Employment Judge AdkinIn person for claimantDate 16 May 2025
JUDGMENT
[1]Mr Ekkachai Somboonsarn, the First Claimant’s complaints of unfair dismissal and breach of contract (wrongful dismissal) against the First and Second Respondent are not well founded and are dismissed.[2]Ms Halyna Duda, the Second Claimant’s complaints of unfair dismissal and breach of contract (wrongful dismissal) against the First and Second Respondent are well founded and succeed.[3]The First Respondent shall pay the Second Claimant:a. a basic award of £5,169.28;b. a sum for breach of contract in the sum of £1,400, less deductions for tax and income tax.[4]The Second Respondent shall pay the Second Claimant:a. a basic award of £5,815.44;b. a sum for breach of contract in the sum of £1,400, less deductions for tax and income tax. 1 of 22
REASONS
[1]I had the benefit of the following evidence: 1.1. a large bundle of documents of some 3,737 pages; 1.2. a further bundle of 194 pages and a set of documents from the Claimant entitled additional disclosures which contained 8 documents of each a number of pages. 1.3. I also had witness statements from both Claimants and also from witness statements from Jiraporn Somboonsarn and Mrs Vanida Walker who is the owner of both Respondents. Parties[2]There is a lengthy history involving both Claimants and both of the Respondent witnesses and the Respondent businesses and prior litigation.[3]There is a judgment of His Honour Judge Davies-White KC sitting as a Judge at the Chancery Division (Walker v Somboonsarn [2024] EWHC 919 (Ch)), the High Court which was sent out on 26 April 2024 following on from a hearing which took place in May 2023. I defer to findings of fact in the judgment. Nothing that I have said here is intended to make any different finding.[4]I followed the invitation of the parties to use the witnesses’ English nicknames as had been done in the High Court. The underlying context of litigation is a family dispute as much as this is a commercial dispute. These are the names that the parties use for each other.[5]The First Claimant is known as Eggy or Ekk. The Second Claimant, who is his wife, is known informally as Helen.[6]The Respondents first witness Mrs Vanida Walker is known as either Vanida or Wanda. She is the First Claimant’s mother. The Respondent’s other witness is her daughter (the First Claimant’s sister) who is known as Jerry.
Findings of Fact
[7]The focus of this decision is different to the High Court. That judgment related to in the beneficial interests i.e. the ownership of some businesses including the First and Second Respondent businesses and some other businesses and properties in London. 2 of 22[8]The focus here initially is on whether there was an relationship of employment between the Respondents and the Claimants i.e. were the Claimants employees as defined in section 230(1) of the Employment Rights Act 1996 such that they can bring claims of unfair dismissal and breach of contract in the Employment Tribunal?[9]The focus is also on the circumstances in which those employment relationships came to an end.
Background
[10]In 2000 or 2001 a business called Euro Union Based Company Limited (not one of the named Respondents) acquired the lease at 14 Charlotte Street which was then thereafter operated as a Thai restaurant by the family.[11]On 29 August 2001 Thai Metro Limited was incorporated.[12]On 29 January 2003 the First Respondent Anglo Thai Limited was incorporated and began trading as the Thai Metro Restaurant at 14 Charlotte Street. It later moved in 2003 to 38 Charlotte Street with a new venture taking its place at 14 Charlotte Street.[13]The First Claimant was first appointed as a statutory director of the First Respondent on 29 January 2003 and resigned on 10 July 2006, before being reappointed on 1 December 2006 and resigning on 22 May 2024 as a result of the High Court decision.[14]The Restaurant at 14 Charlotte Street had a variety of names, initially FIN, then CHU CHI and then finally Siam Central. That business was for a period of time managed by a manager hired by the First Claimant, who occasionally helped at the business at 38 Charlotte Street, who was subsequently replaced by other managers[15]There are various documents relating to properties and businesses in which the signature of Vanida was forged by her son Eggy. His contention in the hearing before me was that this was purely for convenience because she was out of the country and she in any event could not read and write business English.[16]Conclusions about the circumstances of those forged signatures are contained within the High Court judgment. Beginning of C1’s work for Rs[17]The First Claimant Eggy says that he began working for the First Respondent, Anglo Thai Limited at this time.[18]On 12 August 2003 the Second Respondent Fishfin Catering Limited was incorporated and began trading as Siam Central. At times material to this and prior to the decision of the High Court the First Claimant was the alcohol and premises licence holder for both restaurants. 3 of 22[19]The First Claimant was first appointed as a statutory director of the Second Respondent on 12 August 2003 and resigned on 10 July 2006, before being reappointed on 1 January 2007 and resigning on 22 May 2024 as a result of the High Court decision.[20]In 2004 Fishfin Catering Limited opened Fin Restaurant at 14 Charlotte Street. Scoffle[21]On 27 October 2006 Scoffle Limited was set up by the First Claimant. That business operated under the “Papaya” at four different sites. This was always the First Claimant’s venture, owned and operated by him and the ownership of that business was not in dispute.[22]The Second Claimant says that she only started doing any work for Scoffle Limited in 2010. She was doing similar work, financial and administrative to the work she was doing for the First and Second Respondents.[23]That business was liquidated on 19 December 2023. Eventually that business was run by Eat Thai Limited. The former was described as a “grab and go” takeaway business offering Thai food on a convenience basis. The First Claimant explained that this was something like Pret a Manger but for Thai food but unfortunately due to the Covid 19 pandemic lockdown and drop off in people coming in afterwards that business failed. C2’s employment[24]In the period 2004-2006 the Second Claimant was working for a company called Ismail & Co a firm of accountants. She did a degree in business and finance and has worked for over two years as a trainee accountant.[25]It was in 2007 that the Second Claimant started working for the Second Respondent.[26]In 2007 the First Claimant and Second Claimant got married and his mother Vanida and sister Jerry attended that wedding. Wages[27]In 2007 there was a difficult period where the First Claimant says that he took no wages because the business was struggling. He said he later recovered this shortfall to himself through payment of dividends. His policy on salary appears to have been to pay himself a salary which typically would be consistent from month to month but then would occasionally change it and would change it where he needed to support the financial help of the business.[28]The Second Claimant’s salary would be subject to these occasional variations. Jerry returns[29]In 2009 Jerry returned from living overseas for a long period of time. She started working for the Scoffle Limited business. She was on the payroll as an employee. 4 of 22[30]She said that at that time she admired the First Claimant her brother and felt that the was supportive of her. She said she did not have much to do with the other businesses.[31]In 2016 the First Claimant says that his salary were £16,204 for the year. He said that sometimes he paid himself less than minimum wage. Ealing property[32]On 20 January 2017 TN Limited purchased 33 The Grove, Ealing W5 3SL for £1.6 million. There was no mortgage taken in connection with that property. The monies for that came from the First Claimant and from the Respondent businesses.[33]On March 2019 Jerry resigned from Scoffle Limited.[34]Also in 2019 there was a visit from Vanida’s sister from Thailand. She suggested that the family relationships were “off” and whether because of this of whether she was identifying some difficult dynamic within the family there was then a significant deterioration in family relationships. Pandemic[35]In 2020 and in particular during the pandemic the First Claimant says and I accept that he filled in for personnel shortages by carrying out shopping and deliveries and the like for the Respondent businesses. High Court proceedings[36]In the High Court judgment HHJ Davies-White KC evidently heard quite a lot of evidence about the day-to-day management and other working roles of the protagonists in this employment tribunal claim. Ultimately he concluded that that was marginal reference to the focus of the High Court proceedings, which was about the beneficial ownership of the businesses rather than who was doing what on the day-to-day basis. For that reason he did not get into a detailed fact finding on those responsibilities but made a broad observation at paragraph 476 where he said: “as a matter of generality … … it seemed to me that Wanda's role was less than she asserted and more than Ekk asserted and the same is true, in reverse, as regards Ekk”[37]In the Employment Tribunal proceedings I was directed to some of the witness evidence that had been filed in the High Court. Given that in those proceedings no detailed findings were made about who is doing what, it seems to me that I can take account of what Wanda was saying was her son’s role in the early days of the businesses by reference to that evidence rather than the conclusions of the High Court.[38]In November 2020 Mrs Walker filed an affidavit in support of legal action that she was taking against her son Eggy in the High Court. That document is in both Thai and English. 5 of 22[39]Extracts from that affidavit relevant to the present claim are as follows. 21. In 1999 Eggy showed me around a Greek restaurant premises at 14 Charlotte Street. The rent was £60,000 per year. Eggy suggested that I take on the lease, as he would prefer to work for me as his mother rather than friends. Eggy could do the front of house work that he used to do at SILKS & SPICE plus the paperwork, which of course I could not do because of my illiteracy in English. I would discontinue the event and festival outside catering business and run the back of house operation. 26. At the outset Eggy’s role was front and house, bookkeeping and general paperwork. He was responsible for:• Recruiting and managing the front of house staff• Training staff for front of house duties• Ordering alcoholic drinks from suppliers for bar and menu• Contacting credit card companies where problems with terminals occurred• Contacting EPOS supplier if problems with tools occurred• Working as restaurant manager during day and evening 27. As far as the bookkeeping and general paperwork were concerned, it was for Eggy to:• assemble deposits and keep accurate records relating to accounts receivable and payable• keep accurate financial records for the company• correct entries as necessary• bring books to trial stage in preparation for the accountant to create financial statements• Cash up the daily takings of the restaurant• calculate and organise weekly tips for staff• make cash deposits and withdrawals from the company bank account• make weekly payments to staff for tips• run weekly staff payroll• organise weekly staff payroll via check or cash• organise regular servicing of front and back of house equipment (when informed) as and when necessary• check all utility payments and meter readings were correct• organise payments made to landlord• organise all necessary insurance for the premises including fire and business insurance[40]It is evident that the Claimant dealt with all correspondence at that stage.[41]In the affidavit date in 2020 it suggested that Eggy (C1) began to delegate to managers and his wife Helen (C2) who was studying bookkeeping: 30. From the first day Thai Metro open, which was in the winter of 2000, it was busy and profitable. During 2001 to 2002 it continued to 6 of 22 thrive. I continued my duties as summarised above, but in contrast Eggy delegated most of his “front of house” duties at the restaurant to George Polikov, who had been employed from the start and he replaced Eggy as the full-time restaurant manager. Eggy told me that he wanted to focus on all the takings, bookkeeping for the payment of staff salaries (including his own), tips, VAT and tax as well as the scheduling of contractors to clean the extractor, checking the fire alarm etc.[42]She says that he then cut down his responsibilities significantly to purely collecting daily takings, calculating and organising weekly tips and staff pay; making cash deposits and withdrawals from the company bank account and letting in monthly maintenance contractors.[43]In respect of the Second Claimant she says: 31: “Helen took on bookkeeping and general paperwork taking responsibility for:• Assembling deposits and keeping accurate records relating to accounts receivable and payable• Making ledger entries• Keeping of accurate transactions• Making ledger entries and ensuring the accuracy of all transactions (correcting entries as necessary)• Keeping accurate financial records for the company• Bringing books to trial stage in preparation for the accountant to create financial statements• Running weekly staff payroll• Organising regular servicing of front and back of house equipment (well informed by Eggy) and when necessary• Checking that all utility payments and meter readings were correct• Organising rent and other payments to the landlord• Arranging all necessary insurance for the premises including fire and business insurance 32. As a result by the end of 2002 Eggy had largely off loaded the work he originally took on at the outset of the Thai Metro project; and it was the profits of my business which was paying the wages of the individuals on whom he had off loaded that work.[44]On 3 December 2020 Vanida applied for a freezing injunction against Eggy. That freezing injunction was granted on 27 January 2021.[45]On 19 December 2023 Scoffle Limited was dissolved. 7 of 22 Position in April 2024[46]By April 2024 the point at which the High Court Judgment and Order were promulgated, the manager of Siam Central the restaurant operated by the Second Respondent was a man called Daniel.[47]The manager of Thai Metro the restaurant operated by the First Respondent was someone called Pawan who was a friend of the Claimant.[48]At this stage the Claimant says that he worked in part from Unit 4d Standard Industrial Estate which is out to the East of London near the London City Airport.[49]The Second Claimant did all of her work from there.[50]The First Claimant would do regular runs into the restaurant businesses operated by the two Respondents but also until it dissolved Scoffle to collect tips and perform other duties which I am going to set out. High Court Judgment & handover of Respondent businesses[51]The High Court Judgment was that there were three companies which were beneficially owned by Vanida Walker rather than her son Eggy which included the First and Second Respondent and two properties, 78 Hermit Road and 38 Charlotte Street. That finding did not apply to a couple of properties: 22 Bloomsbury Mansions and 3 Chargrove Close.[52]On 22 May 2024 Vanida and Jerry visited the restaurant Anglo Thai operated by the First Respondent. They say in summary that it was in a state. They said that the manager and staff were drinking and that there was a complete lack of respect among the staff.[53]Powan had resigned following the High Court Judgment, although this had not been notified to Jerry.[54]The Second Claimant provided the rotas and information to be “keyed” regarding staff payments for that month. Jerry says that she was unaware that the Claimants received salary payments from the businesses. She says that the discovered ghost employees shown on payroll documents. She is critical of the documentation that was handed over to her following on from the hand over required by the decision of the High Court.[55]There are various other criticisms that the Respondent witnesses make of the Claimants. They say that there were difficulties in transferring the alcohol licenses and that Eggy deliberately tried to delay this.[56]They say that in regard to the electrics an engineer from Aspect attended on 19 May 2024. Apparently this electrician laughed at the documentation which had been provided from a previous visit. It was initially suggested that this was a forgery, although nothing like sufficient evidence to demonstrate a fraud has been produced during the course of this hearing. There were also queries about the commercial gas certificate for Anglo Thai. 8 of 22[57]On 16 July the dumb waiter at Anglo Thai broke down. It had apparently been left in a bad state of repair. Handover of paperwork[58]Jerry maintains that the paperwork needed to file accounts with Companies House was in a mess and not properly provided, or at least electronic documentation was provided but no physical paperwork to back it up. Helen is absolutely adamant that the paperwork was handed over by her in a professional way and the necessary documents handed over.[59]There is a dispute about whether deadlines had been missed.[60]My impression is that relations between the Claimants and Eggy’s mother and sister by this stage were at such a low ebb in the wake of the High Court decision that each side was inclined to think the worst of the other. There was a total lack of trust by this stage.[61]The Claimants have highlighted various documents which show that they did take maintenance seriously and documentation which suggested that they were attempting to hand over the accounting files.[62]Many of the matters complained about by the Respondent witnesses appear to be the sort of niggling problems which are likely to arise in the ongoing management of a restaurant which have come to light in the context of an acrimonious handover of the business. I formed the impression that the breakdown in the personal relationship is the predominant cause why these matters are being complained of rather than it genuinely being the case that the restaurant had been allowed to decay into a very poor state to a blameworthy extent.[63]As to paperwork and the accounts, I formed the impression that Helen prided herself on a high level of professionalism in relation to matters to do with accounts. She gave evidence which I accepted and is supported by documentary evidence that even into the first week of June 5 & 6 June she was continuing to work on VAT returns and tronc returns, to ensure that this paperwork was properly completed. This suggests that she took her responsibilities in relation to these matters seriously. Resignation[64]On 19 July 2024 Vanida received resignation letters from both Claimants in relation to both businesses.[65]Jerry’s comment is that she found this bizarre given that they were not employees, they had not performed their duties to a reasonable standard and they were spread to thin to be employees of the restaurants. She said no one at the restaurants could confirm what Eggy and Helen actually did. She also highlighted that Eggy had his own restaurants. 9 of 22 Relationship breakdown[66]One point on which all four witnesses were absolutely agreed was that by the time of the High Court decision the relationship had broken down between the Claimants and the Respondents. There was a complete breakdown in trust and confidence. Each of the four witnesses confirmed that that was a fair characterisation of the state of relationships. Last payments[67]The Claimants were both paid their salaries in the normal way through the PAYE system and provided payslips, on 31 May 2024.[68]The Second Claimant received a gross basic pay from the First Respondent Anglo Thai of £1,400. From that various deductions were taken for income tax, national insurance, NEST. She also received the same sum of £1,400 gross less deductions from the Second Respondent Fin Fish Catering Limited.[69]Eggy’s equivalent payments were £1,333 gross basic pay from 31 May 2024 again less deductions. Although there is no NEST deduction for him relating to pension. Eggys equivalent payment from the Second Respondent Fish Fin Catering Limited was £1,430 less income tax and national insurance.[70]By the time of the next pay run on the final day of June 2024 neither Claimant received salaries from the Respondents. Vanida confirmed that that was at her instruction. She also explained that she was getting everything put on a legal footing.[71]It is common ground that there were not written contracts of employment for any of the staff at either of the Respondent businesses. Claim[72]The ACAS conciliation period was 31 July 2024 to 6 August 2024.[73]The claim was presented to the Employment Tribunal on 11 October 2024. Legal Issues[74]There was no case management hearing in this matter.[75]I identified the issues at the start of the hearing. The issues were as follows: 75.1. Were the Claimants employees of the Respondents within the meaning of s.230 of the Employment Rights Act 1996? 75.2. If so were they constructively dismissed?[76]There is also a breach of contract complaint in respect of notice pay. Again that requires a claimant to be an employee in order for the tribunal to have jurisdiction to hear the claim under Employment Tribunals Extension of Jurisdiction (England & Wales) Order 1994 (SI 1994/1623). 10 of 22 Law Employment status generally
Law
[77]Only employees as defined in section 230(1) of the Employment Rights Act 1996 can bring a claim of unfair dismissal. That definition is as follows: 230 Employees, workers etc. (1) In this Act “employee” means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment.[78]The classic definition of employment status MacKenna J in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497, 515 (endorsed by the Supreme Court in Autoclenz Ltd v Belcher 2011 ICR 1157, SC) identified three particular features of an employment relationship, which is sometimes described as a “contract of service”: “A contract of service exists if these three conditions are fulfilled.(i) The servant agrees that, in consideration of a wage or other remuneration, he will provide his own work and skill in the performance of some service for his master.(ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other’s control in a sufficient degree to make that other master.(iii) The other provisions of the contract are consistent with its being a contract of service.” [emphasis added][79]Subsequent case law has made clear that other factors may be relevant and the Tribunal should stand back and look at the overall picture, but three elements should be considered:(i) mutuality of obligation;(ii) personal performance and(iii) control.[80]Government guidance issued in response to the Taylor reported contained the following: “Someone who works for a business is probably an employee if most of the following are true:• they’re required to work regularly unless they’re on leave, for example they’re on holiday or on sick leave or on maternity leave• they’re required to do a minimum number of hours and expect to be paid for time worked• a manager or supervisor is responsible for their workload, saying when a piece of work should be finished and how it should be done• they cannot send someone else to do their work 11 of 22• they get paid holiday• they’re entitled to contractual or statutory sick pay and to maternity pay or to paternity pay• they can join the business’s pension scheme• the business’s disciplinary and grievance procedures apply to them• they work at the business’s premises or at an address specified by the business• their contract sets out redundancy procedures• the business provides the materials, tools and equipment for their work• they only work for the business or if they do have another job, it’s completely different from their work for the business• their contract, statement of terms and conditions or offer letter (which can be described as an “employment contract”) uses terms like “employer” and “employee”. If most of these do not apply, you should work out if the person is selfemployed”[81]That is helpful guidance, perhaps better understood by non-lawyers than some of the case law.[82]It is clear from case law that Tribunals should not apply a “checklist” approach to employee status, but would nevertheless take a view of the whole picture. Company directors as employees[83]It does not necessarily follow that a director or shareholder of a business is or is not an employee.[84]The Employment Appeal Tribunal gave the following guidance in the case of Clark v Clark Construction Initiatives Ltd [2008] ICR 635 EAT: 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. 12 of 22(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 will 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 (Arenascene).(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 debts could exceptionally have some relevance in analysing the true nature of the relationship, but in most cases such factors are unlikely to 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. [emphasis added] 13 of 22[85]Guidance was also given by the Court of Appeal in the Secretary of State for Business, Enterprise and Regulatory Reform v Neufeld; Same v Howe [2009] EWCA Civ 280; [2009] ICR 1183, which somewhat moderated the strength of the conclusion above at point (6) in Clark: 55 …. Where, however, the contract is not in writing, it will of course need to be proved by other means, and, given the greater informality likely to obtain in one-man companies, the fact and extent of the alleged employee’s control of the company may be a factor for consideration. 61 … If, however, the contract was not in writing, or was expressed only in short form, so that it is necessary to examine the conduct of the parties in order to deduce the content of the contract, the position of the individual and manner in which the company’s affairs were conducted provide the factual setting for the inquiry. 81: Whether or not such a shareholder/director is an employee of the company is a question of fact for the court or tribunal before which such issue arises. In any such case there may in theory be two such issues, although in practice the evidence relevant to their resolution will be likely to overlap. The first, and logically preliminary one, will be whether the putative contract is a genuine contract or a sham. The second will be whether, assuming it is a genuine contract, it amounts to a contract of employment (it might, for example, instead amount to a contract for services). We make clear that we are not of course suggesting that cases raising the first issue are likely to be common, and we think it probable that they will be relatively exceptional. Despite the repeated references in the authorities to the theoretical possibility of a contract being a sham, no such case has been discovered in the principal authorities to which we have been referred. We make no attempt to give any prescriptive guidance as to the resolution of such issues, but we at least offer the following general observations. 84: In a case in which no allegation of sham is raised, or in which the claimant proves that no question of sham arises, the question (or further question) for the court or tribunal will be whether the claimed contract amounts to a true contract of employment. As we have indicated, given that the critical question in cases such as those under appeal is as to whether the putative employee was an employee at the time of the company’s insolvency, it will or may be necessary to inquire into what has been done under the claimed contract: there will or may therefore need to be the like inquiry as in cases in which an allegation of sham is made. In order for the employee to make good his case, it may well be insufficient merely to place reliance on a written contract made, say, five years earlier. The tribunal will want to know that the claimed contract, perhaps as subsequently varied, was still in place at the time of the insolvency. In a case in which the alleged contract is not in writing, or is only in brief form, it is obvious 14 of 22 that it will usually be necessary to inquire into how the parties have conducted themselves under it.[86]The next authority referred to, highlighted by the Respondents was a decision of HHJ Shanks sitting in the the Employment Appeal Tribunal, case reference Bradley Rainford v Dorset Aquatics Limited (EA-2020-000123-BA), which was a small family company owned by two brothers: 14. It is important to note that in this case there was no evidence of any relevant express contract, whether written or oral. If there was a contract of employment or other worker’s contract between Bradley and the company it was therefore necessarily one that was implied from the conduct of the parties and any other relevant circumstances. The decision about whether such a contract should be implied is one of fact for the employment tribunal … 16. From Clark and Neufeld (see: paras [79] to [90] in particular) we take the following propositions in relation to the question whether a director/shareholder is also an employee of a company (which are likely to apply equally to the wider concept of “worker”):(1) There is no reason in principle why someone who is a shareholder and director of a company cannot also be an employee, even if the person has total control over the company;(2) Whether the shareholder/director is an employee is a question of fact for the Tribunal;(3) In cases where matters have been dealt with informally it may be a difficult question as to whether the correct inference is that the shareholder/director was truly an employee;(4) In considering the issue it will be necessary in particular to consider how the parties have conducted themselves, what they have actually done and how they have been paid;(5) Where the conduct of the parties is inconsistent with the existence of a contract of employment or is in some areas not governed by such a contract, that will be an important factor pointing away from a finding that the shareholder/director is an employee;(6) It follows that the lack of any written employment contract or other record thereof, is likely to be an important consideration;(7) The fact that the shareholder/director has control of the company or that his personal investment in it will stand to prosper with the company will be “part of the backdrop” but will not ordinarily be relevant to the issue and can and should therefore be ignored (see: Neufeld para [86]). 15 of 22 (It is right to say that there are many references in Clark and Neufeld to an issue which can (perhaps rarely) arise in this context as to whether or not a company or an agreement is a “sham”. This issue simply does not arise in this case: no-one has suggested that the company was any kind of sham and there was no written agreement which could even arguably be a sham.) 17. Other relevant propositions of law we draw from the authorities are these: (1) The primary underlying question in all these cases is one of statutory, rather than contractual, interpretation; the relevant statutory purpose of the Employment Rights Act 1996 and other employment legislation is the protection of workers who are vulnerable because they are in a relationship of subordination and dependence towards their employers; and a “touchstone” of subordination and dependence is the degree of control exercised by the putative employer over the work or services performed by the individual concerned (see: Uber per Lord Leggatt JSC at paras [69],[71] and [87]); (2) It is open to an employment tribunal to take account of the “subjective” views of the parties as to their obligations and status in ascertaining the terms of any agreement between the parties (see: Carmichael per Lord Hoffman at p1234 D-H.) (3) A genuine right of substitution is inconsistent with an obligation to perform personal services; if there is such a right it does not matter if it is used in fact (see: Autoclenz per Lord Clarke JSC at para [19]). (4) The payment of “salary” with payslips and PAYE/national insurance deductions is a relevant factor which would point towards employment but is by no means decisive in itself; and it may be of little significance if, in a case like this, it is organized entirely by a company accountant for tax reasons without any particular awareness on the part of the putative employee and covers only a small part of the total payments to a shareholder/director (see: Dugdale at paras [23] and [47]). … 27. In relation to “control” it is, we think, important to distinguish between, on the one hand, the control exercised by a shareholder/director of a company over that company, which is generally irrelevant (see: Neufeld para [86]) and, on the other, the control (or lack of it) exercised by the employer over what work the employee/worker does and how, when and where he does it under the (putative) contract, which is of central relevance to the question Judgment approved by the court for handing down Rainford v Dorset Aquatics Limited whether there is a contract of employment (see: Ready-Mixed Concrete) and, perhaps to a lesser extent, a “limb (b)” worker’s contract. It is right to say that in his conclusion on the evidence at para 13(d) and in para 14(b) the judge refers to matters 16 of 22 that seem to come within the former concept of control, in particular the fact that Bradley set the rate of his pay and dividends with his brother and that he later took control of the company bank account. To that extent the judge may have been taking account of irrelevant matters. However, we think that he was nevertheless undoubtedly justified in the overall conclusion that the company exercised “little or no control” over Bradley’s work and that he was entitled to have regard to the control Bradley exercised over the company as part of the “backdrop” in this case, and we do not think that this amounts to a material error which would have had any significant influence on the overall outcome. Submissions[87]Submissions on behalf of the Respondents included the following:[88]Employment by more than one employer is unusual though not impossible.[89]The burden is on the Claimants to show that there was a contract at all and if so that it was a contract of employment. There is no written contract in this case.[90]In the case of the First Claimant it is submitted that it is simply not clear when an alleged relationship of employment began. It is conceded that at least in relation to the Second Claimant it could be said that employment commenced in 2013 which coincided with implementation of PAYE.[91]The First Claimant made brief submissions on behalf of himself and his wife. In particular he emphasised that they had been left with no choice but to resign. Discussion Contract
Discussion
[92]Neither Claimant had a written contract of employment.[93]In respect of the First Claimant, was there an oral agreement that he was an employee or can this be implied by the parties conduct?[94]The dates of him being a statutory director are set out above. He became a statutory director of the First and Second Respondent in January and August 2003 respectively. By this stage the Claimant had initially started working on various front of house responsibilities and then already delegated this according to his mother’s affidavit to a manager. By 2006 he had established Scoffle Limited, entirely his own enterprise, which operated at multiple sites and must have required a substantial amount of work. Would he have been free to delegate a large amount of his responsibilities and set up his own separate business if he was merely employee of the First and Second Respondent? That seems doubtful. 17 of 22[95]In the case of the Second Claimant I accept that, although there was not a written contract, by the parties conduct and implication there were contracts. She worked for a regular salary doing financial and administrative tasks for both of the Respondents. She says that this commenced in 2009 and 2007 respectively. My finding is that at a simple level it was around 2007 when the Second Claimant came to work for the business having ceased working for a firm of accountants as a trainee accountant. It was never formalised in a written contract but she was providing work for the Second Respondent initially and being paid for it. She then started working for the First Respondent in 2009. First Claimant[96]There was a manager and a head chef in each of the restaurants. Eggy did take responsibility for various operational matters as our detailed above. These were not necessarily things that needed doing every single day, but did require doing regularly such as allowing access for maintenance of equipment and the like. He had meetings with head chefs and floor managers. It seems from Jerry’s advice that this was ad hoc rather than regular. He was involved in recruitment.[97]I have not seen any evidence of employment appraisals. My impression is that these businesses run informally and that a formal regular employment appraisal was not something that really happened.[98]I find that Eggy was involved in distribution of tips, attending site for out of hours repairs and maintenance for example extraction cleans, fire alarm equipment checks, drain maintenance services, pest control, contractor visits, emergency site attendance, attending to burglaries or break ins. It fell to him to replace old or faulty equipment, although I acknowledge that the extent to which this occurred is in dispute.[99]Finally I accept, and in particular during the Covid-19 pandemic that he filled in personnel shortages. This represented a change from his normal role which was more hands off.[100]I accept he had a role in communication with the suppliers. It is conceded by Vanida that he arranged insurance, collected money, arranged access for contractors, maintenance and was responsible for safety certification. Again the Respondents argue that he failed to do this properly. He was also the licensee for alcohol purposes. In reality there was some dispute but not a fundamental difference of view between the parties in relation to what might be termed “responsibilities”. Second Claimant[101]The Second Claimant was responsible for managing payroll and tips administratively which relied on her training as a background training as an accountant. She was responsible for EPOS, programming and networking and resolving issues with EPOS. She was responsible for delivery partners websites and matters such as product pricing, software updates. She had some responsibility for staff training. She used accounting software such as SAGE and QuickBooks. 18 of 22[102]She worked principally from the office in East London. Some work was done from home on her computer. Requirement of personal service[103]In relation to personal service compared to substitution in relation to First Claimant the picture is slightly mixed. Most operational matters it seems to me could easily have been delegated to managers or head chefs, but he chose to do these tasks himself. It seems from Vanida’s witness statement that within a year or so of the Thai Metro business being operated by the First Respondent, in 2001-2 the Claimant’s of delegated most of his “front of house” duties to manager Mr Poliakov.[104]With regard to the Second Claimant I am satisfied that she could not have simply substituted someone else to do this responsibilities on an ad hoc basis. In other words the was a requirement for personal service by her of these duties. Accounting and the other matters carried out by her required intimidate knowledge of the business. Mutuality of obligations[105]I find that both Claimants did work for both businesses and they were both paid.[106]Somewhat tempering that was the pay for both of them fluctuated. That did not appear to relate to the amount of work they were doing, but rather the “health for business”. In the case of the First Claimant he could choose was responsibilities he carried and which were delegated. Control[107]As to control for the First Respondent, I do not find that he was subject to the control of the business in any meaningful sense. He could choose where and when to do his work, how much to pay himself and when to take his holiday.[108]In response to a question posed in the Tribunal hearing about going on holiday and booking holiday he said “why would I refer this to anyone else?”. That was an entirely honest and natural reaction. I find that that was indicative of his role as director and owner as he believed it to be.[109]It was he that made decisions to vary his and Helena’s salary from time to time.[110]I consider it would be false to suggest that he was under the control of the businesses albeit that he was the controlling mind, given that there were two businesses and he also had another business which he was working for at the same time. He was free to set up the venture that became the brand “Papaya” under Scoffle Limited. He may not have drawn a clear distinction between those businesses on an hour by hour or day by day basis but the reality was that he could move from business to business and give them whichever attention he deemed necessary. In conclusion he was not under the control of either of the Respondents businesses.[111]Turning to the Second Claimant, instructions were given to her by Eggy and the restaurant managers. That seems to me to be plausible. They gave her 19 of 22 instructions. She implemented. True it is that she could choose to do some responsibilities from home but I find that there was an expectation that she would go to the office. There was a period where she worked alongside Jerry and evidently got on well with her at that time. Although it may be that as the wife of the owner the Second Claimant had a degree of latitude that other employees might not, I find that there were responsibilities to which she had and an expectation that she would perform those responsibilities in a professional structured way. It would not make sense to characterise her as an accountant working in private practice or self-employed. She was working as part of the Respondents’ businesses. I find that she was under the control of the businesses. Payment[112]Both Claimants were paid salary through PAYE. That in itself is consistent with employment.[113]The fact that in the case of the First Respondent he also received dividends as a component to his renumeration and also was able it seems to take money out of the businesses for example for the purchase of a property I find is less consistent with employment and is far more consistent with owner. Conclusion on employment status C1[114]I find that the First Claimant was not an employee of either of the Respondent businesses. I find that his role was as an entrepreneur and owner of several businesses including the Respondents. Had there been a parent company that owned the various businesses it might have been said the First Claimant was employed by the parent, in informal terms “Head Office”. There was no such arrangement, however. In reality the First Claimant was acting as owner and director across the various businesses, i.e. the First and Second Respondents and the restaurants operated by Scoffle Ltd.[115]I recognise that seen from Eggy’s perspective that may seem unfair since the High Court has found that he was not the beneficial owner of the First and Second Respondents and the Tribunal finds that he was not an employee. Nevertheless I find that from the beginning of his involvement in the Respondent’s businesses he enjoyed the flexibility and financial rewards of being an owner and director. C2[116]By contrast, and in particular because of the degree of control which I find was significantly different in their two cases, I find that the Second Claimant was an employee of both the First and Second Respondents.[117]It is not possible to be an employee of two different employers in respect of the same work (following Patel v Specsavers Optical Group Ltd UKEAT/0286/18; Cairns v Visteon UK Ltd [2007] ICR 616). That is not the situation with the Second Claimant. She was doing different work for the two different Respondents, albeit generally working at the same location and that the content of the work (e.g. 20 of 22 accounts, administration) was similar in each case. That is no different in my view to her being a part-time employee of two different companies. Was there a constructive unfair dismissal?[118]This question only applies to the Second Respondent given the finding on employment status.[119]I find that by ceasing paying salary the Respondents did dismiss the Second Claimant. Not paying salary goes to the root of a contract. Mr Smith to his credit did not seem to suggest otherwise.[120](If I am wrong about employee status in the case of the First Claimant, I would have found a constructive unfair dismissal in his case for the same reason.) Polkey[121]The next question that I have to answer is the “Polkey” question i.e. but for the dismissal might a fair dismissal have taken place in any event?[122]I conclude that there had been an irretrievable breakdown in trust and confidence. It was overwhelmingly likely that a fair dismissal could have arisen following a fair process.[123]In order for that to be a procedurally fair dismissal there ought at the very least to have been a letter inviting the Second Claimant to a meeting to discuss the matter and a right of appeal. She received neither.[124]But I find that it was an inevitable conclusion that she would have been dismissed. She could not have continued to work given the breakdown of the relationship.[125]Doing the best I can I find that the process of inviting the Second Claimant to a meeting, providing her with an explanation of why dismissal was being considered, then allowing her to attend the meeting, giving a decision confirmed in writing and then granting an appeal right would have taken in the region of four weeks. Was there a breach of contract?[126]I find that the Second Claimant was a long standing employee. I find that she was reasonably to expect to be paid notice. She was on a salary and paid monthly. She says that she should have been paid a months’ notice. I agree and take the view that one month’s notice would be reasonable in respect of her employment with each.[127]Given that there is an overlap between the compensatory element for unfair dismissal and breach of contract she is only entitled to recover one months’ pay, since there cannot be double recovery of both notice pay and compensatory award for loss of earnings following an unfair dismissal.[128]One month’s pay with the First Respondent was £1,400.[129]One month’s pay with the Second Respondent was £1,400. 21 of 22 Basic award for unfair dismissal R1[130]In each case the Claimant’s gross weekly salary was (£1,400 x (12/52)) = £323.08[131]Basic award in relation to the Second Respondent whom the Second Claimant commenced working for in 2009 i.e. 15 years. 131.1. 13 x 1 x £323.08 = £4,200.04 131.2. 1.5 weeks' pay for each year of employment over the age of 41: 131.3. 2 x 1.5 x £323.08 = £969.24 131.4. £4,200.04 + £969.24 = £5,169.28 Basic awards for unfair dismissal R2[132]Basic award in relation to the Second Respondent whom the Second Claimant commenced working for in 2007, i.e. 17 years 132.1. 15 × 1× £323.08 = £4,846.20 132.2. 1.5 weeks' pay for each year of employment over the age of 41: 132.3. 2 × 1.5 × £323.08 = £969.24 132.4. £4,846.20 + £969.24 = £5,815.44. Comment[133]Despite the stressful circumstances of this hearing, their estrangement from one another and the difficult background of High Court litigation, I noted that the Claimant and his mother each expressed some affection for the other in the course of evidence.[134]I remain hopeful that there may yet be future reconciliation of the members of the family.