LAWmail September 2009

Tribunal Update - GSY

Mr L Coates (the “Applicant”) was employed by CRE8 Limited (the “Respondent”) as the company’s Chief Financial Officer from 12 April 2006 until 10 October 2008. In October 2008 the Applicant became a director of the Respondent company and around this time he also became the Company Secretary of Plus SMS Holdings Limited (“PLS”), of which CRE8 Limited was a wholly owned subsidiary. Throughout the course of his employment the Applicant resided in the Isle of Man, travelling to and from Guernsey for work purposes on a regular basis.
Previous to the Applicant’s employment, the Respondent began an acquisition strategy in Latin America and acquired three mobile services companies during the period December 2006 and March 2007. In response to this PLS established a corporate subsidiary office in Texas and two members of staff relocated there from Guernsey. The Office Manager did not relocate and the Applicant did not relocate either and stated this was for “personal reasons”. However, the Applicant did travel to the Texas office on a regular basis and worked from home on the Isle of Man at all other times.
In May 2008 a member of the PLS Board introduced a new investor to PLS in a bid to obtain funds to commercialise its operations. However, in September 2008 the Applicant tendered his resignation after what is described as a “period of professional conflict” with the new investor and the member of the Board that introduced that investor. Following the Applicant’s resignation the entire management team of PLS also resigned. A stand-off situation arouse between the PLS Board and the management team of PLS. It was agreed that each member of the PLS management team would be contacted by a member of
the PLS Board. However, the Applicant was never contacted.
On 3 October 2008 the Applicant noticed some funds had been transferred from PLS’s account without his or his CEO’s knowledge and alerted PLS’s bank in New Zealand after suspecting fraud. It subsequently transpired the new investor of the Company had somehow managed to change the PLS bank account mandate without the existing bank signatories’ knowledge.
On 9 October 2008 the Applicant received a letter, dated 8 October 2008, from the Chairman of the PLS Board advising that the company had lost all trust and confidence in him as a result of alleged actions or inactions following his resignation and claimed that the Applicant had fundamentally and materially breached his contract of employment. The Applicant had no prior warning of this letter. Less than five hours after receiving this letter via email, the Applicant received another letter dated 10 October 2008 (via email also) terminating his employment. On 11 October 2008 the Applicant responded by email to both letters refuting the allegations made against him, however no response was ever received.

The Law: The Employment Protection (Guernsey) Law 1998, as amended, Section 5(2)(a) provides that an employee shall be treated as dismissed by his employer if “the contract under which he is employed by the employer is terminated by the employer, whether it is so terminated by notice or no notice.”
Jurisdictional Issue: The Tribunal asked for confirmation that Mr Coates, who was a stated resident of the Isle of Man, was, for the purposes of the Employment Protection (Guernsey) Law 1998, as amended, “ordinarily working in Guernsey”.
Judgment: The Applicant’s employment in Guernsey was established via testimony of a Director who worked for the Respondent company during and since the Applicant’s resignation. The Tribunal also had sight of a reasonable amount of documentary evidence to support the Applicant’s employment in Guernsey. The Tribunal concluded that no reasonable procedure was followed in relation to the PLS Board’s concerns regarding the Applicant’s performance. The Tribunal commented that the Respondent did not follow its own procedures in terms of dispute resolution. As a result of this the Applicant was not afforded the opportunity to respond to the allegations made and no opportunity to appeal against the PLS Board’s decision to terminate was given.

The Tribunal found that under the provisions of the Employment Protection (Guernsey) Law, 1998, as amended, the Applicant was unfairly dismissed. The Tribunal considered testimony from the Applicant in relation to his earnings for 2008. As there was no evidence in the way of payslips or to document a twenty per cent salary loan agreement, the Panel awarded the Applicant six month’s salary less the twenty per cent but added any remaining holiday entitlement. An award of £64,310.00 was made.