Mr J Allen v Secretary of State for Business Energy and Industrial Strategy and Leads Online Ltd: 1800310/2022

Case Number:1800310 /2022 EMPLOYMENT TRIBUNALS Claimant Respondent Mr J Allen v Secretary of State for Business Energy and Industrial Strategy (1) Leads Online Limited (2) Heard at: Leeds by CVP On: 4 April 2022 Before: Employment Judge O’Neill Appearance: For the Claimant: Mr T Kenward of Counsel For the First Respondent: Mr P Soni - representative of the Secretary of State. For the Second Respondent: No appearance JUDGMENT The claimant has failed to show that he was employed under a contract of employment and therefore all his claims for payments from the National Insurance Fund under Sections 166 and 182 Employment Rights Act 1996 fail and are dismissed. REASONS Purpose of the Hearing 1. To determine whether the claimant is entitled to a redundancy payment and other payments (notice pay, holiday pay and arrears of wages) from the National Insurance Fund on the insolvency of the second respondent. 2. The Claimant claims to be entitled to such payments on the basis of having been employed by the Second Respondent. 3. The First Respondent has refused to make the payments in issue with the reason given that it was not satisfied that the Claimant was an employee of the Second Respondent. 1 Case Number:1800310 /2022 Law 4. The relevant statutory provisions are as follows a) Employment Rights Act 1996 section 166(1) “(1) Where an employee claims that his employer is liable to pay to 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 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 the whole or part of the payment remains unpaid the employee may apply to the Secretary of State for a payment under this section”. b) Employment Rights Act 1996 section 182(1) “(1) If, on an application made to him in writing by an employee, the Secretary of State is satisfied that— (a) the employee's employer has become insolvent, (b) the employee's employment has been terminated, and (c) on the appropriate date the employee was entitled to be paid the whole or part of any debt to which this Part applies, the Secretary of State shall, subject to section 186, pay the employee out of the National Insurance Fund the amount to which, in the opinion of the Secretary of State, the employee is entitled in respect of the debt”. c) Employment Rights Act 1996 section 185 “In this Part “the appropriate date” — (a) in relation to arrears of pay (not being remuneration under a protective award made under section 189 of the Trade Union and Labour Relations (Consolidation) Act 1992) and to holiday pay, means the date on which the employer became insolvent, (b) in relation to a basic award of compensation for unfair dismissal and to remuneration under a protective award so made, means whichever is the latest of— (i) the date on which the employer became insolvent, (ii) the date of the termination of the employee's employment, and (iii) the date on which the award was made, and (c) in relation to any other debt to which this Part applies, means whichever is the later of— (i) the date on which the employer became insolvent, and (ii) the date of the termination of the employee's employment”. d) Employment Rights Act 1996 section 230 “(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 Case Number:1800310 /2022 (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…. (4) In this Act “employer” , in relation to an employee or a worker, means the person by whom the employee or worker is (or, where the employment has ceased, was) employed. (5) In this Act “employment” — (a) in relation to an employee, means (except for the purposes of section 171) employment under a contract of employment …”. e) Section 54 National Minimum Wage Act 1998 defines employee in similar terms. 5. The second respondent has referred me to a long list of cases, namely: Neufeld, Knight, Auto Klenz, Ready Mixed concrete, Nethermere, Eaton, Fleming, Rainford, Dugdale and Rajah. Full Citations are given in Appendix 1 below. 6. In addition the claimant has referred me to Bottrill, Clark and Nesbitt and Regeling and Paggetti. Full Citations are given in Appendix 1 below. Evidence 7. I had before me an agreed bundle of documents paginated and indexed and running to 244 pages. 8. In addition, I had before me a schedule of loss and written submissions of the claimant. 9. The claimant was the only witness. He produced a written statement, which was adopted and taken as read. He was cross-examined by Mr Soni and answered questions from me and was re-examined by his Counsel. Findings 10. Having considered all of the evidence both oral and documentary I make the following findings of fact on the balance of probabilities which are relevant to the issues to be determined. Where I heard or read evidence on matters on which I make no finding or do not make a finding to the same level of detail as the evidence presented to me that reflects the extent to which I consider that the particular matter assists me in determining the issues. Some of my findings are also set out in my conclusions below in an attempt to avoid unnecessary repetition and some of my conclusions are set out in the findings of fact adjacent to those findings. 11. Leads Online Limited (the second respondent(R2)) was incorporated on 29 April 2016.At the outset the Claimant was the sole director and shareholder of the 3 Case Number:1800310 /2022 Company. Two other workers were engaged later on, but they were not directors or shareholders. 12. R2 is insolvent having entered into a creditor’s voluntary liquidation on 7 December 2021. The claimant ceased working for the company on 31 October 2021. 13. The company provided services to various clients including design work, creating websites and social media management. The claimant was a graphic designer and immediately began working in the business of the company from 29 April 2016. The claimant was a hands-on director in that the product of the company was the product of his own work as a graphic and website designer, seeking new customers and managing the business. The claimant was in essence a one-man band. 14. The claimant was not issued with a written contract of employment. There was no Board minute or memorandum setting out the arrangements under which the claimant would be working. The only evidence the tribunal has as to the existence of a contract and its terms is the evidence of the claimant himself and to the HMRC documents, payslips and company accounts to which he was referred. 15. Employment Rights Act 1996, Part I sets out a requirement on a employer to issue a statement of employment particulars covering the key terms of employment. The absence of such a document does not defeat a claimant’s claim to be employed under a contract of employment. However, even if those terms are not written down one would expect the parties to the contract to be clear as to what those key terms are. The claimant was not clear about a number of key terms. 16. The key terms under section 1 ERA 1996 are normal working hours, holiday arrangements and pay,...