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Continuity of Employment

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Was an employment tribunal entitled to draw an inference that two companies were associated in a case where a relevant director had failed to give evidence to the contrary?

Yes, held the EAT in SD (Aberdeen) v Wright.

Mr Wright worked for an entity or entities trading as 'AMPM' from 20 May 2014 to 23 August 2016, when he was dismissed. But who should he sue for unfair dismissal? He brought claims against 19 companies, to be on the safe side.

An employment tribunal determined he was employed by Chiahealth Property Limited between 20 May 2014 and 3 September 2015 and by SD (Aberdeen) Limited from 3 September 2015 until 23 August 2016. The tribunal found these companies were associated companies, so continuity of employment was preserved by s218(6) Employment Rights Act, giving the tribunal jurisdiction. SD appealed.

Under ERA s231 two employers are to be treated as associated if: (a) one is a company of which the other (directly or indirectly) has control, or (b) if both are companies of which a third person (directly or indirectly) has control. 'Control', under the case law, depends on whether the controller has the majority of votes in the general meeting of a company (so called 'legal' control).

But here the tribunal was entitled to draw an inference that the two companies were associated where a director (Mr Kerr), described as a "principal actor" in both companies, could have given evidence to shed light on the issue, but failed to do so. Thus, while voting control, rather than mere de facto control, is required for the purpose of section 231, the EAT held that evidence of de facto control can properly be used to draw an inference of voting control if the respondent has an opportunity to clarify the legal position, but does not.

Thanks to Dr John McMullen of Stone King LLP for preparing this case summary.