An employment tribunal was entitled to infer that two companies were associated in a case where a relevant director failed to give evidence to the contrary, the Employment Appeal Tribunal (EAT) has held.

In the case of SD (Aberdeen) v Wright, Mr Wright worked for an entity or entities trading as “AMPM” for just over two years when he was dismissed. Unsure who he should sue for unfair dismissal, he brought claims against 19 companies.

Writing in Daniel Barnett’s Employment Law Bulletin, Dr John McMullen of Stone King LLP, explained that the employment tribunal found Wright to have been 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. It also found that these were associated companies and, as such, continuity of employment was preserved. SD (Aberdeen) appealed.

Under the Employment Rights Act s231, two employers are treated as associated if: (a) one is a company of which the other has control; or (b) if both are companies of which a third person has control – in case law, ‘control’ depends on whether the controller has the majority of votes in the general meeting of a company.

In this case, “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,” explained McMullen.

“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.”

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