2009 August | Sherie Griffiths

August 4, 2009

Builders’ Argument Against Unfair Dismissal Claim Had No Foundation In Sham Self-employed Contract

Filed under: Uncategorised — Tags: Circumstances, Commonsense Approach, Contract Doesn, Court Of Appeal, Courts And Tribunals, Daily Basis, Deliberate Intention, Employment Law Specialist, Employment Rights, Employment Tribunal, General Degree, Hornet, Lady Smith, Legal Relationship, Paperwork, Partnership Agreement, Sham, Szilagyi, Truth, Unfair Dismissal Claim — sheriegriffiths.com @ 8:09 am

The question of who is and who is not an employee has long exercised the courts and tribunals. Earlier in the year, we posted an article by HR and employment law specialist, Karen Woodbridge of Hornet Solutions – http://www.hornetsolutions.com – about how a supposedly self-employed person could, under certain circumstances, acquire employment rights, including the right to sue for unfair dismissal. The latest from Karen shows yet another example of where this problem has caught a company out.

Mr Szilagyi worked for a building firm with whom he had a written partnership agreement. However, when he lost his job he took his case to an Employment Tribunal, claiming unfair dismissal. His ex-employers argued he had no such right because he was a partner, not an employee. Mr S countered this by pointing out that they had provided him with tools and a van, that he wasn’t free to work for any other firm and that the general degree of control they had over him had made him an employee. The tribunal accepted this argument and found the partnership agreement was a sham.

The Court of Appeal has since set out the test for establishing whether or not a contract is a sham:

Lady Smith said
“The question is always what the true legal relationship is between the parties.” This contradicts the commonsense approach which says paperwork is king. She goes onto state “if there is evidence to show that the contract doesn’t paint a true picture, the court or tribunal needs to look behind what’s in writing, to find the truth. Whether the document was intended to deceive or mislead or even where there is no deliberate intention to deceive, what is important is what is happening in reality on a daily basis. It is this “truth” that will decide whether a person is really an employee or a self-employed worker.

So the lesson is, if your paperwork is contradicted by the daily reality, Beware!

As I keep saying on this issue, “if they look like an employee in terms of their work activities, there is a risk they’ll be deemed to be an employee no matter what all-singing, all dancing, self-employed contract the two parties sign.

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August 3, 2009

The Companies Act 2006 – The Final Implementation

More from Branston Adams Chartered & Certified Accountants’ July newsletter.

The Companies Act 2006 received Royal Assent on 8 November 2006, and has been introduced in a series of different stages. Some of the key changes coming into force on 1 October 2009 are outlined below.

New company formation

The documentation required for forming a company will be very different, with a much shorter Memorandum of Association. Companies will no longer be required to specify their objects, and the concept of authorised share capital will be abolished. New Model Articles will be introduced. There will be three types:

Private company limited by shares

Private company limited by guarantee

Public limited company

The Statement of Capital is a new requirement, providing a ’snapshot’ of a limited company’s issued share capital at a given time. It will also need to be provided in various other circumstances, including as part of the application to incorporate and with each annual return made up on or after 1 October 2009.

Existing companies

Companies formed before 1 October 2009 will have constitutions designed under previous law, so there will be a need for transitional provisions. Where the Articles contain matters which are not required under the specific provisions of the Companies Act 2006, the company may consider them to be unduly restrictive. Companies would be well advised to examine their Memorandum and Articles of Association with a view to adopting the new Model Articles, or to changing some of their current provisions.

Directors’ Service Addresses

Directors (and company secretaries where applicable) of both existing and new companies will have the right to set out a service address rather than their usual residential address. The service address may be the company’s registered office.

Individual companies will have to maintain two registers of directors – one containing, amongst other things, a service address for each director, and a further register containing the residential address of each director (protected information).

Only shareholders of traded public companies will be required to provide any address to Companies House.

Registrar’s Powers

The Registrar of companies will be given a range of new powers. These include powers to decide on the form and manner in which companies must deliver documents, what is needed for a document to be properly delivered, provision of electronic delivery for certain documents, and amendments to the register.

Striking off

The existing procedures will be carried over in a similar form. However, there will be a new simplified administrative restoration procedure for companies struck off by Registrar’s action. Whatever the route of dissolution, the time limit for application to restore will be six years (currently two years for liquidation, 20 years for striking off).

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