SD (Aberdeen) Ltd v Wright & Ors

For continuity of employment, the control required by section 231 of the Employment Rights Act 1996 is legal or voting control, rather than mere de facto influence. However, evidence of practical control may support an inference of legal control where the person able to clarify the corporate position has had a fair opportunity to do so and has failed to provide contrary evidence.

An Employment Tribunal may therefore find companies to be associated employers from the whole evidential picture, including their integrated operations, common management, payment arrangements, and the parties’ failure to address a clearly raised issue. An appeal cannot undermine an unchallenged alternative finding which independently establishes the employee’s qualifying service.

The claimant worked in businesses trading as AMPM from May 2014 until his dismissal in August 2016. Uncertain which of numerous entities was his employer, he brought claims, including unfair dismissal, against 19 respondents.

The Employment Tribunal held that he was an employee. It found that Chiahealth Property Ltd employed him until September 2015 and that S D (Aberdeen) Ltd then employed him. It also held that those companies were associated employers, preserving continuity under sections 218(6) and 231 of the Employment Rights Act 1996. Alternatively, it found that S D (Aberdeen) Ltd had employed him throughout.

S D (Aberdeen) Ltd appealed only the associated-employer finding. The central issue was whether the Tribunal had sufficient material to infer that Duncan Kerr had legal control of both companies.

1. Appeal dismissed. The Employment Tribunal made no error of law in finding that Chiahealth Property Ltd and S D (Aberdeen) Ltd were associated employers.
2. Section 231 of the Employment Rights Act 1996 requires legal, namely voting, control. Mere de facto control is insufficient by itself. Nevertheless, practical control can provide the evidential basis for an inference of voting control where the party able to explain the legal structure has an opportunity to do so but does not.
3. The Tribunal was entitled to draw that inference. The evidence showed common premises, closely connected business operations, Chiahealth’s payment of the claimant even while he performed work for S D (Aberdeen) Ltd, Mr Kerr’s role as representative and principal actor for both companies, and the claimant’s continuing dealings with him. Mr Kerr did not answer the claimant’s express associated-employer submission or adduce evidence to displace the inference. The Tribunal could also treat his conduct as an implied admission.
4. The appellant had not challenged the Tribunal’s alternative finding that S D (Aberdeen) Ltd had employed the claimant throughout the material period. That unchallenged finding independently gave the claimant the qualifying continuity of employment. The EAT could not entertain an unpleaded argument against it.
5. The EAT deferred the claimant’s application for expenses. It directed that Mr Kerr receive formal notice and an opportunity to respond before any expenses or wasted-costs order was considered.

• Employment Appeal Tribunal: dismissed S D (Aberdeen) Ltd’s appeal and upheld the Employment Tribunal’s associated-employer finding: [2018] UKEAT 0003_18_1409.
• Employment Tribunal, Aberdeen: in a judgment dated 18 August 2017, found that the claimant was an employee, that the two relevant companies were associated employers under sections 218(6) and 231 of the Employment Rights Act 1996, and alternatively that S D (Aberdeen) Ltd employed him throughout.