Essay on Legt 2741 Assignment

1772 Words Apr 5th, 2013 8 Pages
LEGT2741 Assignment
There are three main parties to this case; Flywell Ltd (F), the parent company, Jetover Ltd (J), the subsidiary, and the Australian Pilots Association (APA) which is representing the 200 pilots currently employed by J. F incorporated J as a wholly owned subsidiary of F and appointed four directors for J from the six directors of F. Two hundred of F’s pilots were made redundant and immediately rehired by J on lower wages and entitlement previously enjoyed at F. New pilots hired by F receive 20% more pay and entitlements for the same work than pilots of J.
The issue here is that are the original contractual entitlements received at F applicable to the pilots of J?
Firstly it must be emphasised that through
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Shortly after resigning from his employment, Horne and his wife set up a similar company to GM. Horne solicited with GM’s customers through the newly incorporated company. The Court of Appeal (UK) stated that the new company was a “mere cloak or sham” used by Horne to breach his contractual obligation. Similarly, it can be shown that F had a contractual obligation to its employees to pay a certain wage and provide certain entitlements in return for the standard of work provided by the pilots. The existence of legal obligation is demonstrated by F having to request the pilots to voluntarily take a reduction in pay and the pilots refusing. Since the pilots provide the same standard of work for J and through lifting the corporate veil, F and J are determined to be one and thus the pilots may be entitled to their previous remuneration.
Creasey v Breachwood Motors Ltd is another example where restructuring was used to avoid a legal obligation. Creasey was employed by Breachwood Welwyn Ltd and was also a creditor. Breachwood Welwyn transferred all of its assets to Breachwood Motors Ltd, which they controlled, to avoid having to repay Creasey. The court held that one of the key reasons for the restructure was to avoid legal obligations to pay its employee legal entitlements. The corporate veil was lifted and it was held that Breachwood Motors Ltd would be liable for the debt payable to Creasey. This precedent further supports the application of Gildford

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