IN THE EMPLOYMENT AND DISCRIMINATION TRIBUNAL

 

 

IN THE MATTER:

 

 

BETWEEN

TANYA CLEMENTS

CLAIMANT

 

AND

 

 

LV GROUP LTD

 

RESPONDENT


TRIBUNAL JUDGMENT


 

Reference:                    [2018] TRE 095

 

Hearing Date:                11 October 2018           

 

 

Before:                                     Mrs H G Griffin, Chairman

 

Appearance:

For the Claimant:           In person

For the Respondent:     Mr J McGarry, Purpose Consulting

 

 

THE JUDGMENT

 

The Claimant did not have sufficient continuous employment to entitle her to issue a claim of unfair dismissal because (a) her two employers were not ‘associated companies’ for the purposes of the Employment (Jersey) Law 2003 and (b) she resigned from her first employer in January 2018, thereby breaking her continuous service.  Consequently, the Claimant’s claims of unfair dismissal and wrongful dismissal are struck out.

 

THE REASONS

 

Background

 

1.       By a Claim Form presented on 11 July 2018, the Claimant brought complaints of unfair dismissal and wrongful dismissal against the Respondent ("Claims").  The Claimant was dismissed on 10 July 2018.

 

2.       By a Response Form presented on 27 July 2018, the Respondent defended the Claims and asserted that the Claimant did not have sufficient continuous employment to claim unfair dismissal.

 

Claimant’s submissions

 

3.       The Claimant submitted that her resignation from LV Home Care Ltd to take up employment at Cheval Roc Residential and Nursing Home (“Cheval Roc”) should not have broken her continuous service because:

 

a)       she was forced to resign; and

b)      she asserted that LV Home Care Ltd and Cheval Roc were ‘associated companies’ under the provisions of Article 58 of the Employment (Jersey) Law 2003 (“EJL 2003”).  Therefore, the Claimant asserted that her continuous service was maintained thereby entitling her to bring a claim of unfair dismissal and seek an additional week’s notice pay.

 

Respondent’s submissions

 

4.       The Respondent rejected the Claimant’s assertions on the grounds that:

 

a)       the Claimant resigned voluntarily from LV Home Care Ltd on 24 January 2018;

b)      at the time of her resignation the Claimant knew that such resignation would break her continuous employment; and

c)       LV Home Care Ltd and Cheval Roc were not ‘associated companies’ for the purposes of EJL 2003.

 

Case Management to date

 

5.       This matter came before Advocate Davies, Deputy Chairman, for a Case Management Meeting (“CMM”) on 31 August 2018. At the CMM, the Deputy Chairman ordered that an interim hearing take place to determine whether the Claimant had sufficient continuous employment to bring a claim of unfair dismissal.

 

6.       The issues (“Issues”) before the Tribunal were as follows:

 

a)       who was the Claimant’s employer from 25 January 2018? 

b)      were LV Home Care Ltd (the Claimant’s employer until 24 January 2018) and the Claimant’s subsequent employer ‘associated companies’ for the purposes of EJL 2003?

c)       If they were ‘associated companies’, did the Claimant’s resignation in January 2018 from LV Home Care Ltd break her continuous employment or, despite her resignation, was her continuous employment maintained by virtue of the provisions in Article 58 EJL 2003?

 

7.       An Interim Hearing was listed for 11 October 2018 (“Interim Hearing”).

 

Documents and evidence

 

Witness evidence

 

8.       On behalf of the Claimant, the Tribunal received witness statements and heard evidence from:

 

a)       the Claimant [p101]; and

b)      MR, former manager of Cheval Roc [p100].

 

9.       On behalf of the Respondent, the Tribunal received witness statements and heard evidence under oath from:

 

a)       Ms G Buesnel, Administrator of LV Group Ltd [p20[; and

b)      Mr E Dingle, Director of LV Home Care Ltd [p21].

 

10.   I also heard brief evidence under oath from Mr C Shelton, Director of LV Group Ltd.

 

Hearing File

 

11.   I received a file of documents in advance of the Hearing (“Hearing File”).  Early during the Claimant’s evidence, it became clear that the Claimant did not have a copy of the Hearing File; she was using a file which contained the Respondent’s disclosure documents.  The Respondent had delivered the Hearing File to the Claimant’s union representative in accordance with the Case Management Orders but the union representative had failed to pass it on to the Claimant.

 

12.   There was only one document in the Hearing File which was not in the Respondent’s original disclosure file.  I therefore adjourned the Interim Hearing to allow the Claimant time to read that additional document.  When we reconvened, the Claimant confirmed that she had read the document and was happy to continue with her evidence.

 

Submissions

 

13.   Both parties made their arguments by way of oral submissions.

 

The Law

 

14.   Article 58 EJL 2003 provides as follows:

 

58  Change of employer

(5)  If an employee of a company is taken into the employment of another company which, at the time when the employee is taken into its employment is an associated company of the first-mentioned company, the employee’s period of employment at that time shall count as a period of employment with the associated company and the change of employer shall not break the continuity of the period of employment.

(6)  For the purposes of paragraph (5), a company is associated with another company if it is a subsidiary or a holding company of that other company, or if both companies are subsidiaries of the same holding company.”

 

15.   There is no definition of ‘subsidiary’ or ‘holding company’ in the EJL 2003, and it is therefore necessary to look to the Companies (Jersey) Law 1991 (“CJL 1991”) for guidance.

 

16.   Article 2 of the CJL 1991 provides as follows:

 

“2   Meanings of “subsidiary”, “wholly-owned subsidiary” and “holding body”

(1)     A body corporate is a subsidiary of another body corporate if the second body –

(a)                 holds a majority of the voting rights in the first body;

(b)                 is a member of the first body and has the right to appoint or remove a majority of the board of directors of the first body; or

(c)                 is a member of the first body and controls alone, pursuant to an agreement with other shareholders or members, a majority of the voting rights in the first body,

or if the first body is a subsidiary of a body corporate which is itself a subsidiary of the second body.”

 

 

 

Material Facts

 

17.   I carefully considered all of the evidence (including witness accounts).  However I summarize here only that evidence which was relevant to the Issues. Where it is has been necessary to resolve disputes about what happened I have done so on the balance of probabilities taking into account my assessment of the credibility of the witnesses and the consistency of their accounts with the rest of the evidence including the documentary evidence. In this decision I do not address every episode covered by that evidence, or set out all of the evidence, even where it is disputed. Rather, I have set out my principal findings of fact on the evidence before me that I consider to be necessary in order to fairly determine the claims and the issues to which the parties have asked me to decide.

 

Claimant’s employment

18.   The parties agreed that the Claimant was continually employed by LV Home Care Ltd from 5 June 2015 until 24 January 2018 when the Claimant resigned voluntarily.  On 25 January 2018, the Claimant commenced employment with Cheval Roc.

 

19.   The Claimant’s employment contract (“Contract”) with Cheval Roc specified as follows:

 

a)       the Claimant’s employer was “Cheval Roc Residential & Nursing Home”;

b)      the Claimant’s continuous employment commenced on 25 January 2018; and

c)       the Claimant’s place of work was at Cheval Roc but that LV Group Ltd (the Respondent) was entitled to change the location of the Claimant’s work “to any other Residential Home owned by the Group if the need arises.”

 

20.   In his evidence Mr Shelton confirmed that the Claimant was not employed by Cheval Roc itself.  He submitted that the Claimant was, in fact, employed by CR Residential Ltd, a trading company which owned 100% of the shares in Bonne Nuit Cheval Ltd (“Bonne Nuit Cheval”), a property holding company.  In turn, Bonne Nuit Cheval owned Cheval Roc.  There was no mention of CR Residential Ltd in the Contract.

 

21.   On the basis of the above evidence I made a finding of fact that, from 25 January 2018 until the effective date of termination, the Claimant’s employer was LV Group Ltd. 

 

22.   LV Group Ltd dismissed the Claimant on 10 July 2018.  The Claimant received one week notice to terminate her employment.

Shareholders Agreement

 

23.   According to the Shareholders Agreement, during the relevant period there were two shareholders in LV Home Care Ltd:

 

a)       LV Group Ltd (the Respondent); and

b)      a private individual,

 

each of whom held 50% of the shares.  Accordingly, LV Home Care Limited was in effect what is commonly referred to as a “50:50 deadlock” company.

 

24.   The Shareholders Agreement [§5.1 at p62-63] specified that neither of the two shareholders had control of the board of directors unless:

 

a)       agreed by Special Shareholder Consent (requiring the agreement of not less than 70% of the holders of the company’s nominal share value).  The practical effect of this consent threshold was that the consent of both shareholders was required to pass a Special Shareholder Consent;

b)      specifically provided in the adopted Business Plan or Annual Budget; or

c)       specifically provided for in the Shareholders Agreement.

 

25.   I accepted Mr Shelton’s evidence that the above provisions were not varied by the two shareholders in either the Annual Budget or in an adopted Business Plan.  Consequently, LV Group Ltd did not have control of the board of LV Home Care Ltd.

 

Conclusion

 

26.   Applying the law to the facts as set out above, in order for LV Home Care Ltd and LV Group Ltd to be “associated companies” under the provisions of Article 58 EJL 2003, LV Group Ltd must:

 

a)       hold a majority of the voting rights in LV Home Care Ltd; or

b)      be a shareholder of LV Home Care Ltd and have the right to appoint or remove a majority of the board of directors of LV Home Care Ltd; or

c)       be a shareholder of LV Home Care Ltd and, under the terms of a supplemental agreement between other shareholders, control a majority of the voting rights in LV Home Care Ltd.

 

27.   On the facts as set out in paragraphs 23 to 25 above, LV Group Ltd did not satisfy any of the three requirements as set out in paragraph 26.  Although LV Home Care Ltd and LV Group Ltd worked collaboratively and were linked by the fact that LV Group Ltd was a shareholder in LV Home Care Ltd, they were not “associated companies” under the provisions of Article 58 EJL 2003.

 

28.   I therefore concluded that Article 58 EJL 2003 did not apply in these circumstances and that consequently, when the Claimant chose to resign from LV Home Care Ltd, she broke her continuous employment. 

 

29.   The Claimant therefore does not have sufficient continuous employment to bring a claim of unfair dismissal. 

 

30.   Similarly, since the Claimant received the appropriate notice pay of one week, there was no breach of contract by the Respondent in its payment in lieu of notice to the Claimant. 

 

31.   It is worth noting that, had the Claimant been employed by CR Residential Ltd (as asserted by the Respondent), the outcome in this case would have been the same.  Whilst CR Residential Ltd is a wholly owned subsidiary of LV Group Ltd (meaning that LV Group Ltd and CR Residential Ltd are “associated companies” under the provisions of Article 58 EJL 2003), that this relationship cannot extend to LV Home Care Ltd.  Although LV Group Ltd is a shareholder in both CR Residential Ltd and LV Home Care Ltd, it is not a controlling shareholder in LV Home Care Ltd and does not otherwise satisfy the requirements of Article 58 EJL 2003 to be an “associated company” of LV Home Care Ltd.

 

32.   The Claimant’s claims of unfair dismissal and wrongful dismissal (failure to pay notice pay) are struck out.

 

 

 

Mrs H G Griffin, Chairman                                                    Date:           5 November 2018

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