Big City Leisure Ltd v McCarthy

A respondent does not require permission to amend its ET3 merely to dispute an averment which it has not admitted. A prior preliminary hearing does not determine a claimant’s employment status unless that issue has in fact been decided.

Employee status is a necessary condition for the transfer protections to operate and for the associated Employment Tribunal claims. Where the status issue was left unresolved, it should be remitted for determination. The outcome of the remaining claims may stand or fall according to that determination.

The claimant worked as a head doorman at a bar whose security services had been contracted out. Following the sale of the bar, he brought claims for unfair dismissal, wrongful dismissal and failure to consult under the Transfer of Undertakings Protection of Employment Regulations 2006 against several potential respondents.

The Employment Tribunal held that Big City Leisure Ltd was the relevant transferee following a service provision change. At the later merits hearing, it upheld the claims against Big City but refused it permission to amend its ET3 to contend that the claimant had been self-employed rather than an employee.

On appeal, Big City no longer challenged the service provision change or its status as transferee. The issue was whether permission to amend was needed to contest employment status and whether that status had already been determined.

1. Appeal allowed. The issue whether the claimant was an employee of the original contractor under a contract of service at the time of the service provision change was remitted to the Employment Tribunal.

2. Big City did not need permission to amend its ET3 in order to contest employment status. Its ET3 had made no admission of the relevant averment in the ET1. On the material before the Appeal Tribunal, that point was prima facie correct.

3. Employment Judge Sherratt’s earlier decision had determined the appropriate transferee following a service provision change. It had not made a proper determination of whether the claimant was an employee rather than self-employed. The later Tribunal therefore erred in treating that question as already decided.

4. The status issue was decisive because TUPE operates only in relation to employees in the strict sense. If the claimant establishes employee status, the unchallenged determinations on the remaining issues will stand. If he does not, they necessarily fall.

5. The Tribunal indicated that the remitted issue could be heard by the Franey Tribunal, subject to the Regional Employment Judge’s case-management discretion. It declined to make the requested case-management directions.

• Employment Appeal Tribunal: Allowed Big City’s appeal and remitted the unresolved employment-status issue for determination: [2012] UKEAT 0459_12_3110.
• Employment Tribunal (Manchester): Upheld the claimant’s claims against Big City and dismissed the claims against Mr Rodgers. It had refused Big City permission to raise the claimant’s alleged self-employment.
• Employment Tribunal preliminary hearings: Employment Judge Sherratt determined that Big City was the appropriate respondent following a service provision change and later accepted its ET3 out of time.