Court of Appeal confirmed as follows:-

 

•          The definition of 'associated employers' in Section 231 of the 1996 Act (Article 4 of the 1996 Order) is exhaustive. For an employee to sustain a claim of continuity between two employers under Section 218(6) of the 1996 Act (Article 14(6) of the 1996 Order), they must fit within the definition of associated employers in Section 231, otherwise they will not be legally associated.

 

•          The word 'company' as used in Section 231 means limited company - and nothing else.

 

[Approved, in an equal value claim, by the Northern Ireland Court of Appeal in Hasley v Fair Employment Agency [1989] IRLR 106]

 

It does not appear to include bodies such as partnerships, local authorities or health authorities. However in the case of Pinkey v Sandpiper Drilling Ltd [1989] ICR 389, the Employment Appeal Tribunal held that the partnership of separate limited companies should, for the purposes of the definition of associated employers in Section 231 of the 1996 Act, be regarded as a limited company in itself where, for example, the operation of the partnership was operated within a corporate structure under the direction of a management committee, for the majority of whose members were nominated by subsidiary companies within the group.

 

It has been argued that this is a case, based upon its own particular facts and was an attempt by the Employment Appeal Tribunal, in such circumstances, to ensure, as it considered necessary, that a number of companies could not avoid their legal and statutory obligations, pursuant to the said legislative provisions, by establishing themselves as partnerships. However, it has to be recognised the partnership could not be a limited company, as required in Gardiner, albeit in Gardiner, there was no issue relating to a partnership.

 

2.5 The issue of 'control' is therefore central to the definition of 'associated employers' in Article 4 of the 1996 Order (Section 231 of the 1996 Act).

 

It was held by the Employment Appeal Tribunal in the case of Secretary of State for Employment v Newbold and Another [1981] IRLR 305, that control of a limited company is based on a majority shareholding test:-

 

" ... 'control' meant control by the majority of votes attaching to the shares of the company in general meeting. It was not a question of how or by whom the company was run. Control rests in those who by the constitution of the company can say to the management, 'thou shall do this' ... ."

 

In Hair Colour Consultants Ltd v Mena [1984] ICR 671, the Employment Appeal Tribunal confirmed that control means control by such a majority of votes, as set out in Newbold, and does not include 'negative control'. On the facts X had a 50% shareholding which meant he could thwart the wishes of the other shareholders at a general meeting and, to that extent control the company. The Employment Appeal Tribunal held that such a shareholding was not sufficient, being one short of the majority control required, for the purposes of the definition.

 

Although Section 231 of the 1996 Act refers to control by a third person, the case of Zarb and Samuels v British & Brazilian Produce Co (Sales) Ltd [1978] IRLR 78, suggested, on its own particular facts, that where two people between them own more than 50% of each of two companies, they could form a third person, having control of the two companies provided, on the facts, it was found whether they actually acted jointly and in concert to control the two companies. However, this decision has been doubted in some subsequent decisions (see later South Western Launderettes v Laidler [1986] IRLR 68). In Rance v Service Offset Supplies (Anglia) Ltd [1983], an Employment Tribunal, followed Zarb and held that the directors habitually acted in concert and between them formed a 'third person, controlling the companies and, as a consequence, were associated employers. In Poparm Ltd v Weekes [1984] IRLR 388, the Employment Appeal Tribunal held that a 'third person' controlling two companies may be two (or more) individuals acting in concert and they must be the same individuals in respect of each company.

 

2.6 If the line of authority found in Newbold is followed, control clearly means constitutional control of a limited company, ie through voting power at a general meeting of the company. It does not therefore include 'de-facto control' - by holding a person can be said to control a company when he or she effectively directed its operations, whether he or she controlled a majority of the votes in general meeting or not.

 

As seen in Harvey on Industrial Relations and Employment Law, Section H, Paragraph 582, it has been suggested that any test of 'de-facto control', to establish compliance with the definition, was 'heretical'; and similarly, to suggest a company means something more than limited company was also heretical.

 

However it has to be recognised that the more pragmatic decision in Zarb was followed by a number of Employment Tribunals in Great Britain for many years prior to the doubts raised in the subsequent decision in the case of South West Launderettes v Laidler (see later); with the consequence that there have continued to be a number of decisions of the Employment Appeal Tribunal, since Laidler, where different divisions of the said tribunal have decided to follow Zarb, while others have felt bound by the strict approach seen in Laidler (eg Harford v Swiftrim Ltd [1987] ICR 439 and Strudwick v Iszatt Brothers Ltd [1988] ICR 796). Indeed, in Strudwick, Wood J declined to follow Harford and commented that, insofar as the decision in Zarb suggested that practical control rather than voting control was the relevant test:-

 

"It has been superseded by a number of subsequent authorities."

 

[In doing so, he clearly had in mind the decision in Laidler]

 

He also commented that:-

 

"The view taken in Harford tends to cloud the water rather than to clarify it and would therefore create enormous problems of discovery and evidence."

 

In South Western Launderettes v Laidler [1986] IRLR 68, the Court of Appeal expressed similar concerns, albeit obiter and which were not therefore binding, about the appropriateness of an investigation into how the decision-making power had in practice been exercised to enable it to be shown that the same person (where that person is a composite) controls two companies.

 

Laidler, the majority shareholder, in the employing company was also the owner of 50% of the shares, with his wife holding the other 50% in other companies. The Employment Tribunal held that, for practical purposes, the companies were associated employers. The EAT overruled that decision and the Court of Appeal agreed, holding the persons controlling the companies were different. There was no evidence that the husband had control over his wife's shares or that he had any means of using his wife's voting power. It doubted, obiter, the concept of 'plural' control by two or more individuals who are to be viewed as a 'single unit', contrary to the decision in Zarb; but since this issue was not required to be determined by the Court, Zarb was not expressly overruled and the obiter comments of the Court of Appeal were not binding. The EAT in Laidler rejected the test compounded by Philips J in Zarb that where ownership of the company is divided 50/50, control depends on an analysis of how the decision-making power has in practice been exercised in each particular case. The Court of Appeal approved the decision of the EAT. However, on the issue of the manner in which the possessor of control is to be identified the Court of Appeal suggested the register of members should be conclusive unless there is a legally binding agreement giving one shareholder control over the way in which another shareholder exercises his or her voting rights, Mustill LJ stated:-

 

"Plainly the register of shares cannot be conclusive on the matter, for the person registered as the owner of the majority might be a nominee or trustee, or might be a party to a contract which conferred the right to determine the way in which the voting rights were exercised. Whether anything short of a legally binding agreement to this effect would ever justify the conclusion that the control resided in someone other than the registered owner is, to my mind, debatable."

 

Thus, albeit obiter, the Court of Appeal in Laidler did not appear to follow the test in Zarb and the more pragmatic test of de-facto voting control, referred to therein. However, even in Laidler, the Court of Appeal was prepared, on the particular facts, to allow, if there was evidence of a legally binding agreement between the parties, with separate shareholdings, to the effect that giving one shareholder control over how the other shareholder exercises their voting rights and control, it would have held there was established the relevant control for the purposes of the definition of associated employers in Section 231 of the 1996 Act.

 

2.7 Given the above uncertainties of approach, there was a requirement for some greater certainty to be provided by a subsequent decision of the Court of Appeal. In the decision of the Court of Appeal in the subsequent case of Payne v Secretary of State for Employment [1989] IRLR 352 [1989] ICR 771, (under the name Secretary of State for Employment v Chapman ['Chapman']), the decision appeared to give some certainty; but again due to, arguably obiter, comments by two of the judges in the Court of Appeal, some continuing doubts remain about the relevant test for establishing the relevant and necessary control (see later). Give that this decision and, in particular, the said comments were strongly relied upon by the claimant's representative in the present proceedings, it is necessary to refer to the decision in some detail.

 

The head note, in Chapman [1989] ICR 776, states as follows:-

 

"Before 1980 the employer carried on business as a sole trader. In that year, in order to avoid the incidents of VAT in relation to a maintenance contract for which he was tendering, he formed a limited company in which he and his wife were sole and equal shareholders and directors. When the maintenance contract came to an end in 1982 the company ceased trading, the employer thereupon resuming business as a sole trader. The employee, who had been employed from 1980 for two consecutive periods by the company and the employer respectively, was made redundant on 1 ^st of April 1986 and received a redundancy pay based on three years' continuous service with the employer as sole trade from September 1982. On his application to the industrial tribunal, the tribunal, having found that the company was formed solely for the purposes of performing one particular contract and the wife shareholding was a formality to satisfy the requirements of company law, held that the employer and the company were 'associated employers, within the definition of Section 153(4) of the Employment Protection (Consolidation) Act 1978 (Article 4 of the 1996 Order), consequently the period of his employment by the company could be counted in to give him payment based on five years', rather than three years', continuous service. The Appeal Tribunal reversed that decision.

 

On the employee's appeal:-

 

Held, allowing the appeal, that for the purposes of Section 231 of the Act of 1978 (Article 4 of the 1996 Order) the test for determining whether an employer 'controlled' a company was normally referable to the question of whether or not the employer possessed voting control; that the facts found by the industrial tribunal were consistent with the wife's holding as a nominee albeit that the tribunal had not expressly so found; and that, accordingly, the tribunal had not erred in law in holding that the employer controlled the company and that the employer in the company were in consequence 'associated employers' within the meaning of the Act.

 

Quaere - whether, although voting control was the normal and usual test for determining control of a company for the purpose of Section 153(4) exceptionally, other circumstances might be taken into account."

 

Thus it would appear that the facts of the case fell within the scope of Mustill LJ's comments in Laidler, referred to previously and the decision, on its facts, is therefore consistent with the reasoning in Laidler and the principle of shareholding control. However, as set out previously, it is necessary to refer to the said comments of Balcombe LJ and Staughton LJ, which gave rise to the 'quaere section', in the head note set out above.

 

Balcombe LJ stated:-

 

"For my part I think it is sufficient to say that I am wholly unconvinced that the industrial tribunal here did make a mistake of law. Admittedly some of the language they used refers to the question of what might be called 'de-facto control', but, as I have already said I would not, for my part, be prepared to go beyond saying that it might, in certain circumstances, be relevant to know about the 'de-facto control'. But bearing in mind the findings of fact to which I have referred, I reiterate that the company was set up to carry out this one-off contract as an extension of the husband's sole business and that once the contract was completed he alone returned to that business; that the wife's holding of one share was a matter of formality to comply with the provisions of the Companies Act, which in my judgment, is consistent (and certainly not inconsistent) with a finding that she held that one share as nominee for him, even though that finding is not expressly made ... ." [Page 778 B - D)

 

Further, Staughton LJ stated:-

 

"I also agree that this appeal should be allowed for the reasons given by Balcombe LJ. We have been referred to three decisions of the Appeal Tribunal in which is has been held that 'control' in Section 153(4) means voting control : see Hair Colour Consultants Ltd v Mena [1984] ICR 671. In extension of that, I would readily conclude that a person who has the legal right to control the exercise of votes by another or others, himself has control within the section, as was indicated by Mustill LJ in Laidler [1986] ICR 455. For the reasons that Balcombe LJ has given, that is sufficient to decide this case.

 

Mustill LJ in the Laidler case left open the possibility that something less than a legal right to direct the voting of another or others might suffice. Balcombe LJ has cited the relevant passage in his judgment. It is, I think, a perhaps a matter for regret that this appeal has not resulted in the determination of that point, but anything I said about it would be obiter.

 

So it must be left to another case, where on the facts it is shown that one person can direct the voting of another by force of personality or for economic reasons or by some other such means, without any legal right to do so.

 

What is clear is that a husband is not presumed in law to be able to direct the voting of his wife. Mr Brownlow said to Mr Bumble You are the more guilty of the two in the eye of the law, for the law supposes your wife acts under your direction. That is not the law of England today, at any rate in the field of employment, as appears from the Laidler case itself."

 

Interestingly, despite the said arguably obiter comments in Chapman there have been no further authorative decisions by the Court of Appeal to resolve these conflicting lines of authority; and therefore the suggestion that something short of a legally binding agreement conferring voting rights can amount to 'control' remains speculative, since the Court of Appeal in Chapman decided the case on the narrow point that the facts were 'consistent' with the wife being a nominee of her husband, albeit there was no expressed finding by the Employment Tribunal, at first instance, of a legally binding nomineeship. It has been suggested, because of the TUPE Regulations, the necessity for such an authorative decision by the Court of Appeal, to resolve these conflicting lines of authority, has been considerably reduce. Of course, in the present proceedings, the TUPE Regulations are not relevant.

 

Interestingly, Zarb was followed by the Employment Appeal Tribunal in Tice v Cartwright [1999] ICR 769. Tice was decided therefore after Chapman. Tice concerned an employee who worked for six years for a company in which two brothers each had 50% of the shares. When his employment was terminated he was taken on by a partnership of the same two brothers with the partners, holding equal shares. He was dismissed one and a half years later, but the question arose as to whether he had continuity of employment as between the two employers. The Employment Appeal Tribunal held that the tribunal was correct to conclude that the partnership in fact controlled the company rendering the two enterprises 'associated employers'. On the particular facts, the Employment Appeal Tribunal held 'control' dealt with practical rather than theoretical matters and the correct legal test was of 'de facto' control. Applying that test it held the partnership of two brothers had indirect control of a company in which the brothers had a 50 per cent share, so the partnership and the company were 'associated employers'. In this case, unlike Harford and Strudwick, the Employment Appeal Tribunal was not required to deal with issues relating to multiple, varying shareholdings. In doing so, the Employment Appeal Tribunal noted the decisions in the Employment Tribunal, which followed Zarb, referred to previously, but also that the decisions of the Court of Appeal in Chapman had left open the question whether the 'de-facto control' might be the relevant test in some circumstances. The Employment Appeal Tribunal therefore concluded, in view of this conflicting authority, it could decide which line of authority to follow, in light of the facts in the particular case. The practical approach in Tice was also subsequently approved by the Employment Appeal Tribunal in Da Silva v Composite Mouldings and Design Ltd [2009] ICR 416. In Da Silva, HH McMullen QC confirmed that a purpose of these legislative provisions (but also the TUPE Regulations) was 'to provide for continuity of employment for employees where there is a change of employer and to avoid the effect of manipulation of the employment relationship, depriving, employees of their rights by setting up by the same owners of a new business, shorn of continuity of service:-

 

"Taking this into account, it was found both companies A and B were held, in majority shareholding, by the same person who dismissed and hired the employee and therefore, on the facts, both were associated employers over which the majority shareholder had control, notwithstanding the role of the liquidator in A at the time of the re-hiring by B."

 

In a more recent decision, in the case of Schwarzenbach t/a Thame-Side Court Estate v Jones [2005] UKEAT/0100, HHJ Eady QC adopted a pragmatic approach to certain evidential difficulties that had faced the claimant, where there was a complex corporate structure and difficulties for the claimant to obtain relevant information about the corporate structure of the company, which was in issue on the facts of the case. At best, there was only circumstantial evidence to show the necessary control between the two companies, the subject-matter of the proceedings. Indeed, the relevant personnel, Mr and Mrs Schwarzenbach did not give evidence and there was limited disclosure of information about the corporate structure of the relevant company. HHJ Eady QC concluded, given the evidential problems, in the absence of any evidence to contradict such circumstantial evidence, which pointed towards control of the company by Mr and Mrs Schwarzenbach, the tribunal was entitled to rely on evidence of 'de-facto control' as pointing to the probability of ultimate legal control. Given the burden of proof is on the claimant, it was recognised this creates particular difficulties for a claimant to establish the relevant employers are associated employers and, as a consequence continuous employment, in circumstances where the evidence is most likely to be in the hands of the respondent. However, Schwarzenbach shows that, although HHJ Eady QC was still applying the shareholding test of control, the tribunal was prepared to have regard to de facto control, but only to the extent appropriate when drawing inferences as to the position in terms of legal control; and to thereby limit the potential hardship of that test, as recognised by various divisions of the Employment Appeal Tribunal when following the Zarb line of authority. In so holding, the Employment Appeal Tribunal drew support from the dicta in Chapman to suggest de facto control, in certain circumstances, can be a relevant consideration and the dicta could be used to apply a less strict approach to the issue of control in the context of the insolvency of one of the companies.

 

3.1 Following oral evidence from the claimant and Mr Callaghan and the submissions, both oral and written, from the representatives, the tribunal made the following findings of fact, as set out in the following sub-paragraphs, in order to determine the issues, the subject-matter of this pre-hearing review. As set out below, many of the facts were not in dispute between the parties.

 

3.2 It was agreed that the claimant was employed by Newtownabbey Citizens Advice Bureau Ltd (hereinafter referred to as 'Newtownabbey'), from in or about 20 July 2008 until or about 26 March 2015, at which time the claimant held the post of Deputy Manager; and that he then immediately commenced employment with the respondent, as a Service Delivery Manager on a pension project from on or about 27 March 2015. His said employment with the respondent was terminated on or about 25 February 2016. It was not disputed by the representatives that, in order for the tribunal to have jurisdiction to determine the claimant's claim of unfair dismissal, following the termination of his employment with the respondent, the claimant would have to establish that he satisfied the provisions of Article 6 and 140 of the 1996 Order, namely that he had been continuously employed for a period of not less than one year ending with the effective date of termination. It was further accepted that the claimant would not have been able to satisfy this provision, given his employment history, as referred to above, unless he could include his periods of employment with both the respondent and Newtownabbey; and that he could only include both of these periods of employment if Newtownabbey and the respondent were 'associated employers', pursuant to the terms of Article 4 of the 1996 Order.

 

3.3 It was agreed that Newtownabbey and the respondent, which are both companies limited by guarantee, were therefore both relevant companies for the purposes of Article 4 of the 1996 Order. Both representatives further agreed that the principal issue for the tribunal to determine therefore related to the issue of 'control', as referred to in the case law, set out in the previous paragraph of this decision. Indeed, in particular, it was not disputed that the claimant could not show that the respondent had the necessary legal shareholding/voting control in relation to Newtownabbey; and that it would therefore be necessary for the claimant to show the respondent had 'de-facto control' in relation to Newtownabbey, and to thereby show that the respondent and Newtownabbey were 'associated employers' for the purposes of Article 4 of the 1996 Order. As seen from the said case law, the extent to which 'de-facto control' can be relied upon to establish the necessary control, for the purposes of Article 4 of the 1996 Order, remains uncertain (see later).

 

3.4 In seeking to establish the respondent had such 'de-facto control' in relation to Newtownabbey, the claimant strongly relied on the Membership Agreement between the respondent and Newtownabbey. This Membership Agreement also applies to all other Citizens Advice Bureaux in Northern Ireland, not just Newtownabbey.

 

3.5 In the terms of the said agreement, referred to below, which is dated March 2012, the respondent is referred to as 'Citizens Advice' and Newtownabbey is referred to as 'the member', as appropriate.

 

The following paragraphs of the said Membership Agreement were relied on, in particular, by the claimant. However, before reaching our decision, as set out below, the tribunal considered the whole agreement and the terms thereof:-

 

"Introduction :

 

Citizens Advice is the leading advice charity in Northern Ireland working against poverty, and meeting the advice and advocacy needs of the general public. The service is free at the point of use, impartial, confidential and independent.

 

All parts of the service are united by the Citizens Advice Bureau brand and its values. We share the same objectives have one set of aims and principles and one strategy. We all want clients to be able to access the best possible advice, information, preventative services and social policy outcomes.

 

Citizens Advice and its members have common aims but play different roles. The primary role of the members in the CAB network is to deliver services to meet local need, while Citizens Advice leads the service, holds the relationship with Government, and provides strategic direction, infrastructure, support and other services to its members.

 

This agreement sets out the formal basis for our relationship. It aims to foster a transparent and professional relationship in which we both expect high standards from each other. It includes high level requirements from membership - and equally high level commitments from Citizens Advice. The detailed standards for membership are set out in the Membership Scheme.

 

Citizens Advice will review the terms of the agreement annually to be sure they are still relevant and appropriate. This review will take into account overall strategy and priorities and the funding outlook - both for Citizens Advice and for its members -

 

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1. Mandatory Policies and Membership Requirements

 

1.1 Citizens Advice will consult its Members before introducing new policies or requirements which will apply to all members, or before making substantive changes to existing policies or requirements. The Citizens Advice Trustee Board will agree to a proposal only :

 

•          If it is in the best interests of the service for policies to be established at regional level.

 

•          If it is needed to implement existing strategy or deal with changes in the external environment.

 

•          After evaluating the benefits and disadvantages including the impact on clients and the services they are offered.

 

•          After evaluating the cost of compliance and the overall financial impact on members.

 

•          After evaluating the impact of proposals including on equality and diversity.

 

•          After issuing a consultation to all members allowing a minimum of eight weeks for response.

 

•          After the responses have been analysed and carefully considered an objective analysis will be published.

 

•          When reasonable support and guidance for Bureaux is available from Citizens Advice prior to a policy becoming mandatory.

 

•          Whether there is a plan to review the implementation and impact of the policy at an appropriate point.

 

1.2 Whenever consultation is mentioned in the Membership Agreement, this commitment will apply.

 

1.3 If the Trustee Board makes a decision which is at variance with the views of members expressed through consultation, it will explain its reasons for the decision.

 

1.4 The Member agrees to abide by mandatory policies and requirements agreed by the Citizens Advice Trustee Board after consultation and evaluation of the impact. The Member also agrees to respond to policy consultations carried out by Citizens Advice.

 

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3. Brand and Reputation

 

3.1 The Member and Citizens Advice will protect, promote and uphold the Citizens Advice brand and its reputation and do nothing that could damage the interest of the Citizens Advice service. This includes issuing misleading statements about the Citizens Advice service in general or the service provided by the member, especially in respect of quality of service.

 

...

 

3.5 Citizens Advice, the name 'Citizens Advice Bureau' and the CAB service logo (and other variances) have been registered as trademarks to ensure that it is able to protect the name and logo for the benefit of the service as a whole.

 

3.6 The Member agrees to display the standard Citizens Advice Bureau logo at all service outlets and all websites, e-services, letterheads and publications, etc. The member will not modify the logo without prior written permissions from Citizens Advice.

 

...

 

3.9 Citizens Advice will require the Member to remedy any breach of Section 3 of this agreement immediately, failing which Citizens Advice will use its sanction process to consider the nature of the breach and an appropriate remedy which could lead to suspension of the Member and the eventual termination of its membership.

 

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6. Governance and Management

 

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6.5 The Member must comply with all legal requirements, this includes requirements relating to charitable status, company law and its duties as an employer.

 

6.6 The Member will adopt the Service Delivery Model developed by the Northern Ireland Trustee Board.

 

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6.9 The Member will comply with the policies of Citizens Advice in Northern Ireland.

 

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6.12 The Member agrees that Citizens Advice will administer the recruitment process for its manager, to use Citizens Advice specified skills and competencies for recruitment of its manager and to involve Citizens Advice throughout the process, including at interview and decision-making.

 

...

 

6.16 The Member must adopt the Memorandum and Articles of Association developed by Citizens Advice in Northern Ireland by 31 ^st of December 2012.

 

6.17 Citizens Advice will undertake to review the Memorandum and Articles of Association annually and update these in line with statutory requirements and explain the reasons for change.

 

6.18 The member will meet the standard set out in the membership scheme, quality assurance standards.

 

7. Citizens Advice and Major Issues

 

7.1 The Member acknowledges that Citizens Advice has the right and responsibility to protect the Citizens Advice service and has the ultimate ability to terminate the member's membership of the Association.

 

...

 

7.4 The Member acknowledges that Citizens Advice has the ultimate right to intervene and make decisions where the Member is unable or unwilling to make the appropriate decisions.

 

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8. Volunteers and Paid Staff

 

8.1 The Member will ensure that its HR policies and procedures relating to paid staff meet the minimum requirements defined by Citizens Advice. This applies to recruitment (including induction), performance management, handling grievances, disciplinary processes, sickness management and redundancies.

 

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13. Advice and Other Services

 

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13.2 The Member will use defined processes, tools and procedures to deliver services where these are agreed by the Citizens Advice Trustee Board following consultation.

 

13.3 Citizens Advice will not mandate the use of processes or set standards without undertaking a full consultation with members. It will consider circumstances where it would not be appropriate for a member to conform.

 

13.4 Citizens Advice will -

 

•          Provide up-to-date, relevant and appropriate information, training, so that advisers are able to advise clients.

 

•          Set, monitor and regularly review quality standards required for advice and other services to protect the investment being made in the Citizens Advice and its good name.

 

•          Provide regularly reviewed and appropriate processes by which the quality of advice and other services can be assessed.

 

13.5 Citizens Advice agrees that any client services its manages or provides will be to the same standard as those expected from its members and be subject to the same quality assurance mechanisms.

 

...

 

14. Client and Casework Data

 

14.1 The Member agrees to use standards systems for collecting, recording and categorising all mandatory client data and case-recording information.

 

14.2 The Member agrees it will pass all client data to Citizens Advice in the event that the member closes down without transferring its clients to another Advice Agency.

 

15. ICT Strategy, Infrastructure and Services

 

15.1 The Member agrees to have ICT infrastructure that complies with Citizens Advice specified parameters. This includes mandatory connection to the Citizens Advice secure data network.

 

...

 

15.3 Citizens Advice will:

 

•          Manage the provision of operational ICT services to publish levels of reliability and availability.

 

•          Manage the Citizens Advice service secure data network.

 

•          Be accountable for the performance of ICT systems and services.

 

•          Provide a single point of contact for all ICT services in the form of the service desk available at agreed hours.

 

•          Provide support to assist the member to plan it ICT infrastructure.

 

•          Publish an ICT strategy covering all ICT services to members.

 

•          Maintain a governance framework for ICT that ensures that members are properly represented in the specification and design of new computer solutions.




 

16. Quality

 

16.1 A member will strive for high quality and continuous improvement in all its services, operations, governance and management. It agrees to provide evidence to Citizens Advice that it meets the requirements set out in this agreement and the quality assurance standards for membership. It will co-operate with periodic audits and assessments reasonably required by Citizens Advice.

 

16.2 Citizens Advice will assess and audit a Member's compliance with requirements and standards at least once every three years.

 

16.3 Citizens Advice will make every effort to ensure that its quality standards are accepted by other bodies as a 'passport' to accreditation.

 

16.4 Citizens Advice will ensure that any public-facing advice or information services it provides or manages meet the standards that apply to members and are subject to the same audit and assessment process.

 

17. Licenses, Insurance and Approval

 

17.1 Citizens Advice will negotiate, manage and administer systems to ensure that members benefit from joint or block licenses, insurances and approvals where this is in the best interest of the service or is cost effective.

 

17.2 The member agrees that it will operate under the terms of the licenses, insurances and approvals negotiated for the service as a whole.

 

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21. Breaches of this Agreement

 

21.1 If the Member is considered to be in breach of this agreement, Citizens Advice will, in the first instance, work constructively with the Member to agree how the breach will be remedied and what support will be provided. If this approach fails or if the breach is considered major, the Member may be referred to the Northern Ireland Membership and Standards Committee to determine what action should be taken. Depending on the severity and impact of the breach the member may be placed within the formal sanction process.

 

21.2 If a Member considers Citizens Advice is in breach of this agreement the Member may use the Citizens Advice complaints process to request that the breach is investigated and that appropriate steps are taken to put it right.

 

22. Duration and Termination of this Agreement

 

22.1 This agreement will apply from 1 ^st of April 2012 and continue until it is terminated.

 

...

 

22.3 Citizens Advice may terminate the agreement if the Member is in breach of the agreement and the Trustee Board resolves to terminate its membership by a majority of two-thirds of the Trustees present and voting at a meeting provided that:

 

(i) the charities procedures relating to membership sanctions have been implemented; and

 

(ii) the Member concerned has been given an opportunity to make representations to the authorised representatives of the Trustee Board.

 

22.4 Membership will also cease if the Members goes into liquidation or has a receiver appointed (other than the receiver appointed under the Charities Act (Northern Ireland) Act 2008 or any statutory re-enactment or modification of that Act or is dissolved.

 

22.5 On the termination of this agreement, for any reason the member will immediately cease to use the name , Citizens Advice Bureau or any name which is deemed to be confusingly similar. It will also cease to represent itself in any way as a Member of the Northern Ireland Association of Citizens Advice.

 

... ."

 

3.6 The tribunal was also referred to the Articles of Association of Newtownabbey, which it was agreed by the representatives was consistent and reflected the terms of the membership agreement, referred to above. In particular, the tribunal was referred to the following paragraphs of the said Articles, namely:-

 

"10.3 A representative from Citizens Advice shall be invited to attend General Meetings of the company and shall have the right to speak but not to vote at such meetings."

 

3.7 In addition, reference was also made to the terms of the Articles of Association of the respondent (referred to as the Company) and which it was also agreed by the representatives was consistent with and reflected the terms of the Membership Agreement:-

"4. The company is established for the promotion of any charitable purposes for the benefit of the community in Northern Ireland by the advancement of education, the protection of health and the relief of poverty, sickness and distress. In furtherance of its objects and for no other purposes, the Company shall have power:-

 

"(a) to encourage the provisions of Citizens Advice Bureaux which will provide a free, confidential and impartial service of advice, information and counsel for the public, and to assist the implementation of such advice, information and counsel;

 

(b) to provide for member Bureaux an efficient service of information and training, and to assist in the development of new Bureaux;

 

(c) to ensure that adequate standards are maintained by all member Bureaux;

 

(c)(i) to support, assist, guarantee, or assume responsibility for any part of the affairs, business, liabilities, obligations, or service of a member Bureau if in the opinion of the Board of the Company such member Bureau has conducted or managed, or is considered by the Board as likely to conduct or manage, its affairs in such a manner so as to cause, loss, damage or harm to the business, standing or reputation of the member Bureau, the Company of Citizens Advice Bureaux generally or the services provided by any of them; and in the exercise of such power the Company shall for the avoidance of the doubt and without limitation be entitled to provide direct or indirect financial assistance to a member Bureau, to guarantee the liabilities or obligations or a member Bureau to a third party, and to nominate one or more persons to be a director of a member Bureau, on such terms and conditions as the Company may think appropriate;

 

(d) to cause to be written and printed, or otherwise re-produced and circulated, gratuitously or otherwise, reports and other documents;

 

...

 

(s) to employ and pay any person or persons to supervise, organise, carry on the work of and advise the Company,

 

(t) to ensure and arrange insurance cover for and to indemnify its officers, servants and voluntary workers and those with members from and against all such risks incurred in the course of performance of their duties as the Company shall think fit;

 

...

 

(Bureaux Members, Associate Members)

 

10(a) as subscribers to the Memorandum of Association, such Management Committees in Northern Ireland as the Board shall at its discretion in all respects admit to membership such persons as shall co-opted onto the Board in accordance with Article 30(a)(ii) shall be members of the Company. Every such Management Committee which shall wish to be admitted to membership shall bear sign and deliver to the Company an application for admission in such form as the Board shall from time to time prescribe. The rights of a member shall not be transferable;

 

(b) the Company shall establish and maintain a register in which there shall be registered the name and addresses of members;

 

11(a) a member may (subject to Section 2 or 3 of the Act) terminate its membership of the Company by giving notice in writing to the Company to that effect;

 

(b) the Board may at its discretion, by a two-third majority of the Board members for the time being, terminate the membership of any member of the Company provided that the Board shall not so act unless and until the member shall have been accorded a right to be heard by the Board or, at its discretion by a duly authorised Sub-Committee or duly authorised representatives of the Board;

 

...

 

Board Composition

 

31(a) the Board shall consist of -

 

(1) Nine individuals elected by the Company as follows. Each member being either a Management Committee member or a co-opted member (but not an associated member) shall nominate one individual for election of the Board. If there are nine individuals nominated they should be deemed to be elected. If there are more nine individuals nominated the election to the Board membership shall be conducted by postal ballot in advance of the Annual General Meeting. The number of votes required to elect an individual shall be four and the members voting shall, in accordance with proportionate representation transferrable voting system indicate on the ballot to whom their vote should be transferred.

 

(ii) The Board shall have the right to co-opt not more than three persons to serve as a co-opted members of the Board for a specified period of time. Such members need not be either a member or associated member of the Company and shall be admitted as members of the Company from the date of their co-option of the Board in accordance with Article 10(a) above.

 

(iii) The chairperson, vice-chairperson and treasurer are nominated by the members of the Company. If there is one nomination for each post the nominated individual shall be deemed to be elected. If there is more than one nomination for each post the member shall elect the officers at the Annual General Meeting. These officers shall be eligible for re-election annually.

 

(iv) The minimum number of Board members shall be 12 and the maximum number shall be 16.

 

... ."

 

3.8 Mr Callaghan, in his evidence, which the tribunal accepts, explained that, at present each Bureau in Northern Ireland is a member of the respondent. There are 13 operational Bureaux, plus there are co-opted members, in accordance with the said Articles of Association. Under the said Articles of Association, referred to above, on the Board of the respondent there are representatives elected from the said Bureaux in Northern Ireland as a whole. There is therefore not an individual representative from each Bureau on the Board.

 

3.9 In relation to the operation of the terms of the Membership Agreement, referred to previously, the claimant accepted that the logo of the Citizens Advice, as referred to in the Membership Agreement, appeared on all documents and leaflets, provided by the respondent for use in the office of Newtownabbey; albeit, as appropriate, some would be stamped, for example, with the name, address, telephone number, etc of the office in Newtownabbey. Letters would also have on them the said logo but the specific letterhead would refer to Newtownabbey and the address of the office. These would also be in use in the Newtownabbey offices a number of specific Newtownabbey documents, giving, for example, opening hours and addresses of outreach centres operated by Newtownabbey in community centres. He also confirmed the respondent provided standard/template policy documents for use by Newtownabbey relating to health & safety, disciplinary, grievance, redundancy, equal opportunities but also all the other Bureaux in Northern Ireland. He acknowledged that the respondent was only involved, as per the Membership Agreement, in the appointment of the District Manager (see later). Indeed, when he was appointed Deputy Manager in Newtownabbey, it was an internal promotion decision made by the District Manager, who is referred to as the Manager in the Agreement. The claimant agreed that the respondent carried out audits to ensure compliance by Newtownabbey with the respondent's policy and procedures, as referred to in the Membership Agreement. Information management systems, case-management recording systems and IT systems and back-up IT systems were set up and operated by the respondent for use across all the Bureaux in Northern Ireland. The claimant further accepted, as an employee at Newtownabbey, any disciplinary decisions, grievance issues would be determined by the District Manager. Insurance cover for Newtownabbey, was required to be obtained by the respondent, for the use by all Bureaux in Northern Ireland, including Newtownabbey. Training was provided by the respondent. The claimant also accepted that, when he was working with Newtownabbey, he had a contract of employment between himself and Newtownabbey. Similarly, when he came to be employed by the respondent, he entered into a new contract with the respondent. When he was working for Newtownabbey, his salary was paid by Newtownabbey. Similarly, when he was employed by the respondent, his salary was paid by the respondent.

 

3.10 Mr Callaghan, in his evidence, explained, which was not disputed by the claimant that, in relation to recruitment of a manager, under the Membership Agreement, involvement by the respondent only related to the recruitment of the manager, known as the District Manager in Newtownabbey and who was the 'chief local officer'. It had no involvement with the employment of any other employee at Newtownabbey. The local Management Committee decide the terms and conditions and salary scale for the recruitment of any manager employed at Newtownabbey, including when the manager would start and his precise job description/ personnel specification; albeit Mr Callaghan had to agree that any such job description/personnel specification drawn up by the said local committee would have had to comply with the terms of the Membership Agreement. As stated previously, under the Membership Agreement, the respondent would provide to Newtownabbey, and the other Bureaux in Northern Ireland, standard templates for disciplinary procedures, grievance procedures, redundancy, etc, which would therefore have to be included, as appropriate, in the job description/personnel specification upon the recruitment of any manager. He acknowledged that, if the Local Management Committee wished, for example, to change the criteria from three years' relevant experience to five years' relevant experience, then it would be expected that the Local Management Committee would consult with the respondents, albeit the final approval of any such criteria would be for the Local Management Committee provided, if appropriate, it complied with the terms of the Membership Agreement. In relation to the interview panel for the recruitment of any such manager, Mr Callaghan accepted that the panel would consist of three people, one of them a senior member from the respondent, the other two from the Local Trustee Board; but at all times, the respondent would therefore be a minority member of the panel. He acknowledged the member of the panel from the respondent was a member of the panel because it was recognised he would be more likely to have relevant operational experience, relevant to the particular role, in comparison to the Local Trustee Board members. He emphasised the respondent therefore had no role in the recruitment of a manager, other than as a member of the panel, as referred to above. The interview panel would then make a recommendation to the Local Trustee Board, who would then make the final decision in relation to the relevant appointment.

 

3.11 Mr Callaghan agreed that the respondent provided a shared system for provision of information called 'Adviser Net' for use across all bureaux in Northern Ireland. He further accepted that, although most of the information which had been provided to clients at a local bureau would be information provided by the respondent, Newtownabbey and other local bureaux are, as appropriate, able to use other sources of advice, provided they are considered by the respondent to be authorative sources, such as the Law Centre, NI Direct. Consistent with the terms of the Membership Agreement, any such other sources of authoritative advice used by Newtownabbey required to be consistent with information provided by the respondent in its documentation distributed by way of Adviser Net. Mr Callaghan accepted that the respondent provided a lot of training to bureaux, including Newtownabbey, which the claimant would undoubtedly have availed of but he maintained that other training providers could be used; but again would be subject to ensuring that any such training provided was consistent with the respondent's policies, procedures etc. He also acknowledged that, if a member is in breach, ultimately, pursuant to Paragraph 21.1 of the Membership Agreement, it is for the respondent to decide any sanction; but by way of contrast, pursuant to Paragraph 21.2 of the Membership Agreement, if the respondent was in breach, the member has to request that the breach be investigated. However, he disputed any such difference was of any practical difference. He pointed out a member bureau, such as Newtownabbey, could withdraw from the Membership Agreement if any dispute could not be satisfactorily resolved.

 

4.1 Having carefully considered the submissions of the representatives, and after applying the legislative provisions and guidance set out in the legal authorities referred to in the previous paragraphs of this decision, the tribunal, in light of the facts as found by it, reached the following conclusions, as set out in the following sub-paragraphs, in relation to the issues, the subject-matter of this pre-hearing review.

 

4.2 It has to be accepted that, having regard, in particular, to the terms of the Membership Agreement between Newtownabbey and the respondent, the respondent exercises a certain degree of control over Newtownabbey, as it carries out its day-to-day business. Indeed, in the judgment of the tribunal, the degree of control, as set out in the terms of the Membership Agreement, is not dissimilar to the terms of a Franchise Agreement commonly to be found between a franchisor and a franchisee; but which would not normally give rise to the concept of 'associated employers' for the purposes of the 1996 Order. Certainly, pursuant to the terms of the Membership Agreement, there is a requirement of consistency in relation to branding, policies and procedures, advice and how all day-to-day operations are carried out and managed. Undoubtedly, the respondent plays a role in the appointment of the manager, the senior person in the Newtownabbey office. However, the respondent's involvement in the appointment of the said manager only relates to the manager and not to other more junior employees. Secondly, the member of the interview panel from the respondent is at all times a minority member of that panel; albeit he/she may be very persuasive because of that person's experience; but, ultimately, the interview panel make a recommendation to the local Board who take the final decision. It is also relevant, in this context, to note, although a representative from the respondent has to be invited to attend General Meetings of Newtownabbey and has the right to speak he/she has no vote at such meetings. Further, as set out in the Articles of Association of the respondent, although Newtownabbey is a member of the respondent, it does not have an automatic right to a seat on the Board of the respondent; albeit, depending on the nominations/ election, amongst the other Bureaux members of the respondent, it may have such a seat on the Board for a particular period. However, even if that is the case, it is only one member of the Board and does not have any controlling vote.

 

4.3 It has to be recognised that there is some divergence in the legal authorities, as referred to previously, in relation to this issue of who, at any material time, are 'associated employers', for the purposes of the 1996 Order. However, although the concept of voting/shareholding control has been the subject of some exceptions, as seen in the ' Zarb' line of authority, where some degree of 'de-facto control' has been permitted, the factual situations in all those cases, in the tribunal's view, was very different to the factual situation in the present proceedings, as found by the tribunal. In particular, the present proceedings do not involve issues relating to partnership and/or company structural issues, which arose in such cases and which, as found by the appeal tribunals, were clearly adopted by the relevant parties in order to avoid their legal and statutory obligations. Further, in the tribunal's judgment, the present proceedings, on the facts as found by the tribunal, do not establish there was the necessary legally binding agreement, to give one shareholder control over the other, referred to in Laidler, which suggested a potential softening of the strict voting/shareholding control test set out in Newbold, neither under the Membership Agreement and/or the Articles of Association of Newtownabbey and the respondent. Even in Chapman, subject to the obiter comments of Balcombe LJ and Staughton LJ, the judgment of Mustill LJ, in Laidler, was followed.

 

4.4 The obiter comments of both Lord Justices were somewhat general in the circumstances. Balcombe LJ's comments, where he suggests 'it might in circumstances be relevant to know about the 'de-facto control'', was, in essence, merely a reflection of the fact that, in particular cases, such as Zarb, there can be exceptions to the strict shareholding/voting control test seen in Newbold; as a means to reflect that the particular arrangements entered into are for all intents and purposes the equivalent of the strict shareholding/voting control test by the shareholders in General Meetings. Similarly, Lord Justice Staughton refers to the ability of a person 'to direct the voting of another by force of personality or for economic reasons or by some other such means (undefined) without any legal right to do so'. Again this recognises there can be some exceptions. Certainly, in the reported cases where exceptions have been permitted, there has to have been something more than mere force of personality/ economic reasons established to show a party has something equivalent to the degree of control over the other party established by shareholding/voting control by shareholders in General Meetings.

 

4.5 The tribunal is not satisfied, on the facts as found by it, the arrangements between Newtownabbey and the respondent, reflected in the Membership Agreement and/or the said Articles of Association established, that the respondent, in reality, had that sufficient level of control which meant the respondent could direct the voting of Newtownabbey. There was no evidence before the tribunal which showed the respondent, by force of personality or for economic reasons had such degree of control. In the judgment of the tribunal, for any such exception to be based on such matters, in circumstances where there was no such shareholding/voting control, would require clear and specific evidence, none of which was established in the present proceedings. In particular, the terms of the Membership Agreement, although it established a certain level of day-to-day operational, primarily for purposes of consistency across all the bureaux, control it was not sufficient, in itself and without more, to be an exception to the shareholding/voting control test, confirmed in Newbold and Laidler.

 

4.6 The tribunal is confirmed in that view by the recent decision in Schwarzenbach. The Employment Appeal Tribunal was clearly still seeking to apply the shareholding/voting control test; but allowed some evidence of 'de-facto control' to ensure that, due to evidential difficulties for the claimant, the above test could still be shown to be applicable and relevant. That is a very different situation to the present proceedings, where no such evidential difficulties arose.

 

5. In light of the foregoing, the tribunal decided:-

 

(1) The respondent, Northern Ireland Association of Citizens Advice Bureaux, was not an 'associated employer' with Newtownabbey Citizens Advice Bureau Limited, at the relevant and material time, for the purposes of Article 4 of the Employment Rights (Northern Ireland) Order 1996.

 

(2) The claimant was therefore disqualified from the right not to be unfairly dismissed by the provisions of Article 140 of the Employment Rights (Northern Ireland) Order 1996, regarding a minimum period of continuous employment with the respondent.

 

(3) The tribunal therefore does not have jurisdiction to determine the claimant's said claim of unfair dismissal and it is dismissed.

 

(4) A Case Management Discussion will be arranged, in due course, for the tribunal to give relevant case-management directions/orders to enable the claimant's claims of breach of contract in relation to notice pay and/or holiday pay to be determined.

 

 

 

 

 

 

 

Employment Judge

 

 

Date and place of hearing: 19 December 2016, at Belfast

 

 

Date decision recorded in register and issued to parties: