United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the First Appellant (EAT/1448/96) For the Second Appellant (EAT/1449/96)	MR J BOWERS (of Counsel) Anthony W Jeremy & Co Solicitors Crown Court Duke Street Cardiff CF1 2AY THE SECOND APPELLANT NEITHER PRESENT NOR REPRESENTED
For the Respondent	MISS S LITCHFIELD (Legal Advisor) The Solicitor Department of Trade & Industry 10-18 Victoria Street London SW1N 0NH


 


MR JUSTICE KIRKWOOD: This is an appeal from a decision of an Industrial Tribunal at Cardiff on 20th August 1996 that Mr Brooke and Mrs Hill were not employees of Imageline Fashions Ltd; and not entitled to payments out of the National Insurance Fund pursuant to ss. 166 and 182 of the Employment Rights Act 1996.

Mr Brooke was the managing director and general manager of the company. Mrs Hill was a director, company secretary and factory manager. They each owned one share in the company. There were no other shareholders. The company went into liquidation in about January 1996. Each of the appellants applied for payments from the Secretary of State under ss. 166 and 182. That was refused. The matter went to the Industrial Tribunal.

In its reasons, the Industrial Tribunal set out the background facts in about as short a way as can be conceived. The tribunal said:

"1. ... In order to recover a redundancy and other payments, however, each has to show that he/she was an employee within s.230, ie an individual who has entered into or works under a ... contract of employment. Contract of employment means at contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing."

The tribunal had before it, in forms completed by the appellants, the information that there was not a written contract of employment, but it did not address the question any further in its reasons.

The tribunal referred to three decided cases in this field, and said:

"1. ... Although the present applicants paid income tax on the PAYE system and Class 1 National Insurance Contributions, neither was under any control as there was no-one to whom they reported or who could give them warnings or specific instructions."

At the end of the extended reasons:

"2. ... We consider, however, that we are bound by precedent to conclude that they were not employees."

The Industrial Tribunal was asked to review its decision, but refused to do so saying:

"All matters were taken into account."

The case presents the first difficulty that the extended reasons are, in the view of this Appeal Tribunal, quite inadequate in their failure to make findings of fact and to set them out so as to demonstrate the manner in which the tribunal weighed the one feature against the other and reached a conclusion as it should have done by looking at the case in the round. For that reason, we are unanimously of the view that the decision cannot stand and that the case must go back to an Industrial Tribunal for proper findings to be made on a proper approach to the law. That being the case, the appeals will be allowed and the cases remitted.

Additionally, however, and since this matter was before the Industrial Tribunal, the Employment Appeal Tribunal has had occasion to consider this type of problem on two occasions, and on each of those occasions the President of the Employment Appeal Tribunal for the time-being endeavoured to set out definitive advice for Industrial Tribunals and others. Their conclusions however differed. The Industrial Tribunal will no doubt wish to remind itself of the decision of Mummery J (President) in Buchan v Secretary of State for Employment and Ivey v Secretary of State for Employment [1997] IRLR 80. The Industrial Tribunal will also wish to remind itself of the decision of Morison J (President) in the Employment Appeal Tribunal's decision in Secretary of State for Trade & Industry v Mr P Bottrill [EAT/516/97]. (It is not, as far as we are aware yet in the reports, but I have no doubt that Mr Bowers and/or Miss Litchfield will ensure that the Industrial Tribunal has that decision before it when it comes to consider these matters).

We shall allow the appeal for the reasons I have given and remit the cases to a differently constituted Industrial Tribunal.

Legal Aid taxation for the first appellant granted.