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| Former health secretary’s firm faces unfair dismissal case Former health secretary’s firm faces unfair dismissal case | |
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| Directors of a crashed company have been given the go-ahead to pursue a case for unfair dismissal in a landmark ruling against a business controlled by the former health secretary Stephen Dorrell. | Directors of a crashed company have been given the go-ahead to pursue a case for unfair dismissal in a landmark ruling against a business controlled by the former health secretary Stephen Dorrell. |
| The tribunal ruling allows employees of an insolvent company to sue a business allegedly born out of the ashes of the one that employed them and where there is “commonality of ownership” between the two. | The tribunal ruling allows employees of an insolvent company to sue a business allegedly born out of the ashes of the one that employed them and where there is “commonality of ownership” between the two. |
| After several attacks on employment protections by recent governments, lawyers said the surprise ruling could potentially pave the way for a landmark legal decision for corporate insolvencies. | After several attacks on employment protections by recent governments, lawyers said the surprise ruling could potentially pave the way for a landmark legal decision for corporate insolvencies. |
| Dorrell, who remains a senior figure in the health sector as chairman of the employers’ lobby group, the NHS Confederation, is accused of using a controversial insolvency procedure to move the assets of a publishing company into a new corporate entity owned by himself. | Dorrell, who remains a senior figure in the health sector as chairman of the employers’ lobby group, the NHS Confederation, is accused of using a controversial insolvency procedure to move the assets of a publishing company into a new corporate entity owned by himself. |
| The insolvency made shares owned by Dorrell’s business partners worthless and thwarted their unfair dismissal claim against the company. | The insolvency made shares owned by Dorrell’s business partners worthless and thwarted their unfair dismissal claim against the company. |
| After hearing the claim, the employment judge ruled that Dorrell’s new company – Pixel West – must face the unfair dismissal claim instead. | After hearing the claim, the employment judge ruled that Dorrell’s new company – Pixel West – must face the unfair dismissal claim instead. |
| Matti Rogers and his wife, Kate, who brought the claim, said they were delighted by the decision at the West Midlands employment tribunal in Birmingham. The unfair dismissal hearing will take place in May. They allege they were removed from the publishing company, called Project Viva, through a “sham redundancy exercise” that paved the way for Dorrell to then transfer assets out of the business. | Matti Rogers and his wife, Kate, who brought the claim, said they were delighted by the decision at the West Midlands employment tribunal in Birmingham. The unfair dismissal hearing will take place in May. They allege they were removed from the publishing company, called Project Viva, through a “sham redundancy exercise” that paved the way for Dorrell to then transfer assets out of the business. |
| The insolvency procedure used by Dorrell – a pre-pack administration – is lawful but controversial, because it allows a company in effect to walk away from its debts. However, this ruling shows that the new company can be made liable for the liabilities of the old company. The judge said there was “commonality of ownership and directorship between the companies so this [action] was hardly out of the blue”. | The insolvency procedure used by Dorrell – a pre-pack administration – is lawful but controversial, because it allows a company in effect to walk away from its debts. However, this ruling shows that the new company can be made liable for the liabilities of the old company. The judge said there was “commonality of ownership and directorship between the companies so this [action] was hardly out of the blue”. |
| Dorrell was health secretary between 1995 and 1997 in John Major’s administration and served as a Conservative MP for 36 years until he stood down at the last election. | Dorrell was health secretary between 1995 and 1997 in John Major’s administration and served as a Conservative MP for 36 years until he stood down at the last election. |
| Project Viva, which published specialist health and motoring magazines, called in administrators in March and was immediately bought by Dorrell’s investment vehicle, Dorson Transform, through a pre-pack administration. | Project Viva, which published specialist health and motoring magazines, called in administrators in March and was immediately bought by Dorrell’s investment vehicle, Dorson Transform, through a pre-pack administration. |
| Project Viva was 35% owned by Dorrell’s wife, 30% owned by financier Paul Meier, and 35% by Kate Rogers, whose husband Matti, a publisher, helped to set up the business. Matti Rogers claims he and Kate were pushed out of their roles at the company last summer after opposing Dorrell’s proposals to take over Project Viva. Dorrell said their positions had been made redundant. | Project Viva was 35% owned by Dorrell’s wife, 30% owned by financier Paul Meier, and 35% by Kate Rogers, whose husband Matti, a publisher, helped to set up the business. Matti Rogers claims he and Kate were pushed out of their roles at the company last summer after opposing Dorrell’s proposals to take over Project Viva. Dorrell said their positions had been made redundant. |
| Rogers and his wife then launched the unfair dismissal case against Project Viva, but the company was placed into administration just weeks before the hearing. The new hearing in Birmingham took place after Rogers applied for Pixel West to be added to the claim. | Rogers and his wife then launched the unfair dismissal case against Project Viva, but the company was placed into administration just weeks before the hearing. The new hearing in Birmingham took place after Rogers applied for Pixel West to be added to the claim. |
| This is not the first time that Dorrell has been caught up in controversy. His behaviour was branded “completely immoral” seven years ago after a South African company was left with worthless paper shares after selling Dorrell its UK clothing business. LA Group sold its clothing operations for £1m of shares in Wensum, a company chaired by Dorrell and in which he had a large stake. | This is not the first time that Dorrell has been caught up in controversy. His behaviour was branded “completely immoral” seven years ago after a South African company was left with worthless paper shares after selling Dorrell its UK clothing business. LA Group sold its clothing operations for £1m of shares in Wensum, a company chaired by Dorrell and in which he had a large stake. |
| However, a month after the deal the assets of Wensum were moved into a new business through a pre-pack administration. While LA Group ended up with nothing, Dorrell had a 15% stake in the new business and collected a £200,000 salary as a director. | However, a month after the deal the assets of Wensum were moved into a new business through a pre-pack administration. While LA Group ended up with nothing, Dorrell had a 15% stake in the new business and collected a £200,000 salary as a director. |
| Dorrell said at the time he acted in good faith and denied that the acquisition of A&D was part of a pre-arranged plan designed to boost Wensum’s assets before it became insolvent. | Dorrell said at the time he acted in good faith and denied that the acquisition of A&D was part of a pre-arranged plan designed to boost Wensum’s assets before it became insolvent. |
| He also faced calls to resign as an MP in 2014 after taking on a lucrative role as a health consultant with KPMG, the accountancy firm. Critics claimed it was a conflict of interests because KPMG was looking at bidding for a £1bn contract with the NHS. | He also faced calls to resign as an MP in 2014 after taking on a lucrative role as a health consultant with KPMG, the accountancy firm. Critics claimed it was a conflict of interests because KPMG was looking at bidding for a £1bn contract with the NHS. |
| Dorrell’s behaviour also drew criticism from staff at Project Viva. An editor of one the magazines it published, Andy Hornsby, sent an email to suppliers and customers after the pre-pack administration to say he was leaving the company. | Dorrell’s behaviour also drew criticism from staff at Project Viva. An editor of one the magazines it published, Andy Hornsby, sent an email to suppliers and customers after the pre-pack administration to say he was leaving the company. |
| In the email, seen by the Guardian, Hornsby wrote: “I really should try to write it as a script for a sitcom, except a lot of the stuff between the lines is frankly too implausible.” | In the email, seen by the Guardian, Hornsby wrote: “I really should try to write it as a script for a sitcom, except a lot of the stuff between the lines is frankly too implausible.” |
| In another email directly to Dorrell, the former health secretary is told that the reason for the pre-pack administration is morally objectionable. | In another email directly to Dorrell, the former health secretary is told that the reason for the pre-pack administration is morally objectionable. |
| Dorrell told the Guardian earlier this year that Project Viva was placed into administration “because the board concluded that it was unable to meet its obligations”. | Dorrell told the Guardian earlier this year that Project Viva was placed into administration “because the board concluded that it was unable to meet its obligations”. |
| In relation to the ruling this month, Dorrell said: “The tribunal ruled as it ruled and the issue will be dealt with in the normal way.” | In relation to the ruling this month, Dorrell said: “The tribunal ruled as it ruled and the issue will be dealt with in the normal way.” |
| Dorrell said that Pixel West is trading normally. | Dorrell said that Pixel West is trading normally. |
| Mark Gray, senior employment lawyer for Harrison Clark Rickerbys, which represented Rogers, said: “The case throws up interesting legal issues for both employers and employees. It demonstrates that the TUPE [employment protection] regulations can still potentially have teeth, despite what was seen by many as a watering down of employment laws in 2013. Businesses need to be very aware that employment laws still protect employees in a variety of situations and that TUPE laws may generally remain far-reaching.” | Mark Gray, senior employment lawyer for Harrison Clark Rickerbys, which represented Rogers, said: “The case throws up interesting legal issues for both employers and employees. It demonstrates that the TUPE [employment protection] regulations can still potentially have teeth, despite what was seen by many as a watering down of employment laws in 2013. Businesses need to be very aware that employment laws still protect employees in a variety of situations and that TUPE laws may generally remain far-reaching.” |