case roundup

This week’s case roundup

Can a majority shareholder be an employee?
Sellars Arenascene v Connolly, IDS Brief 683, CA

Connelly was the majority shareholder in EGP, which in turn had a 99 per
cent shareholding in Arenascene. Connelly had a service agreement with EGP to act
as managing director and chairman of both companies, which were both sold to
IRH in April 1992.

Connelly entered into a contract of service with IRH to act as managing
director for his former companies but held no shares in either of them. In June
1992, IRH sold Arenascene to Sellars Arenascene, which terminated Connelly’s

Connelly’s claim for unfair dismissal failed because the tribunal found
that, prior to April 1992, he was the controlling shareholder of EGP rather
than an employee and did not have the requisite continuity of employment.

Connelly successfully appealed to the EAT which held that the tribunal was
wrong to find that because Connelly was a controlling shareholder before his
employment with IRH, he could not be an employee.

Sellars Arenascene’s subsequent appeal failed. Although the Court of Appeal
confirmed that Connelly’s position as a controlling shareholder was an
important factor in deciding his employment status, it was not the only factor.
There was no reason in principle why a controlling shareholder could not also
be an employee.

Race discrimination comparator
Bhatt v London Borough of Hounslow, unreported, June 2001, EAT

Bhatt brought successful claims for unfair dismissal and victimisation under
the Race Relations Act 1976. With regard to the victimisation claim, the
comparator used by the tribunal was simply an employee who had not carried out
the protected act.

Hounslow successfully appealed to the EAT, which held that the tribunal’s
comparator was too wide and that the Race Relations Act required consideration
of whether Bhatt would have been treated less favourably than an actual or
hypothetical comparator in any "relevant circumstances". While this
did not mean comparison on a "like-for-like" basis, it did call for
consideration of circumstances that were relevant to the treatment Bhatt had
received, principles established in Khan and TNT Express applied.

The circumstances relevant in this case were the fact that Bhatt had
requested redundancy dismissal on early retirement terms and had undergone
disciplinary hearings.

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