EMPLOYEE

Gladwell v Secretary of State for Trade and Industry

EAT: Elias J (President): 25 October 2006

The claimant was a director and 50% shareholder of a travel company which became insolvent. His application to the Secretary of State pursuant to section 182 of the Employment Rights Act 1996 for money owed to him by the company was refused on the ground that he was not an "employee" as defined by section 230(1) of the Act. He made a complaint to an employment tribunal under section 188, which was allocated to be heard by a chairman sitting alone. The parties raised no objection, though they were given notice of that intention and given the opportunity to make representations if they wanted a full tribunal, and the chairman heard the claim. He decided that, as the claimant was a director and joint controller of the company and the same person could not be both employer and employee, he was not an "employee", and he dismissed the claim.

The claimant appealed, contending, inter alia, that the chairman erred in failing to constitute a full panel, or at least to consider so doing, under section 4 of the Employment Tribunals Act 1996.

ELIAS J (PRESIDENT) held:
(1) Although a majority shareholder would in practice act as the employer, making decisions on behalf of the company, he could still be an employee. The chairman saw the question of control as being effectively decisive, rather than merely as a significant factor weighing the scales firmly in one direction, and treated it as likely to be inconsistent with the status of employee. In so doing, the chairman excluded proper consideration of other factors, and the matter would be remitted for rehearing.

(2) Under section 4 of the Employment Tribunals Act 1996 a case which fell within subsection (3), as did the present case, was to be heard by a chairman alone unless he directed otherwise, having regard to the factors set out in subsection (5). There was nothing wrong in a tribunal office operating a standard practice, as directed by the regional chairman in accordance with section 4(2), whereby all cases in that category were listed before a chairman alone and the parties given an opportunity of making representations as to why a full panel should be constituted. The chairman hearing the case should be alert to the continuing duty to consider sitting with members and, although there was no legal duty for him to invite observations from the parties, it would usually be prudent to do so and to state briefly that he had considered the matter and the reason for his decision. Accordingly, since the composition of the tribunal had not been raised by the parties and there was no reason for the chairman to have considered whether a panel should be called, the tribunal was properly constituted.

The appeal was allowed.

Appearances: Oliver Isaacs (Nicholas Frimond, Guildford) for the claimant; Robert Kellar (Treasury Solicitor) for the Secretary of State.