Application of Unfair Dismissals and Minimum Notice and Terms of Employment Legislation to Directors
The Employment Appeals Tribunal recently determined in the case of Reddy & Reddy v Hyper Trust Limited (EAT Determination of 23 January 2017) that the former directors of a company were not employees for the purposes of the Unfair Dismissals Acts, 1977 – 2007 and the Minimum Notice and Terms of Employment Acts, 1973 – 2005.
The claims were brought by the former directors (and the ultimate owners) of Hyper Trust Limited (“Hyper Trust”), which owns and operates the Leopardstown Inn public bar and restaurant. The former directors (the “Claimants”) owned and operated the business of Hyper Trust since 1978 and both worked in the business.
At the Claimants’ instigation, Hyper Trust obtained protection from its creditors through a High Court examinership process. While the Claimants had made an investment proposal, the Examiner chose an investment proposal from a third party and formulated a Scheme of Arrangement based on that investment proposal. The Scheme of Arrangement provided that the Claimants would be removed and replaced once the Scheme of Arrangement came into effect. The Claimants opposed the Scheme of Arrangement, but it was approved by the High Court.
The Tribunal noted that there is no single determinative factor as to whether a person is an employee and that all relevant facts must be considered. The Tribunal was satisfied that:
(a) the PRSI for the Claimants was paid under class S1 (self-employed) since 2008;
(b) no written contract of employment existed (albeit that there was evidence that the directors had requested contracts be drawn up shortly before they lost control of Hyper Trust);
(c) the Claimants had other sources of income;
(d) the Claimants considered and treated the assets of Hyper Trust to be their own; and
(d) the Company paid personal expenses of the Claimants.
Considering these factors, together with the evidence and submissions of both sides, the Tribunal held that the Claimants were not employees and, therefore, were not entitled to the relief claimed.
For further information please contact Gavin Simons or your usual AMOSS contact.