Case Study: Substantial Settlement for an Auditor who Invoiced via a Limited Company

Summary

Debbie instructed our Employment lawyers in Croydon as she had been refused funding by her legal expenses insurer to bring about Employment Tribunal Claim, as they did not accept she was an employee.

The situation

Debbie was an experienced auditor employed by Shield Partnership. After a few years in her post, Mark, the Managing Partner, offered to promote Debbie and give her a pay rise. After several months, Mark had failed to do either and Debbie raised this with him.

Mark insisted that in order to be promoted and to receive a salary increase, Debbie would need to invoice the firm via a limited company. Debbie set up a limited company and raised invoices to his firm via her Company, and she received her promotion and increased salary.

Debbie continued to train and supervise junior staff within the practice, her own work was supervised by Mark, and she continued to attend management meetings and develop the business. Debbie stopped submitting invoices via her Company and for 9 months she continued to be paid.

The following year Debbie wanted to apply for a mortgage and she asked Mark if she could go back on their pay roll. This caused some friction and Mark began to withhold pay unless Debbie went back to submitting invoices.

Mark also told Debbie that if she wanted to go back on their pay roll she would either need to accept a lower salary or alternatively help him to dismiss other employees in order to make the necessary savings in the business. Debbie was unhappy about this and she turned to the firm’s HR Consultants for guidance. She also began Pre-Claim Conciliation with Acas.

A Conflict Resolution process took place between Mark and Debbie, facilitated by the external HR Consultants. This involved three meetings. At the first meeting Mark was angry and hostile towards Debbie and he didn’t listen to anything that she had to say. Mark did not attend the second meeting, and at the beginning of the third meeting Mark gave Debbie one month’s notice.

Mark agreed to pay Debbie some of her outstanding wages but only if she entered into a COT3 Agreement. The firm offered nothing to compensate her for other claims.

Debbie approached her legal expenses insurer who turned her down. Her insurer had referred Debbie’s case to their Panel Solicitors who concluded that Debbie had a less than a 51% chance of winning her claim for unfair dismissal and wages. They said that because Debbie had invoiced Shield Partnership via a Limited Company, she would not be able to persuade the Tribunal that she was either an employee or a worker.

Debbie issued an Employment Tribunal Claim herself and she approached us for help once a Preliminary Hearing was listed to decide her status.

What Martin Searle Solicitors did

We prepared the relevant documents and a Witness Statement which demonstrated why Debbie was an employee. This explained how Mark had kept the same level of control over Debbie, how she remained integrated in the practice, and how there was an ongoing mutuality of obligation.

After we exchanged our documents and Debbie’s Witness Statement, Shield Partnership conceded that Debbie was an employee. This meant that the Employment Tribunal could consider Debbie’s claims for unauthorised deductions from wages, holiday pay, unfair dismissal, wrongful dismissal and failure to provide a statement of written employment particulars.

Alongside this, we challenged DAS’ decision to refuse legal expenses funding. We helped Debbie to make a formal complaint which criticised DAS’ delay and their Panel Solicitors’ incorrect decision on the merits of her case.

The result

After exchanging Witness Statements, Shield Partnership was keen to settle Debbie’s claims. Three days before the trial, a Settlement Agreement was agreed upon, which was worth approximately three-quarters of the compensation that Debbie was likely to recover if she won at Tribunal.

As a result of our complaint, DAS agreed to backdate legal expenses funding, covering two-thirds of Debbie’s total costs.

If you believe that you have been wrongly turned down by your legal expenses insurer, contact our specialist Settlement Agreement solicitors on 01273 609911, or email info@ms-solicitors.co.uk.