Mr L Carberry v Integrity Pub Management Ltd: 2405798/2020

EMPLOYMENT TRIBUNALS

Case No 2405798/2020

Between

Mr L CarberryClaimant

Integrity Pub Management LtdRespondent

Before

Employment Judge Ainscough

In person for claimant

Date 21 July 2022

JUDGMENT

The claimant is an employee/worker in accordance with the meaning set out at section 230 of the Employment Rights Act 1996.

REASONS

[1]The claimant has brought claims for unfair dismissal contrary to section 94 of the Employment Rights Act 1996 and unlawful deduction from wages contrary to section 13 of the Employment Rights Act 1998, following his dismissal from the respondent company on 19 December 2019.

[2]In order to bring a claim for unfair dismissal the claimant must be an employee and in order to bring a claim for unlawful deduction from wages the claimant must be a worker.

The Law

[1]The definition of an employee appears in section 230(1) of the Employment Rights Act 1996: “(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. (2) In this Act “contract of employment” means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing.”

[2]The legislation goes on to define in section 230(3) the concept of a worker. An identical definition appears in the Working Time Regulations 1998 and the Employment Relations Act 1999. The definition is as follows: “In this Act “worker” means an individual who has entered into or works under, or where the employment has ceased worked under,(a) a contract of employment, or

(b) any other contract, whether express or implied, and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual, and any reference to a worker’s contract shall be construed accordingly.” Employee

[3]The statutory definition simply incorporates the common law concept of what is a contract of service or a contract of employment, traditionally distinguished from a contract for services which is a contract for a self-employed arrangement. There is a wealth of decided cases on what will amount to a contract of employment, beginning with the well-known summary in Ready Mixed Concrete (South East) Limited v Ministry of Pensions and National Insurance

[1968] 2 QB 497

: “The contract of service exists if these three conditions are fulfilled:(1) 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.

(2) 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.

(3) The other provisions of the contract are consistent with it being a contract of service.” That remains the starting point even though, of course, the language of master and servant is something from which the law has moved on.

[4]More recently in Carmichael v National Power Plc

[1999] ICR 1226

the House of Lords confirmed that there is an “irreducible minimum of mutual obligation necessary to create a contract of service”. It follows, as was confirmed in Montgomery v Johnson Underwood Ltd

[2001] ICR 819

, that unless there is mutuality of obligation and a sufficient degree of control, there cannot be a contract of employment.

[5]If those irreducible minimum requirements are met, the other considerations include how the parties have labelled or characterised their relationship, which is relevant but never in itself conclusive, the treatment of tax and national insurance, and any other matters that form part of the working relationship. Ultimately the task for the Tribunal is to look at all the relevant factors and form an impression, looking at the picture as a whole, as to whether the contract in question is one of employment or not. Worker

[1]The different statutory provision means that there is not the same requirement for mutuality of obligation, control or integration that is necessary for there to be an employment relationship. As Underhill LJ put it in paragraph 24 of his judgment in Secretary of State for Justice v Windle

[2016] ICR 721

, for the claimant “the passmark is lower.” That case was concerned with the Equality Act definition of “a contract personally to do work”, but the point remains valid.

[2]Once again it is a matter of overall impression, although the factors which are significant in any particular case may differ depending on the context (see Hospital Medical Group Ltd v Westwood

[2013] ICR 415

). Whether there is a relationship of subordination is frequently important, although one must bear in mind the caveat expressed by Lady Hale in paragraph 39 of her judgment in Clyde & Co LLP v Bates van Winkelhof

[2014] ICR 730

that “….. there is "not a single key to unlock the words of the statute in every case". There can be no substitute for applying the words of the statute to the facts of the individual case. There will be cases where that is not easy to do. But in my view they are not solved by adding some mystery ingredient of "subordination" to the concept of employee and worker. The experienced employment judges who have considered this problem have all recognised that there is no magic test other than the words of the statute themselves. As Elias J recognised in [James v Redcats (Brands) Ltd

[2007] ICR 1006

], a small business may be genuinely an independent business but be completely dependent upon and subordinate to the demands of a key customer (the position of those small factories making goods exclusively for the "St Michael" brand in the past comes to mind). Equally, as Maurice Kay LJ recognised in Westwood, one may be a professional person with a high degree of autonomy as to how the work is performed and more than one string to one's bow, and still be so closely integrated into the other party's operation as to fall within the definition. As the case of the controlling shareholder in a company who is also employed as chief executive shows, one can effectively be one's own boss and still be a "worker". While subordination may sometimes be an aid to distinguishing workers from other self-employed people, it is not a freestanding and universal characteristic of being a worker.

Findings of Fact

[3]The claimant was employed as a Pub Manager and Company Director for the respondent from 13 March 2015 when he signed a contract of employment. From March 2015 until December 2017 the claimant was the sole shareholder in the respondent company.

[4]The employment contract provided that the claimant’s salary as £11,000 per annum and detailed his place of work as the Rovers Return Public House on Chapel Street in Manchester. The claimant received a P60 from the financial year 2016/2017. This document showed that the claimant was paid through the PAYE system and paid tax and national insurance.

[5]The claimant worked fixed hours each week. The contract required the claimant to devote full-time efforts to his role, not to compete and not to have any conflict of interest. The claimant’s role was to manage the public house. The claimant did not work behind the bar but he was responsible for the administration, including the company accounts and VAT returns.

[6]At the same time the claimant also owned another business in Liverpool to which he devoted approximately six hours per week over and above his role with the respondent.

[7]In 2017 the respondent company ran into financial difficulties. In order to save the respondent company, Mr Greaves and Mr Ashton of Property North West Limited, bought a third share each in the respondent company. The claimant’s shareholding was reduced to one third.

[8]It was agreed between the claimant and Mr Greaves that respondent would continue with the services of the instructed accountancy firm and the claimant would retain responsibility for the VAT returns and the maintenance and filing of company accounts. The claimant attended meetings with the other shareholders to discuss VAT and company accounts.

[9]The respondent firstly, leased the pub to the claimant as an individual tenant and then, at the request of the claimant, amended the lease to record the tenant as Rovers Return Pub Limited. The claimant was the sole Director of Rovers Return Pub Limited. The rent was paid via credit card receipts into the respondent’s bank account.

[10]In January 2018, all staff who worked for the respondent, save for the claimant and his wife, transferred in accordance with the Transfer of Undertakings (Protection of Employment) Regulations 2006, over to Rovers Return Pub Limited.

[11]On 2 February 2018 the claimant signed a statutory declaration declaring, amongst other things, that as of that date the respondent had no “bona fide” employees and did not owe more than £5,000 to creditors.

[12]There is a dispute as to whether the Rovers Return Pub Limited extinguished the rent obligation in the lease, between January 2019 to December 2019. Rovers Return Pub Limited was evicted on 23 December 2019 on the grounds of forfeiture for non payment of rent. At an extraordinary general meeting on 19 December 2019, the claimant was removed as a director of the respondent company. Submissions Claimant’s submissions

[13]The claimant submits that Mr Grieves and Mr Ashton had ample time to complete due diligence on his legal status within the respondent company prior to buying their shareholdings.

[14]It is the claimant’s case that the administrators appointed prior to the purchase were aware that the claimant was an employee of the respondent company.

[15]The claimant submits that it was agreed that he would stay on as an employee of the respondent to run the administration side of the public house. Respondent’s submissions

[16]The respondent submits that it was the understanding of Property North West Limited that the claimant would remain as a tenant of the public house following the purchase of shares in the respondent company.

[17]It is submitted that this was why the original lease was in the name of the claimant. The name of the tenant was altered at the behest of the claimant and because Mr Grieves and Mr Ashton trusted the claimant.

[18]The respondent relies upon the statutory declarations signed by the claimant confirming that the respondent had no employees.

Discussion and Conclusions

[19]When Mr Greaves and Mr Ashton became shareholders in January 2018, the claimant’s contract of employment was not terminated. The claimant's contract of employment with the respondent existed alongside his shareholding.

[20]The respondent only appointed new accountants in late 2019/early 2020. Up until that point, and up until the claimant's removal as a director and the eviction of Rovers Return Pub Limited, the previous accountant had been dealing with matters. The respondent admitted that they kept the accountant on as the claimant had a relationship with that firm and to assist with the recovery of VAT and the filing of accounts.

[21]The only change in January 2018 was the reduction in the claimant’s shareholding. The claimant was not given notice and he was not in receipt of a P45 to confirm that the employment contract had been terminated.

[22]The respondent says that it was unaware of the contract and relied upon the statutory declaration signed by the claimant on 2 February 2018. However, it is the claimant's evidence that the administrator was aware of all the contracts of employment, including his own, and he verbally reminded Mr Greaves of his status, and that of his wife, prior to signing the declaration. The claimant says the respondent was not concerned. This position is reflected in a document completed by the respondent to set up a Lloyds bank account which records the number of employees as two.

[23]The respondent’s witness admitted in evidence that at the time of the purchase there was goodwill between the parties. The respondent says that this is reflected by the fact that the respondent agreed to a lease in the name of a limited company rather than the claimant.

[24]The claimant was employed by the respondent up until his removal as a director in December 2019 and was similarly a worker for the purposes of the unlawful deduction from wages.

Discussion and Conclusions

[1]By a claim form presented on 21 May 2020 the claimant brought claims of unfair dismissal, and for unpaid notice pay and holiday pay, arising from his (alleged) employment by the respondent, which ended on 19 December 2019.

[2]The response to the claims was due by 24 June 2020. A response, from Graham Healey, Director, was received on 22 June 2020. That response denies that the claimant was ever employed by the respondent company, or that he was a worker.

[3]A preliminary hearing was held on 2 November 2020to determine whether the claimant was an employee or a worker of the respondent. By a judgment sent to the parties on 2 December 2020 Employment Judge Ainscough determined that the claimant was indeed an employee and a worker of the respondent.

[4]At the same hearing, by Orders sent to the parties on 15 December 2020 the Employment Judge made case management orders for the future conduct of the claims. They required the claimant to provide a schedule of loss by 18 January 2021, the parties to exchange documents by 30 November 2020, a bundle to be prepared by 21 December 2020, and witness statements to eb exchanged by 18 January 2021.The final hearing was listed for 25 January 2021.

[5]That hearing, however, was postponed, for a variety of reasons, amongst which were that the claimant had been unable to comply with the Tribunal’s orders, because he was undergoing a biopsy for suspected cancer in January 2021.

[6]Employment Judge Newstead – Taylor postponed the hearing, and by orders orders. She also listed a preliminary hearing for 16 August 2021 to determine the issue of whether the claimant had presented his claims in time. She made specific case management orders for that preliminary hearing, which required the parties to provide their documents by 21 June 2021, or the respondent to prepare a bundle for the preliminary hearing by 26 July 2021, and to exchange witness statements for the preliminary hearing by 19 July 2021.

[7]The parties were ordered to confirm their readiness for the preliminary hearing by 8 August 2021.

[8]On 9 August 2021, however, Graham Healey for the respondent informed the Tribunal that he was on holiday on 16 August 2021 and asked for the hearing to be re-arranged.

[9]This application was refused by the Tribunal by letter of 10 August 2021, it being observed that the hearing date had been set on 25 January 2021 and notified to the parties on 19 February 2021.

[10]On 13 August 2021, however, as no hearing bundle had been received, and the Tribunal had not heard from either party, that hearing was postponed, initially to 8 September 2021, and then again, when nothing had been heard from either party.

[11]Regional Employment Judge Franey then directed that the Tribunal write to the claimant warning him that his claim may be struck out as it was not being actively pursued.

[12]The claimant replied to that warning by email of 20 September 2021. He said he had been pursuing his claims and had provided a zip file of evidence for the hearing listed for 8 September 2021, though he accepted this was late. He also attached medical evidence confirming his diagnosis of, and treatment for, a melanoma n his back.

[13]On 1 October 2021 the Tribunal wrote further (by email only) to the parties, seeking clarification of their compliance with the Tribunal’s orders. Neither party responded to that email.

[14]On 19 January 2022 the Tribunal wrote again to both parties, warning them that the Tribunal was considering striking out the claim and the response , on the grounds that both parties had failed to comply with the Tribunal’s orders, had not replied to the Tribunal’s letter of 1 October 2021, and both the claim and the response were not being actively pursued. Then parties were given to 2 February 2022 to respond, and to object to the proposal, or request a hearing.

[15]The claimant did respond by email of 1 February 2021. He apologised for his failure to deal with his claim, due to medical issues, related to his cancer, but also to contracting Covid – 19, which had led to him being bedridden, and to ensuing fatigue, with him sleeping for some 14 hours a day. He said, however, that his health had started to improve, and asked for the opportunity to progress his claim. He had instructed a solicitor, whose details he provided.

[16]The respondent, however, did not respond to the strike out warning.

[17]Notwithstanding this, the Tribunal wrote to the respondent again on 17 March 2022, referring again to the strike out warning of 19 January 2022, and asking for a response.

[18]Finally, by letter of 30 March 2022, the Tribunal wrote again to the respondent (i.e to Graham Healey – erroneously addressed as Henley) pointing out the recent history, and asking for a response by 7 April 2022, in default of which the response was likely to be struck out.

[19]Graham Healy replied on 30 March 2022, saying this: “As far as I am aware I am awaiting a decision by the Tribunal as to whether the Claim should be dismissed as the Claimant did not abide by the ACAS timeline rules”

[20]The Employment Judge could not see how this was a reasonable view. The hearing to determine whether the claim was presented in time was listed for 16 August 2021, but postponed. There is nothing that the respondent is waiting for. A further letter, therefore, pointing this out was sent on 6 April 2022. The letter also pointed out that whilst the claimant had explained his default, the respondent had not.

[21]Graham Healey’s reply on 7 April 2022 says this: “I cannot explain the Claimant’s default. He either brought the claim in time or he did not – You will have to decide. I have nothing more to add – Ive (sic) spent enough time on this spurious claim.!!!!!”

[22]Mr Healey does not, of course, in this, or in any other communication, address the respondent’s default in complying with the Tribunal’s orders. His last sentence gives no indication that the respondent will now comply.

[23]The Employment Judge therefore considers that, given the substantial default, and lack of any explanation, excuse or apology, the respondent has no intention of complying with the Tribunal’s orders, and the response is accordingly struck out. The claimant’s case – the time limit issue.

[24]That does not mean, however, that the claimant can succeed. As previously observed, his claims were, on the face of it, presented out of time.

[25]That must certainly be the case in respect of his unfair dismissal claim. His dismissal was on 19 December 2019. That would give him three months less one day in which to present his complaint of unfair dismissal to the Tribunal.

[26]Whilst the early conciliation provisions do provide for potential extension of this primary time limit any such extension can only arise if the claimant starts the early conciliation process within the initial three months’ time limit. In this case that would have been by 18 March 2020. The claimant only commenced early conciliation on 22 April 2020, a month out of time. he cannot therefore gain the benefit of any potential extension of time.

[27]In relation to his claims for notice pay and holiday pay the time limit may be a little later, in that it would run from when these sums were payable. Given, however, that even if they were not payable until another month after his dismissal, that would be 19 January 2020, meaning that his ACAS early conciliation starting on 22 April 2020 would still make those claims too out of time.

[28]This is not a determination, as these issues will be addressed at the preliminary hearing. If the claims are out of time, the claimant will have to show that it was not “reasonably practicable” for him to have presented his claim in time, and that he then presented them within reasonable time. To show want of reasonable practicability the claimant needs to show what prevented him from bringing he claims in time. He needs to explain what he knew of the way in which to present a Tribunal claim, ad the time limits for doing so, what, if any , steps he took to research the process, or obtain advice, and generally why he delayed in event approaching ACAS until after the three month time limit had expired

[29]To that end his witness statement for the preliminary hearing, and his supporting documents, should address these issues. The claimant is urged to seek advice. The provisions of the Tribunal’s letter of 13 August 2021 will apply to this hearing.

[30]Whilst the respondent cannot participate, unless it seeks the Tribunal’s position, as time limits go to the Tribunal’s jurisdiction , they cannot be overlooked, and the Tribunal has to make a determination that the claims can proceed, even if there is no active response.

Discussion and Conclusions

[1]The claimant’s complaint of unfair dismissal was presented outside of the time limits at section 111 Employment Rights Act 1996 (“ERA”). It was reasonably practicable for the complaint to have been presented in time.

[2]The claimant’s complaint of unlawful deductions from wages was presented outside of the time limits at s23(2) ERA. It was reasonably practicable for the complaint to have been presented in time. Accordingly, this claim is dismissed.

[1]This hearing was listed in order to consider and determine whether the claim had been presented in time and, if not, whether the Tribunal should extend time for their presentation (“Time Limit Issues”).

[2]The parties were notified of the hearing (and the reasons for the hearing) by Notice sent to the parties on 27 April 2022.

[3]The Notice of hearing included case management orders requiring the claimant to provide the Tribunal with documents and a witness statement relevant to the Time Limit Issues.

[4]In breach of the Case Management Orders the claimant did not provide either documents or a witness statement. He did not attend this morning’s hearing.

[5]By earlier Judgment, the respondent’s response had been struck out. The respondent was not represented at this morning’s hearing either.

[6]I considered whether to postpone the hearing or determine the Time Limit Issues based on the information available. I decided that it was in accordance with the Overriding Objective to proceed and determine the issues. It was apparent from a review of the case file that there had been a history of non-compliance by both parties. I note the following recent history:a. A preliminary hearing listed for 16 August 2021 was postponed by the Tribunal because the parties had failed to provide a file of documents that they had been directed to provide.

b. Both parties failed to respond to correspondence from the Tribunal dated 13 August 2021 requiring them to inform the Tribunal by 20 August 2021, what steps they had taken to prepare for a hearing;

c. By letter dated 7 September 2021, the Tribunal provided the claimant with a strike out warning ( he had not replied to the correspondence dated 13 August 2021).

d. The claimant replied to the letter of 7 September 2021, by email dated 20 September 2021. In summary, he explained that he had been ill and asked for the claim not to be struck out.

e. On 1 October 2022 the Tribunal wrote to the parties. The claimant was asked whether he had complied with existing Case Management Orders in preparation for a hearing. Both parties were asked to address case management and agree to a new timetable if existing timetable had not been met.

f. On 19 January 2022 the parties were given a strike out warning. There had been no response to the Tribunal’s correspondence of 1 October 2022.

g. On 1 February 2022 the claimant responded. In summary, he informed the tribunal of the seriousness of his illness, that his health was starting to improve and that he had just instructed a solicitor. He also gave written assurance “that any further directions will be strictly adhered to and time limits will be complied with.”

h. The respondent did not provide any adequate response to the strike out warning and therefore the response was struck out by Judgment dated 7 April 2022.

i. This hearing was then listed and the case management orders noted at 3 above were made; orders that the claimant did not comply with.

[7]In deciding to proceed I took in to account the need, so far as practicable, to avoid delay, save expense, deal with cases in ways which are proportionate to the complexity and importance of the issues. This was the third occasion that the hearing had been listed (there had been 2 previous postponements as the parties had not complained with previous case management and prepared for hearing); the claimant had informed the Tribunal that solicitors had been instructed by him and given assurances about compliance with CMOs. It is the claimant’s case and for him to decide what importance to attach to it. A further postponement would be disproportionate. Further resources were applied to the case on the occasion of this hearing.

[8]Whilst I recognised that a decision to proceed would mean that the claimant would not be able to contribute further to this hearing and my determination of the Time Limit Issues; weighing up all relevant factors I decided that it was fair and just to consider and determine the Time Limit Issues on the basis of the information available, thereby providing the parties with an outcome to the Time Limit Issues. B. Relevant Law – Time limit issues. Time Limits – ERA.

[9]Section 111(2) of the ERA provides that a complaint of unfair dismissal must be “presented to the Tribunal –a. Before the end of the period of three months beginning with the effective date of termination, or

b. Within such further period as the tribunal considers reasonable in a case where it is satisfied that it was not reasonably practicable for the complaint to be presented before the end of that period of three months.

[10]Section 23(2) ERA applies the same time limit requirements to complaints of unlawful deductions from wages.

[11]Section 18A(8) of the Employment Tribunals Act 1996 prohibits an individual who wants to commence “relevant proceedings” in the tribunal , to do so unless that person has gone through the ACAS early conciliation process and obtained a certificate.

[12]Section 207B of the ERA extends the time limits at s111(2) to take account of the statutory requirement for early conciliation, but only where the claimant has contacted ACAS within those time limits. That did not occur in this case and therefore the claim was not presented in time.

[13]Where a complaint for unfair dismissal and/or being subjected to detriments has not been presented in time, an Employment Tribunal must consider whether or not it was “reasonably practicable” for the claim to have been presented in time. That is a decision that must be made on the facts.

[14]The term reasonably practicable mean neither “reasonable”, nor “something that is physically capable of being done”. The term means somewhere between these 2 ( see Palmer v Southend on Sea BC

1984 IRLR 119

). I also note the following from paragraph 35 of Palmer: What, however, is abundantly clear on all the authorities is that the answer to the relevant question is pre-eminently an issue of fact for the Industrial Tribunal and that it is seldom that an appeal from its decision will lie. Dependent upon the circumstances of the particular case, an Industrial Tribunal may wish to consider the manner in which and reason for which the employee was dismissed, including the extent to which, if at all, the employer's conciliatory appeals machinery has been used. It will no doubt investigate what was the substantial cause of the employee's failure to comply with the statutory time limit; whether he had been physically prevented from complying with the limitation period, for instance by illness or a postal strike, or something similar. It may be relevant for the Industrial Tribunal to investigate whether at the time when he was dismissed, and if not then when thereafter, he knew that he had the right to complain that he had been unfairly dismissed; in some cases, the Tribunal may have to consider whether there has been any misrepresentation about any relevant matter by the employer to the employee. It will frequently be necessary for it to know whether the employee was being advised at any material time and, if so, by whom; of the extent of the advisors' knowledge of the facts of the employee's case; and of the nature of any advice which they may have given to him. In any event it will probably be relevant in most cases for the Industrial Tribunal to ask itself whether there has been any substantial fault on the part of the employee or his advisor which has led to the failure to comply with the statutory time limit. Any list of possible relevant considerations, however, cannot be exhaustive and, as we have stressed, at the end of the day the matter is one of fact for the Industrial Tribunal taking all the circumstances of the given case into account. C. Findings and conclusion

[15]I am satisfied, from my review of the Tribunal file, that it was abundantly clear to the claimant on the date of termination of employment that he and the respondent (acting by its majority shareholders and directors) were in dispute.

[16]I am also satisfied that the claimant considered himself ousted from the respondent business without notice and without lawful reason and that he was of this view from the moment that he was ousted. I note for example the following sentence from the claim form: “ Eventually Mr Grieves and Mr Ashton called an EGM in December 2019 when, at the EGM I was removed from my position with the company without the correct notice period. Threats of intimidation were also made at the EGM against me.”

[17]The claimant was therefore aware from the moment of dismissal that he was in dispute about his employment and his dismissal. Even taking account of the relatively short time limits in Employment Tribunal proceedings he had plenty of time before the expiry of those time limits to obtain relevant information and advice. If he did not do this, he could have.

[18]There is no evidence to indicate that circumstances applicable to the claimant at the relevant time (end of 2019 and beginning of 2020) were such that it was not reasonably practicable for him to have brought the claim within the time limits set out in the ERA.

[19]Accordingly, the claim is dismissed. Employment Judge Leach Date: 21 July 2022