Appeal No.	 EAT/1135/99

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 12 January 2000

Before
THE HONOURABLE MR JUSTICE LINDSAY
SIR GAVIN LAIRD CBE
MRS J M MATTHIAS

MR C GEORGIOU	APPELLANT

CLEO FASHIONS LLC	RESPONDENT

Transcript of Proceedings

PRELIMINARY HEARING

Revised

	APPEARANCES

For the Appellant	NO APPEARANCE OR REPRESENTATION BY OR ON BEHALF OF THE APPELLANT	

		MR JUSTICE LINDSAY (PRESIDENT):	

1.	This is a hearing, by way of a preliminary hearing, of the appeal of Mr Georgiou in the matter of Georgiou against Cleo Fashions plc.  There has, it seems, been some confusion about the state of the hearing but the latest communication we have received only this morning indicates that Mr Georgiou is willing for the matter to be heard without his being present, and so we will deal with it in that way.

2.	Cleo Fashions Plc is an insolvent company in liquidation and a not unfamiliar question therefore arose which, in this case, was whether Mr Georgiou and, indeed, his wife were or were not, employees of the company.  The unanimous decision of the Tribunal under the Chairmanship of Mrs E Prevezer at London (North) was as follows:-
(1)	Mr Georgiou was not an employee of the Company known as Cleo Fashions LLC.
(2)	Mrs Georgiou was an employee of the Company.

3.	Although the heading to the papers that we have does not so indicate, the body of the decision, refers, as one would expect, to the Secretary of State for Trade and Industry as being the second respondent.  The first respondent below was Cleo Fashions; that company did not appear before us.

4.	In the case of small companies it is often difficult to discern whether a senior figure is an employee or not.  No one test is determinative of the issue.  The Tribunal has to construct a picture from a good number of surrounding circumstances.  Here Mr Georgiou had a written Contract of Employment with the company as its general manager and quality controller.  It has not been said in the decision that that written contract was a sham or otherwise than it appears to be.  He was paid by way of the PAYE system by the company.  He was paid wages by the company.  He worked full time for the company.  However, the Secretary of State apparently urged that he was not an employee.  Upon what grounds that was asserted it is not clear because the decision does not refer to such points.  But there are plain factors that point in that direction.  He was a director of the company.  He was a shareholder of the company.  He was one of two or more joint landlords of the premises occupied by the company or, alternatively, was, perhaps, a joint owner with his wife of those premises.  He was in charge of the workforce and he had injected his own capital to keep the company going.  None of those is necessarily decisive and it is to be noted that his wife was also a shareholder and also a joint owner or landlord of the property occupied by the company.  It is not clear whether she was a director or the secretary of the company but she was held not to be an employee.  

5.	The Tribunal, in a concise decision held as follows:-
“These are the facts on which we base our decision.  
We find that Mr Georgiou ran the company and was not an employee of the company, and, that although Mr Georgiou was paid through the PAYE system and Tax and National Insurance was deducted this is only one factor in considering whether he was an employee and looking at the facts as a whole we conclude that he was not”. 

6.	It is hard not to regard that as confusing.  That he “ran the company” is entirely consistent with his being general manager under his contract of service as an employee.  To base a decision that he was not an employee on the stated fact that he was not an employee is, of course, entirely unacceptable as completely circular.  The PAYE and NIC facts there referred to point against his not being an employee; they point in favour of his being an employee.  But the other factors relied on by the Tribunal to counter that are not described amongst the “facts on which we base our decision” and the contract is not mentioned at all.  Less importantly, there is no explanation of why Mrs Georgiou, (although a shareholder and co-owner of the premises, and, quaere, possibly a director or secretary) was an employee whereas Mr Georgiou was not.  There is here arguably - and we have to emphasise that is all we are concerned about at the moment, whether it is arguable - there is here arguable error of law, either in substantive law or, failing that, in relation to the Meek v City of Birmingham test as to whether the grounds for holding against Mr Georgiou have been sufficiently adequately explained in the decision so that a person can pick up the decision and determine whether there is error of law in the reasoning. The matter is so tersely expressed in the crucial passage that we have read that it may be that the City of Birmingham Test has been failed.  For these reasons we think the matter should go to a full hearing.