Page 25 - BOSS Today Issue 14

LEGAL
leGal
FaCt

it is a criminal offence to fail to
give written details of a redundancy
calculation. Both the company and its
officers can be fined up to
£200 per conviction. this only
applies to the statutory redundancy
payments – any contractual
enhancements
are exempt.

’Consultant’ Can still mean
‘employee’

A case involving liquidation shows why you need to take care over job titles

t is always worth to consider a claim for unfair
remembering that someone dismissal and accrued holiday,
iwho is considered self- on the ground that it had no
employed for tax purposes may jurisdiction to hear the case.
still be considered an employee The EAT overturned this
under employment law. decision. It considered that in
Take the case of Dr Freedman. focusing on the share transfer,
He operated a business as a sole the ET had failed to take into
trader, and in 2009 incorporated account the transfer of assets and
it as Career Energy Ltd (CEL). A contracts, and had been wrong
new company, Career Energy to decide that there had been
Consultancy Services Ltd (CECSL), no transfer of his employment.
was formed and 52 per cent of its It added that when Freedman
shares were sold to an investor. became a consultant he had in
As part of the overall transaction, fact continued to be an employee
CEL was put into liquidation regardless of the label put on the
and its employees, assets and relationship by the parties.
contracts were transferred to The EAT therefore considered
CECSL. Freedman then continued that the ET did have jurisdiction
to act as chief executive until to hear Freedman’s claims, and
February 2010, when the investor referred the case to a new tribunal.
who controlled the majority One lesson to be learned from
shareholding took over his this case is that while a pure share
role. Freedman continued as a sale does not fall within TUPE, a
director and carried out the same more complex transaction can
duties, but he was described as include both a share sale and
a consultant and was paid salary a transfer of business. Another
and commissions gross against is that the parties may label a
invoices submitted. In October working relationship as one thing,
2010, CECSL went into insolvent and HMRC may accept this, but an
liquidation. employment tribunal can take an
An ET found that there had entirely different view.
been no transfer of Freedman’s
employment in 2009, that he n For more inFormation,
had ceased to be an employee in contact your BoSS Hr
February 2010, and so declined adviSer on 0845 450 1565.

32 BOSS TODAY | May/June 2012