ud417/2013

EMPLOYMENT APPEALS TRIBUNAL

CLAIM OF:                                                                                      CASE NO.

Noel Jordan                                                                                        UD417/2013

-        Claimant

Against

M2C Wireless Machine Limited

-        Respondent

under

UNFAIR DISMISSALS ACTS, 1977 TO 2007

I certify that the Tribunal

(Division of Tribunal)

Chairman:      Ms O. Madden B.L.

Members:       Mr M. Noone

                        Mr N. Dowling

heard this claim at Dublin on 31st March 2014

                                    and 10^th September 2014

                                    and 11^th September 2014

                                    and 13^th November 2014

Representation:

Claimant: Mr Peter Downey, Eagleton Downey Solicitors, Suite 1155, Fitzwilliam Business Centre, 77 Sir John Rogerson's Quay, Dublin 2

Respondent:    On first day Mr. Brien Collins, B.L.

                        On the remaining days Mr Mark O’Connell B.L.

The determination of the Tribunal was as follows:-

Preliminary Issue

Both parties told the Tribunal that the claimant’s employment status was in dispute.

The respondent told the Tribunal that the claimant was not an employee of the company but rather a director working on a “sweat equity” basis in the belief that when the product being developed was completed and the purchase order honoured he would be in receipt of remuneration.

Summary of Claimant’s Evidence:

The claimant told the Tribunal that he commenced employment in approximately February 2011 and was employed until October 2012. During this time he did not receive payment from the respondent company.

The claimant and the CEO of the respondent company were friends for 10 years and had worked together previously. The claimant bumped into MB on the road one day and had not seen MB for one and a half years prior to this. MB told him about a new project he was working on and showed him a purchase order for €139,000 that he had received from his client. He told the claimant he would be ideal to help him get the project to completion stage because of his previous experience.

MB invited the claimant to the company offices. When he attended, the product was nearly ready for market. MB wanted the claimant to join the company to help get the product into the marketplace. The claimant thought this was a great opportunity and told MB that he would need one week to finalise what he was currently working on.

MB told the claimant that the company currently had no money but if he helped to get the product to market he would be in receipt of the same wages as another employee, €30,000 per annum. The product was due for completion by summer 2011 at which stage the claimant would receive payment. The claimant commenced work with the company for 8-10 hours per day, five days per week, and sometimes at weekends. These hours were worked on the understanding that the quicker they got the product completed and delivered to the client the quicker they would get paid.

The product had to pass a number of development tests prior to completion. These tests involved the claimant’s input and expertise. The claimant travelled to a number of different countries for research and development purposes, and to attend workshops, as a representative of the company. He submitted expense claims in respect of these trips but was not reimbursed by the respondent company.

The claimant attended a number of meetings from 12^th September 2011. At these meetings it was decided that contracts of employment were to be drawn up. Although the contracts were on the agenda for a number of meetings they never came to fruition and the claimant never received his contract of employment. He believed the contracts were required at this stage because the company was approaching the time for delivering the developed product to the client which would result in him receiving payment for his work. The claimant felt that his payment would be backdated to his date of commencement with the respondent company.

In February 2012 a shareholders agreement was drawn up. The claimant was mandated to arrange correct governance and attribute the shares to holders. The claimant was to receive 8% of shares. The claimant finally got a shareholder’s agreement but never got share certificates. The claimant did not consider his shares as payment in respect of work done because his initially meeting with MB was in February 2011 and shares were not mentioned as a form of payment at that stage. The claimant understood that he would receive the same payment as another employee which would gradually increase to industry norms.

The claimant told the Tribunal that his loss of earnings from the date of his dismissal amounted to €4,000.

Summary of Respondent’s Evidence:

The original CEO (later CTO) of the respondent company gave evidence. He set up the company in 2007 with two friends. The claimant joined the team in 2011. He and the claimant had been involved in ventures together previously. A shareholder meeting was held in February 2012. There was one employee (S) and 8-9 directors/shareholders one of whom was the claimant. The claimant was the Chairman. The agreement was that they would be remunerated when the company received investment or revenue. The claimant signed the shareholder’s agreement. In December 2011 the company had received investment and the CEO gave everyone €2-3k each.

They held weekly meetings. Item one on the agenda each week was the preparation of contracts of employment. The hope was that they would all become employees eventually but it was futile until they got investment. They would not secure investment if the company was in debt due to wages. They could not retrospectively hire as that would also deter investment. The market for electric cars is small with only 670 units in operation. The company is in competition with an Austrian competitor to provide the charging units. The company has never made a profit. The €139k order cost €200k to make. He agreed that he told the claimant that they would all be employees when the money was there, but he had also told him not to give up his day job. Projected calculations envisioned wages to all the directors but the reality was different. The project took much longer to complete than envisioned. The claimant never asked for a contract of employment, terms and conditions, hours of work, pay or holiday pay.

The current CEO gave evidence in regard to the preliminary issue. He joined the business in 2010. His role was to raise funding. They all knew that there was no money in the business but he believed it had a great chance of success. They were all directors or shareholders who were working in the expectation of future reward. There was also one employee (S). The witness continued to work part-time in a restaurant. He believed it would be another two years before he could become an employee. The claimant had never asked him for a contract of employment, terms and conditions, wages or holiday pay. The claimant was the Chairman at the time. He was production manager.

The witness chose his own hours. He worked an average three days per week. The claimant worked most days to his knowledge. They were both free to come and go as they pleased. The then CEO and another director were present on a daily basis. They both held an 8% shareholding.

Determination:

Critically the claimant can be distinguished from the existing employee in the company (S) who had a contract of employment, paid salary, terms and conditions and hours of work. According to the last witness the claimant could come and go as he pleased, the same situation as the other shareholder who attended the office on a regular basis. It has never been asserted that he was an employee. He had expectations of becoming an employee at a date in the future when the company could afford it. This would appear to contradict the claim that he was an employee form the start.

Considering the well established principles of what criteria would constitute an employment relationship the following factors should be considered:

1. Are they under the control of another person who directs as to how, when and where the work is to be carried out?
2. Do they receive a fixed hourly/weekly/monthly wage?
3. Are they able to subcontract out the work (is the employer/employee relationship able to be transferred on)?
4. Do they supply materials for the job?
5. Do they provide their own equipment (other than small tools of the trade)?
6. Are they exposed to any financial risk in carrying out the work?
7. Do they work a set number of hours in a given month or per week?
8. Do they receive expense payments to cover travel and/or subsistence?
9. Are they entitled to extra pay or time off for overtime?

As noted in the case of Henry Denny & Sons Ltd. T/A Kerry Foods -v- The Minister For Social Welfare (1997)“Each case must be considered in the light of its particular facts and of the general principles which the courts have developed”.

In all the circumstances the Tribunal is not satisfied that he has met theses criteria and on that basis the claimant is not an employee as defined in the Unfair Dismissals Acts, 1977 to 2007. Therefore the Tribunal does not have jurisdiction to hear the claim.

Sealed with the Seal of the

Employment Appeals Tribunal

This   ________________________

(Sgd.) ________________________

     (CHAIRMAN)