Heather Joy Crawford & Others v Department of Employment and Learning

17 April 2014

Heather Joy Crawford & Others v Department of Employment and Learning

Heather Joy Crawford –v- Department of Employment and Learning (02448/12IT) Rodger Dunlop –v- Department of Employment and Learning (02449/12IT) Lawrence Dunlop –v- Department of Employment and Learning(00549/13IT)

Heather Joy Crawford and Rodger Dunlop brought proceedings against Adamsez NI Limited. The three members of the Dunlop family had established Adamsez NI In October 1987. Mr Dunlop Senior, Ms Heather Joy Crawford and Mr Rodger Dunlop were the three members of the board. All the shares in the company were owned by family members. Ms Crawford worked 40 hours per week and paid income tax and national insurance contributions; she did not receive any dividend payment from the company. There were no documents in relation to her contract of employment. The company became insolvent and the Claimant claimed redundancy payment, holiday pay, unpaid wages and notice payments resulting from her redundancy. 

The Tribunal awarded her £18,391.17. The redundancy payment branch, the Department for Employment and Learning who paid out this money, argued that as she was a shareholder and Director she was not an employee and therefore not entitled to these payments. The Department argued that “mutuality of obligation” was breached by Ms Crawford as she had decided not to take any remuneration for her work for 6 months, between January 2011 and August 2011 due to the severe financial problems of the company.

Her brother Rodger Dunlop brought the same claim and the Tribunal held that he was also an employee, although he was also a Director and shareholder, and was awarded £26,351.14.

In a separate Decision, with a different Employment Judge, their father Mr Larry Dunlop was held to not be an employee. In the father's case, the Tribunal held that there were a number aspects of his working situation which were consistent with him being an employee, for example, he received payment under the PAYE scheme; he normally worked a 40 hour week; he received a fixed salary; had to apply to the board for holidays; he was part of the company sickness scheme; and he had to seek leave and approval for this holidays. However, the Tribunal held that he did not receive monthly salaries for April, May, July, August and September in 2011 and in 2010 he did not receive a monthly salary for January, February and March. The Tribunal stated “it seems to the Tribunal that the non payment of a monthly salary to an employee on 8 occasion in 2 years, and the company’s failure to address this non payment are not what obtains in an employers/employees relationship”. Together with the absence of a written contract of employment and the relationship between that and the company was not governed by contract but some other factors such as a family relationship.

The Department appealed to the Court of Appeal, which overturned the Decision that they were employees. The Court of Appeal stated that it was apparent that the circumstances of the formation of any contracts of employment between the Claimants and the company and the terms and conditions of any such contracts of employment and the conduct of the Claimant and the performance of any duties under any claim of contracts of employment had not been the subject of adequate inquiry by the Tribunal. The appeals were permitted and the matter was remitted to an Industrial Tribunal for further enquiry.

As to the circumstances of the relationships between the Claimants and the company, the Counsel for the parties drew up a schedule which was considered ought to have been addressed by the Tribunal in undertaking the necessary enquires into the relationship between the Claimants and the company. The list was extensive and is set out below.

SCHEDULE 1 Part 1 1.The following matters fall to be considered by the Tribunal:

1)Job Title;

2)Start Date;

3)Salary/Overtime;

4)National Minimum Wage Compliance (but see Part 2);

5)Working Time Directive Compliance (but see Part 2);

6)Pension Provision;

7)Expenses;

8)Benefits in Kind;

9)Hours;

10)Duties;

11)Management/supervision of the Individual;

12)Place of Work;

13)Holiday Provisions;

14)Sick Pay and Absence Provisions;

15)Performance Reviews;

16)Disciplinary/grievance procedures;

17)The difference between the individual’s role as director and their role as employee (but see Part 2);

18)The issue whether the individual held any other posts in any other businesses, linked or not to the insolvent company (but see Part 2);

19)The issue whether there were any differences between the treatment of the individual in question and other employees in particular where the purported contract terms are the same or comparable;

20)The issue of compliance or non-compliance with the requirements on Director’s Service Contracts under Article 228 of the Companies Act 2006;

21)Dividends and Loans (to or from the company):- a)Whether Loans and Dividend Payments were paid as part of Directors’ remuneration; b)How were Loan and Dividend payments agreed; c)Frequency of payment.

22)Changes to all of the above (Including when, how and by whom agreed);

23)The Implementation of and adherence to the terms along with any variations in the above, and;

24)How the above operated in reality.

2.The Tribunal should inquire as to:

1)When was the claimed contract agreed?

2)Who agreed the terms?

3)Who was the employer representative?

4)What was agreed with reference to the matters listed at 1) – 24) above?

5)Were any variations agreed or introduced? a)If so, what were the variations? b)How were they agreed? c)Who agreed them?

6)Whether the agreement or any part thereof was ever committed to writing and if not why not?

7)Compliance or non-compliance with legal requirement to provide written terms & conditions.

3.The following are potentially relevant documents and the presence or absence of any such documents is potentially relevant:

1)Written signed and agreed statement of Main Terms and Conditions and any notification of changes;

2)Written evidence of agreement, which may be found in:-

a)A Memorandum or note as required under Section 228 Companies Act 2006;

b)Memorandum and Articles of Association, and; c)Board Meeting Minutes.

3)Payslips;

4)Pay Records;

5)Claims for expenses including but not limited to fuel and Benefits in Kind (or such documentation as exists verifying the existence of an entitlement to claim expenses);

6)P60s;

7)P45;

8)Self-Assessment Return;

9)P11Ds;

10)RD18 – National Insurance Contribution Records;

11)Interactions with company as evidenced in writing;

12)Holiday records;

13)Pension documentation;

14)Overtime records;

15)Timesheets/clocking cards;

16)Performance Reviews;

17)Sickness absence and sick pay records;

18)Any other variation documentation;

19)Disciplinary/Grievance records, and;

20)Staff handbook.

4. The question whether the claimant received reduced and/or no pay during the course of their purported period of employment is of relevance. If so, the reasons for the reduction or cessation of payment are potentially relevant as is the issue of whether the claimant consented to receiving reduced or no pay. [20th February 2014 NICA 26]

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