Caterham team accused of running ‘roughshod’ and unfairly dismissing its employees

Close to 50 former Caterham F1 employees who lost their jobs earlier this month are to take legal action against the Formula 1 team, according to their solicitor.

The former members of the grand prix team allege that they were dismissed without consultation in breach of employment law and are claiming breach of contract and unfair dismissal.

Following the sale of the motor racing team by Tony Fernandes to a group of Swiss and Middle Eastern investors, Caterham’s new owners have been searching for ways to make costs savings and make the team more financially viable.

Chris Felton, a partner at Gardner Leader, who is representing the claimants said: “The employees concerned were dismissed without consultation or warning, either in person or on the telephone. They have not been paid for July or offered any further payments in accordance with their contract or their employment rights.

“The fact that they are not being told anything at all by Caterham is concerning. Running roughshod over employees’ rights is not usual behaviour in Formula 1 where, although difficult decisions are sometimes made about appointments, employees are always adequately compensated and usually treated with dignity by their teams.”

Felton continued: “We would not expect any former Caterham employee to be prejudiced for standing up for their rights when they have been unfairly dismissed with no pay for July, no future earnings and families to support. The FIA expect certain standards from its F1 teams and it is these standards we are asking them to uphold and provide assurances that the new owners of Caterham are seen as fit and proper.”

The former employees are understood to be petitioning the Fédération Internationale de l’Automobile (FIA) to fully investigate the F1 team’s conduct and the circumstances in relation to its recent change of ownership.

Caterham F1 bite back

In a further twist, Caterham have taken legal action of their own against their former employees, citing a ‘gross misrepresentation of the facts’ in the claim against the team.

A statement from Caterham reads: ‘Caterham F1 Team has read with great concern recent reports about a group of individuals who are claiming unfair dismissal from the Formula One team following its takeover by new owners.

‘The team is now taking legal action against those parties representing the individuals concerned, and each person involved, seeking compensation for the damages suffered by the team due to the gross misrepresentation of the facts made by all those concerned.

‘These claims include the statement that they have been released from Caterham F1 Team – this is incorrect.

‘Caterham F1 Team’s staff are employed by a company that is a supplier to the company that holds its F1 licence, the licence that allows it to compete in the Formula One World Championship.

‘Additionally, the team has read claims its staff were not paid in July – again, this is wholly untrue.

‘Every individual currently employed by Caterham F1 Team was paid their July salary in full on 25th July, one week before it is formally due on the last day of the month, in this case 31st July.

‘A formal request for the withdrawal of the relevant press statement issued on 28th July has been made by Caterham F1 Team, and the team will vigorously pursue its action against all those concerned.

‘However, it will not allow its core focus to be distracted from achieving 10th place in the 2014 Formula One world championship, and building for the 2015 campaign and beyond.’

Round and round we go

The axed Caterham staff have since respond to the F1 Team, referencing the press release.

‘As confirmed in the contracts of employment for those working in the Caterham F1 Team, Caterham F1 is “the trading name of the Employer and the name of its motor racing team entered into the F1 World Championship”. All those dismissed were employed in the Caterham F1 Team by their operational company Caterham Sports Limited (company number 07042086 previously 1Malaysia Racing Team (UK) Limited).

‘The dismissal letters were on Caterham F1 Team headed notepaper and the reason for dismissal was given as “following the change in ownership and, as a result of the current financial position that the new owners have inherited, your position at Caterham Sports Ltd will terminate with immediate effect…You are being dismissed in law for Some Other Substantial Reason”.

‘The Caterham F1 Team website confirms the change of ownership as at 2 July 2014. The summary dismissal of employees from Caterham was done without warning or consultation, which is a breach of employment laws and contract and will result in significant compensation claims.

‘Regarding matters of pay, those dismissed on 15 July 2014 were advised in writing that they would be paid for 1-15 July. Unless the position has changed, we are informed that those we represent had not yet been paid either on what would have been the usual payroll date of 25 July, or by 28 July.  It is understood those we represent who were dismissed on 24 July 2014 may also not yet have been paid for July.  If those dismissed have now been paid that would obviously be very welcome.

‘Lawyers for those who have been dismissed wrote to Caterham on 25 July 2014 urging a response to the above matters and inviting settlement either through ACAS or in face to face discussions.  A response from Caterham to this letter is awaited.’

It looks as if this dispute is set to rumble on for some time. However, many laps around the court remains to be seen.

This news piece was first published in the Solicitors Journal on 28 July 2014 and is reproduced with kind permission.