Cloughvalley Stores, Crossmaglen
In this Northern Ireland Industrial Tribunal Claim “Quinn –v- Cloughvalley Stores (NI) Limited – (In Administration)”, heard on the 2nd September 2013,one of the issues for the Tribunal to consider was whether the claimants (and in particular Michael Quinn Senior and Brigid Quinn who were Directors of the company) were employees of the respondent company?
THE FACTS
The respondent company was incorporated in 1998 and Michael Quinn, Senior and Brigid Quinn (two of the claimants) were the Directors and Shareholders of the company. They each owed 50% of the shares. Mr and Mrs Quinn sought planning permission to develop a property which they had bought in Crossmaglen and ultimately the premises opened in 2004. There were other stores and units which were let out on the same site. They had a loan with Danske Bank to develop the property and had hoped to reduce the loan considerably by the sale of some ground adjacent to the property. This sale was delayed and ultimately Danske Bank decided to put in a reporting accountant (Des Kelly) to oversee the business in 2009. Up until this point, Mr and Mrs Quinn had been overseeing the business along with the shop that they owned in Carrickmacross, County Monaghan but there was a manager running the premises in Crossmaglen. Ultimately the manager was made redundant in an effort to cut costs and Mr and Mrs Quinn took over the day to day running of the business from that time.
Danske Bank
Effectively, at that stage Des Kelly controlled the finances of the business and supervised its running. Mr and Mrs Quinn’s evidence was that from 19 July 2009, when they began to be paid a regular wage from the business with Mr Kelly’s permission, they were completely under his control in terms of the running of the business. Mr Quinn’s evidence was that he and his wife had taken a small wage prior to that, but were focussing reducing the loan to the bank. After Mr Kelly took over, and Mr and Mrs Quinn were more actively involved in the running of the business on a day-to-day basis, the position changed. No money could be spent without Mr Kelly`s permission and the claimants had to account for all money coming in.
Company placed in Liquidation
The property which they had anticipated selling to Newry and Mourne Council was sold to the Council and their debt was reduced substantially, but this was still not sufficient to satisfy the bank, which maintained Mr Kelly in place. Ultimately the bank put the respondent company into Administration on 17 October 2011 and Tom Keenan of Keenan Corporate Finance was appointed as administrator.
At this point the business continued to run and Mr and Mrs Quinn continued to be employed in it as ultimately were Sarah Quinn and Michael Quinn Junior.
On 7 March 2012, Mr and Mrs Quinn, Sarah Quinn and Michael Quinn Junior were invited to a meeting with the administrator. They were in regular contact with the administrator and there had been no indication given of any changes. Tom Keenan, the administrator told them that the Henderson Group were interested in buying the business as a going concern, but one of the conditions of the purchase would be that no member of the Quinn family or senior management could have any ongoing involvement in the running of the business. This was however confirmed ultimately by a letter setting out the outcome of the claimant’s appeal against dismissal and sent by Keenan Corporate Finance to each of the claimants. Subsequent to an incident the Quinns and their children were made redundant.
Whether or not the claimants were “employees”?
Fair Employment Tribunal
The Tribunal needed to address the issue of whether Michael Quinn Senior and Brigid Quinn, in particular, were employees of the respondent company. This was significant as only employees can bring a claim of Unfair Dismissal. The issue in relation to Mr and Mrs Quinn Senior related to whether they should be properly considered employees, given that they were both Directors of the respondent company and each had 50% of the shares in the company. The Tribunal did not consider this situation prior to 19 July 2009 as Mr and Mrs Quinn’s claims related only to the period after this date, when Desmond Kelly was put in place, the manager also left and Mr and Mrs Quinn took a much more active role in the running of the company. They were clear that they took a much more active role in the running of the company on a day-to-day basis but strictly under Mr Kelly’s control and with him holding the purse strings. It was at this time that they started to receive a regular wage from the company and received payslips.
DECISION
The Tribunal`s view was that in this case Mr and Mrs Quinn were employees from the 19th July 2009, if not before. Their claim was confined to the period from19 July 2009 until their employment ended on 13 March 2012. After Danske Bank effectively took over the running of the respondent company, and Des Kelly was appointed as reporting accountant, it was clear that control of the business effectively was taken away from Mr and Mrs Quinn. While they were “hands on” in the running of the company and continued to be closely involved in the running of the company, the element of independence and control which they had enjoyed previously had gone. Instead, they were very much under the control of Mr Kelly, who directed the day-to-day running of the business, set weekly budgets and authorised them as to what cheques could be written or not.
The Tribunal had no hesitation in deciding therefore that the Directors in those circumstances were employees and therefore entitled to Redundancy.