Appeal No.	 EAT/1226/01

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 25 March 2002

Before
HIS HONOUR JUDGE J MCMULLEN QC
MR D A C LAMBERT
MISS A MACKIE OBE

MR P M WATKINS	APPELLANT

(1) SECRETARY OF STATE FOR TRADE & INDUSTRY
(2) CHANCEWOOD LTD	RESPONDENTS

Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING EX PARTE

Revised

	APPEARANCES

For the Appellant	MR WATKINS
(The Appellant in person)	

HIS HONOUR JUDGE J MCMULLEN QC

1	This case is about redundancy and insolvency payments.  It is an appeal by the Applicant in those proceedings against a decision of an Employment Tribunal, Chairman, Mr L W Belcher, sitting at Southampton on 7 August, promulgated with Extended Reasons on 
28 August, 2001.  The Applicant represented himself; the First Respondent was represented by an officer of the DTI.  The Applicant claimed redundancy payments and notice and other pay arising on the insolvency of the business.

2	The issues before the Tribunal were: the status of the Applicant, whether employee or otherwise; and whether there had been a TUPE transfer.  The Tribunal decided that the Applicant was not an employee and dismissed the application.  The Applicant appeals against that finding on the following grounds, as set out in a skeleton argument and in oral submissions today.

3	The Applicant was a director and a one hundred percent shareholder of the second Respondent from formation of that company or its predecessor in 1995 until the relationship ended on 17 January 2001 upon its insolvency.  As the Tribunal found, the Applicant had guaranteed the financial aspects of the company through a bank loan.  He was the only person who could make formal decisions in regard to the running of the company.  He could not appeal to anybody in the company by way of a grievance procedure and there was no one in the company who had power to terminate his employment.  He was the decision maker.  He was therefore running the company.  

4	The Tribunal also held that he taken a salary cut from about £250 to £140 a week in order, as it put it, to try and salvage something from the wreckage he alleged was created by the Customs and Excise’s conduct.  The conduct was a gross error by the Customs and Excise in levying VAT against the company in the sum of £9,000.  This immediately threw the company into grave financial difficulties from which it never recovered.  In due course the Customs and Excise admitted it was wrong in claiming the sum.  Nevertheless, it did not stop the Inland Revenue from weighing against the company and, as the Tribunal noted, the Inland Revenue itself applied as a petitioning creditor and had the company wound up.  

5	The Tribunal concluded that the Applicant was not an employee.  It found that the wage the Applicant was receiving was below the minimum wage; that if he had been employed by another company he would not expect to guarantee its financial position; that he would not expect to take a cut in salary if he were employed by another company as a mechanic.  In other words, it seems to us, the Tribunal was contrasting the position of someone who has a real stake in the business with one who is simply an employee.  The latter would not be expected to carry financial responsibilities for the company.

6	The Tribunal directed itself by reference to the Employment Rights Act 1996 and to the leading authority, Secretary of State for Trade and Industry v Botteril [1999] IRLR 330.  Applying the law and that authority to the facts as found, the Tribunal came to the conclusion that the Applicant was not an employee.  The Applicant appeals submitting that the Tribunal had erred in law.  The Tribunal made extremely sympathetic noises in the Applicant’s direction in its criticism in the conduct of the statutory authorities as they applied to the Applicant and his company.  Nevertheless, the Tribunal was constrained to apply the law as it perceived it to be.  

7	We detect no error in the application of those legal principles.  The sympathy expressed by the Tribunal is one which we have seen on many occasions.  The decision as to whether a person is an employee or not is one of fact in a case like this where the relationship is regulated not only by some documentary material but also by material which was adduced in oral evidence before the Tribunal.  In those circumstances the Tribunal is the exclusive arbiter of facts and the decision it makes is one which in we are most unlikely to intervene.

8	A sense of grievance is maintained by the Applicant on another ground and that relates to the conduct of the hearing by the Chairman.  The criticism is that the Secretary of State’s representative arrived late at the hearing, failed to provide a bundle of documents seven days in advance and the Applicant was unable to study the documents prior to the hearing.  Those allegations would presumably go to a criticism of the hearing as being unfair.  

9	Having listened to Mr Watkins this morning, we detect no substantial error in the conduct of those proceedings such as would lead a reasonably informed observer to believe that there was a real possibility that the Tribunal might not be impartial.  It is clear the Tribunal did look at all the material adduced by the Applicant and the Secretary of State.  In our judgment no error of law has been committed by it.  We are grateful to Mr Watkins for coming today and explaining the situation to us as he sees it but we dismiss the appeal.