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You are here: BAILII >> Databases >> United Kingdom Employment Appeal Tribunal >> Kearns v The Secretary Of State For Employment [1995] UKEAT 571_94_3101 (31 January 1995) URL: http://www.bailii.org/uk/cases/UKEAT/1995/571_94_3101.html Cite as: [1995] UKEAT 571_94_3101

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BAILII case number: [1995] UKEAT 571_94_3101

Appeal No. EAT/571/94

EMPOLYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 31 January 1995

THE HONOURABLE MRS JUSTICE SMITH

MR D G DAVIES

MISS A MACKIE OBE

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MR B KEARNS          APPELLANT

THE SECRETARY OF STATE FOR EMPLOYMENT          RESPONDENTS

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Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING

Revised


 


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APPEARANCES

For the Appellant NO APPEARANCE BY

OR ON BEHALF OF THE APPELLANT


 


MRS JUSTICE SMITH: This is an appeal from the decision of an Industrial Tribunal sitting at Liverpool on 8 April 1994. The decision of the Tribunal was that the Appellant's application brought under Section 124 of the Employment Protection (Consolidation) Act 1978 fails and should be dismissed.

The facts of the matter may be briefly stated. The Appellant and his wife were shareholders in a Company called Welkear Limited. The Appellant had first worked for Welkear Limited in 1976, when it was controlled by a man named Welsh. The Appellant had a minority shareholding at that time. In 1983 the Appellant was made a director and given a written statement of the terms and conditions of his contract. That document was before the Tribunal and we have seen it.

In 1986, Mr Welsh died and soon afterwards his widow wished to dispose of the shares which she had inherited. She was unable to dispose of them and the Appellant eventually agreed to take them over. They were transferred mainly to Mrs Kearns, the Appellant's wife, but some were transferred to the Appellant himself. The result was that they held 50% of the shareholding each. The Appellant continued to work within the Company's business. He was paid a regular salary and Schedule E income tax and employees national insurance contributions were deducted from his salary at source.

The Company did not thrive and went into liquidation in 1993. The Appellant applied to the Secretary of State under Section 106 and Section 122 of the Employment Protection (Consolidation) Act 1978 for a redundancy payment, pay in lieu of notice and holiday pay. Section 106(1) provides so far as is relevant:

"Where an employee claims that his employer is liable to pay him an employer's payment and either -

(a) that the employee has taken all reasonable steps (other than legal proceedings) to recover the payment from the employer and that the employer has refused or failed to pay it, or has paid part of it and has refused or failed to pay the balance, or

(b) that the employer is insolvent and that the whole or part of the payment remains unpaid,

the employee may apply to the Secretary of State for a payment under this section".

Section 122(1) provides as follows:

"If on an application made to him in writing by an employee the Secretary of State is satisfied -

(a) that the employer of that employee has become insolvent; and

[(aa) that the employment of the employee has been terminated; and]

(b) that on the relevant date the employee was entitled to be paid the whole or part of any debt to which this section applies,

the Secretary of State shall, subject to the provisions of this section, pay the employee out of the Redundancy Fund the amount to which in the opinion of the Secretary of State the employee is entitled in respect of that debt".

On receipt of the Appellant's application, the Secretary of State accepted that Welkear Limited was insolvent, but refused payment on the ground that the Appellant was not an employee, under the statutory provisions to which we have referred.

The Appellant applied to the Industrial Tribunal under Section 124 which provides, at subsection 1:

"A person who has applied for a payment under section 122 may, within the period of three months beginning with the date on which the decision of the Secretary of State on that application was communicated to him or, if that is not reasonably practicable, within such further period as is reasonable, present a complaint to an industrial tribunal that -

(a) the Secretary of State has failed to make any such payment; or

(b) any such payment made by the Secretary of State is less than the amount which should have been paid".

The Industrial Tribunal heard evidence from the Appellant. After setting out the history at paragraph 4 of their Decision the Tribunal said this:

"The Tribunal accepted the evidence of the applicant with regard to the shareholding and the fact that in 1983 he had been given a contract of employment. However, it appeared that since he and his wife became the sole owners of the shares of the company the situation had changed radically, since from that time the applicant was in effect in full control of the company. Therefore, despite the fact that he had been given a contract of employment when Mr Welsh owned the majority of the shares, and that he paid income tax on Schedule E and national insurance, he was not an employee, and accordingly was not entitled to receive redundancy payment, pay in lieu of notice and holiday pay from the Secretary of State. The application accordingly failed".

The Appellant now appeals against that decision and his Notice of Appeal seeks to challenge the conclusion that the Appellant was not an employee.

The Appellant, in a letter dated 23 January 1995, has sought to set out a number of factual matters which were not explained to the Industrial Tribunal in as much detail as the Appellant would now wish. For example he has explained, in some detail, the circumstances in which he agreed to take over the shares held by Mrs Welsh. He explains that he was reluctant to do that but did so, because it appeared to him that unless somebody were prepared to hold the shares, the Company, Welkear Limited, would go out of business. At that time it appeared to be a thriving business with 12 employees. The Appellant explains that he took it over in order to prevent closure and the loss of jobs. We have some sympathy with him. It appears that he probably did not realise that, by taking over the shares so that he and his wife between them held all the shares and controlled the Company, his status as an employee had been affected.

He also seeks to explain the role that has been played by his wife in undertaking many of the administrative tasks in the Company. However, it does not seem to us that any of these factual matters could seriously undermine the decision of the Industrial Tribunal, that this man was not an employee. He was in control of the Company and he was, in effect, his own boss.

This Appeal Tribunal is only empowered to hear an appeal on a point of law. The question of whether an Applicant is an employee is a question of fact, only susceptible of challenge if there is no evidence to support it or it appears that the Industrial Tribunal has misdirected themselves in law in arriving at their conclusion.

Here, it appears to us, that the Industrial Tribunal has properly taken into account the relevant factors. They have considered the shareholding of the Appellant and his wife and the control that was exercised by the Appellant over the Company. They have considered the effect of the written contract dated 1983, entered into at a time when the Appellant was not in control of the Company and they have considered the relevance of the payment of Schedule E tax and employees national insurance contributions.

It appears to us that those are all matters which were properly taken into account. We do not consider that this decision could be categorised as perverse.

In the event we can see no arguable point of law raised by the Notice of Appeal and not without sympathy for the Appellant's position, we have come to the conclusion that the appeal must be dismissed.