Case No 1404494/2020Venue PlymouthHearing 19 February 2021
Between
Mrs C DrewClaimantParenta Training LtdRespondent
Before
Employment Judge N J RoperIn person for claimantMiss H Farrow (instructed by the Respondent) for respondentDate 19 February 2021
JUDGMENT
The judgment of the tribunal is that: 1: The claimant’s claim for unfair dismissal is hereby dismissed; and 2: By Consent, the claimant succeeds in her claim for unlawful deduction from wages, and the respondent is ordered to pay the claimant the sum of £450.00.
REASONS
[1]This is the judgment following a preliminary hearing to determine the employment status of the claimant. In this case the claimant Mrs Clare Drew has brought claims alleging unfair dismissal and unlawful deduction from wages. The claims are denied by the respondent. This tribunal's jurisdiction to hear these various claims turns on the claimant’s employment status, and whether the respondent was an “associated employer”.[2]This has been a remote hearing on the papers which has been consented to by the parties. The form of remote hearing was by Cloud Video Platform. A face to face hearing was not held because it was not practicable and all issues could be determined in a remote hearing. The documents that I was referred to are in a bundle of 81 pages, the contents of which I have recorded. The order made is described at the end of these reasons.[3]I have heard from the claimant, and I have heard from Mr A Presland on behalf of the respondent.[4]There was a degree of conflict on the evidence. I have heard the witnesses give their evidence and have observed their demeanour in the witness box. I found the following facts proven on the balance of probabilities after considering the whole of the evidence, both oral and documentary, and after listening to the factual and legal submissions made by and on behalf of the respective parties.[5]The respondent company is Parenta Training Ltd which as its name suggests is a company which delivers training. The claimant Mrs Clare Drew commenced employment with the respondent on 14 June 2016 and worked as a Trainer/Assessor delivering qualifications in childcare, team leading, management and functional skills.[6]Just after the claimant commenced employment, a limited liability partnership was formed and it was established as Parenta Partners LLP and registered at Companies House (“the LLP”). Employees of the respondent were invited to join the LLP, and after the expiry of the claimant’s initial three-month probationary period with the respondent, she left her employment with the respondent and became an employee of the LLP. The relevant paperwork which invited her to become a member of the LLP and the LLP Members’ Agreement itself made it clear that she was to remain an employee, and also suggested that any accrued employment rights with the respondent would be protected on joining the LLP. (This last assurance was probably incorrect for the reasons explained below).[7]In early 2020 the claimant became aware that the respondent failed to pay the necessary tax on the claimant’s earnings, and failed to make agreed pension payments on time. The claimant decided to leave the LLP. At the end of the financial year on 31 March 2020 she resigned as a member of the LLP and re-joined the respondent. She carried on working very much as before, now in the respondent’s employment again, until she was dismissed by reason of redundancy with effect from 1 July 2020. In the meantime, the respondent had imposed a pay reduction of 15% without the claimant’s consent, and may have made other deductions with regard to pension payments, which the claimant asserts were unlawful deduction from her wages in the total sum of approximately £450.00[8]The claimant subsequently issued these Tribunal proceedings in time claiming both unfair dismissal and unlawful deduction from wages against the respondent.[9]This hearing was originally listed to determine the claimant’s employment status during her time when she worked for the LLP. This may have been as a result of a minor understanding, because the respondent now concedes that the claimant was an employee initially of the respondent from 14 June 2016, then of the LLP from September 2016, and then again of the respondent from 1 April 2020. The respondent does not dispute the employment status of the claimant. Having consider the evidence and the documents, I agree that contention, and I so find.[10]It became clear that the respondent disputes that the respondent and the LLP were associated employers, with the result that the claimant’s accrued length of service with the LLP does not count towards her second period of employment with the respondent, with the result that the claimant does not have sufficient continuity of service to pursue her unfair dismissal claim.[11]Having heard from Mr Presland, who is the CEO of the respondent, I find as follows. The respondent is a wholly owned subsidiary of MBH Corporation Plc (MBH) which is a listed public limited company. Mr Presland owns some shares in MBH, but cannot be said to have or to be a controlling interest in MBH. On the establishment of the LLP, the two designated members were Mr Presland and his wife, but they do not own a controlling interest in the LLP because the LLP is owned by all of the LLP members for their joint benefit and the LLP is managed by a team of managers who do not own it.[12]Having established the above facts, I now apply the law.[13]The relevant statute is the Employment Rights Act 1996. Under section 94(1) the right not to be unfairly dismissed is limited to employees. Under section 108(1) the right to pursue a claim for unfair dismissal under section 94 does not apply to the dismissal of an employee unless that employee has been continuously employed for a period of not less than two years.[14]Under section 218(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 does not break the continuity of the period of employment.[15]Under section 231, 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.[16]I have considered the following cases: Merton London Borough Council v Gardiner [1981] ICR 186 CA; Southwood Hostel Management Committee v Taylor [1979] ICR 813 EAT; and Pinkney v Sandpiper Drilling Ltd and others [1989] ICR 389 EAT.[17]The Court of Appeal considered the definition in section 231 in Merton London Borough Council v Gardiner, and held that the definition of “associated employers” is exhaustive. For an employee to sustain a claim of continuity between two employers under section 218(6) of the Act they must fit the definition of associated employers in section 231, otherwise they will not be legally associated. In addition, it held that the word “company” means limited company. This should be read in conjunction with the decision of the EAT in Pinkney which held that a partnership of separate limited companies should fall within the definition where the operation of the partnership was directed by a management committee, the majority of whose members were nominated by subsidiary companies within the group.[18]However, the position is different in this case. The respondent is a wholly-owned subsidiary of MBH, and under the control of MBH. The respondent is not a company of which the LLP either directly or indirectly has control. The definition of associated employer in section 231(a) is therefore not met. In addition, the definition in section 231(b) is not met because the respondent and the LLP are not companies of which a third person (directly or indirectly) has control. In the first place the LLP is not a limited company, and in any event MBH does not have control of the LLP as well as the respondent.[19]For these reasons, and with some reluctance, I conclude that the LLP and the respondent are not associated employers within the necessary statutory definition. Accordingly, the claimant’s continuity of employment was not protected under section 218(6). The claimant has insufficient continuity of employment under section 108(1) to qualify for her claim for unfair dismissal. For these reasons I dismiss the claimant’s unfair dismissal claim.[20]The claimant does have a valid claim against the respondent for unlawful deductions from her wages during her time with the respondent, and the parties have agreed that judgment is to be entered for the claimant in this respect in the sum of £450.00.[21]For the purposes of rule 30(6) of the Employment Tribunals Rules of Procedure, the issues which the tribunal identified as being relevant to the claim are at paragraph 1; all of these issues were determined; the findings of fact relevant to these issues are at paragraphs 5 to 11; a concise statement of the applicable law is at paragraphs 13 to 16; how the relevant findings of fact and applicable law have been applied in order to determine the issues is at paragraphs 17 to 19 ; and the agreed award for unlawful deduction from wages is set out in paragraph 20.