Julian Leal, Caterham, Silverstone test, 2014

Caterham to sue former staff over “misrepresentation”

2014 F1 season

Posted on

| Written by

Julian Leal, Caterham, Silverstone test, 2014Caterham has announced it is responding to legal action from a group of former employees with a lawsuit of its own.

In a statement released on Tuesday the team said it “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,” it added.

Caterham denies several of the claims made by those bringing the case against them.

“These claims include the statement that they have been released from Caterham F1 Team – this is incorrect,” the statement explained. “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 that its staff were not paid in July – again, this is wholly untrue,” it noted. “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.”

The team said it has requested “the withdrawal of the relevant press statement issued on 28th July” and said it will “vigorously pursue its action against all those concerned”.

“However, it will not allow its core focus to be distracted from achieving tenth place in the 2014 Formula One world championship, and building for the 2015 campaign and beyond,” it concluded.

Update: The former Caterham staff issued the following response on Wednesday:

“Reference the press statement released by Caterham F1 Team on 29 July 2014. 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.”

2014 F1 season

Browse all 2014 F1 season articles

Image © Caterham/LAT

Author information

Keith Collantine
Lifelong motor sport fan Keith set up RaceFans in 2005 - when it was originally called F1 Fanatic. Having previously worked as a motoring...

Got a potential story, tip or enquiry? Find out more about RaceFans and contact us here.

51 comments on “Caterham to sue former staff over “misrepresentation””

  1. Ugly situation for all involved. This really does not put Caterham in a good position in terms of public opinion.

    Honestly I don’t expect them to make it to the end of the season, much less make it onto the grid next year.

    Sad really. It is never good for F1 to lose a team, regardless of the reason.

    1. I really hope you’re wrong in your expectations, and that they DO make it to the end of the season and then to the next one. Because I don’t really see Marussia latching onto the midfield next year yet (although they’ve certainly made some progress), and without Caterham they would just be stone last and, without this Marussia vs Caterham battle, not that worth following, innit.

  2. What a mess. I find it hard to believe that Caterham can afford this, with their already limited budget.

  3. Caterham F1 Team’s staff are employed by a company that is a supplier to the company that holds its F1 licence

    What does this mean? Are they employed by someone else?

    Every individual currently employed by Caterham F1 Team was paid their July salary

    I think that the ex-employers are complaining that it is them who are not being payed, not the current employers.

    1. What does this mean? Are they employed by someone else?

      http://en.wikipedia.org/wiki/Outsourcing

    2. Looks like the personell is contracted through something like a payrolling company @caci_99, a company that employs your personell, handles all legal and financial obligations of the employer and bills your company a pre agreed sum for it.

      Off course it does make the statement that

      “Every individual currently employed by Caterham F1 Team was paid their July salary”

      a bit empty when in fact no one is employed by the team directly (maybe just a few of the top management?)!

      In effect it could just mean that Caterham F1 Team cancelled part of its contract with the payroll company and the legal issue should now be one of the payroll company. But its hard to tell without further details

      1. @bascb, well said, that is exactly how read the situation.

        Interesting example of how patrolling makes employee loyalty nonsensical, I think.

        1. Payrolling, sigh autocorrect

  4. Not sure what is more of a mess, the cars nose or this situation.

    1. Their terrible nose created bad karma. Their situation HAD to match their nose…and the nose never improved so the situation worsened. :-P

  5. This sounds rather like technical quibbling from lawyers looking to muddy the waters. Jumping to a conclusion or two and without any knowledge of the corporate structure of Caterham F1 Team, it may only employ a Director or two and a Company Secretary, and own another company (call it Company B) which actually employs most of the staff who design, build and run the cars. So the Caterham F1 Team statement is probably accurate in that nobody has been fired from there and everyone employed by that company (all three of them) has been paid. Meanwhile in Company B it’s more or less as described by the former staff, and I doubt that they care whether they worked for Caterham F1 Team or Company B.

    Cynical, me?

    1. Neil (@neilosjames)
      29th July 2014, 17:56

      That was pretty much as I interpreted it. But I didn’t want to say anything in case they sued me too.

    2. Nasty behaviour by a once favourable back marker team.

      11th place, no sponsors and no fans will make a very short visit to F1 by these mystery investors.

    3. This is typical of the very rich, they use multiple companies to protect themselves from claims against them and make it prohibitively expensive for any person to use the courts to get justice by useing their lawyers to delay, obfuscate, and if the stakes are high enough countersue, these type of people are ego driven and will spend more than the amount in question to win.

    4. Having been in this situation with an employer, i’d say this is 100% the case. I’d also say that it doesn’t stand up when your union puts the heavies on them.

  6. This team is a sinking ship, isn’t it?

    1. @magnificent-geoffrey
      Once Collin Kolles became involved it certainly became one…

      1. @us_peter Yep. Sounds about right.

    2. @magnificent-geoffrey No kidding, you even had to change your fish! That’s how bad things are hehe

    3. @magnificent-geoffrey Based on that fish is March back in F1? :)

      1. @davidnotcoulthard No, this is OG Geoffrey, circa 2010-11… ;)

    4. Such a shame… Used to love ’em now I loathe ’em.

  7. Well, they were either paid or they weren’t. That should be quite simple to ascertain one would think…

    1. You’d think Bernie’s tax adventures would be just as simple, but here we are. Governments are continuously lobbied (read: bribed) by the rich, to push for the laws that are allowing this kind of overcomplicated, unaccountable and layered structures to exist with a sole purpose of hiding responsibility, hiding real money numbers and protecting the rich while leaving common people at their mercy.
      Truly a mafia-esque setup.

    2. One thing’s for sure: the lawyers will be paid. They won’t come out of this not paid, or slightly paid.

      1. :-D LOL
        Amen to that, the rats and cockroaches rarely starve, even if the lions go hungry…

    3. Every individual currently employed by Caterham F1 Team was paid their July salary in full on 25th July

      Ah, I see now. They weren’t actually employed by ‘Caterham’ perhaps, so they can still say that all staff employed by Caterham (maybe just the cleaner) have been paid. What a sorry state of affairs.

  8. Sennas sandshoe
    29th July 2014, 18:16

    ”This is wholly untrue”

    Like it was wholly untrue that you stole Force India designs……..when in fact you did?

    Caterham are a rotten team that has gone from one rotten owner to another and I can not wait to see the back of them after next season by which time Kolles would have driven them under.

    1. “Wholly untrue” I love the absolute ness of the statement… almost as strong as a “categorically deny” statement just before someone is arrested or exposed of wrongdoing. Slimy lawyering may make it prima facia “true” in the technical sense, but obviously morally without a shred of veracity.

  9. what they’ve done is quite usual here in Argentina: instead of a company (Caterham F1 in this case) Hiring people, and then lay them off, they hire a third party company (let’s call it “workforce for F1 ltd”) who provides a service to caterham F1, and if they don’t want the people no more, they end the contract with this company, so, technically speaking, they’ve worked for Caterham, they worked for “workforce for F1 ltd”. it’s a morally questionable modus operandi, but, they save a lot of money this way… (and the worker get screwed on a regular basis, and that’s the story of my life :D)

    1. I’m sorry for you @matiascasali

      It’s a very tricky way to run a business and Caterham will get out of that story publicly broken. I don’t really like those scheming; more and more the ex-Lotus Racing team loses its appeal.

    2. Here in Australia too! I work in education where there are a lot of rules and regulations on how much employee should be paid and other employment benefits. It is a very common practice for a number of universities here to setup a company to employ the majority of support staff and pay them much much lower than the normal standard and much less employment benefits.

    3. Not sure about Argentine, but I know that in many places its professional companies that offer such services to other companies. The likes of Apple and google use it as well (although they offer the perspective of taking you on permanently).
      I have received several offers from companies who wanted me to go this route as well for my company. They offer you the option of being able to lay off underperforming people on short notice. Not that I am interested, as I think its unfair to my employees and they are an important part of making the company work.

      1. take my word for it, in Argentina it DO happens!

        1. Oh, I was not disputing that. And I know it happens only all too often in the place where I live now too. in the Netherlands (where my company is based) it also happens but only rarely, as courts as well as the tax authorities take a dim view on such practices.

  10. Goodbye Caterham, I wont miss you.

  11. Caterham has gone from the team that seemed the most likely to make it in F1, to… well, to this basically.

    It started by being repeatedly getting beaten by the team that messed up so badly to begin with, the team that made the “discovery” that you can’t make an F1 car solely using CFD, (it did not need discovering really), and made a chassis, with a fuel tank that is too small to finish a race… And now look at who’s where!

    Now it seems that anything can happen with this outfit and it’s hard to predict what is going to happen with this outfit.

  12. Im beggining to think bernie is right. 8 Teams, 3 ccars each.

    1. It would allow us to see many more drivers in ‘equal’ cars!

      I’d like to see an Alonso, Ricciardo, Hamilton team… :D

  13. Kolles – the same man who blackmailed Toto Wolff, burned HRT to the ground within three seasons, and was useless when it came to improving Jordan/Midland/Spyker/Force India’s results, and he has been entrusted with the Caterham F1 team? Surely by now people must realise that asking him how to run a team is as bad as asking Flavio Briatore on how to make the sport more entertaining. OH WAIT.

    1. I think you are completely wrong there about Kolles and some of his efforts with dwindling teams @ladekoya. Sure, he is no inspired leader to build up a winning team. But HRT was doomed even before it got to the grid and he helped them survive a year or 2 longer than they probably would have otherwise. It was the owners failing to back their own team with resources to do better. As for Midland – much the same case. No money but he did keep it afloat and in reasonable state long enough for Snajder to be able to sell it on to Mallya and make it the team it is now.

      I see this as a move of the owners to stabilize, close the endless holes in the buget to be able to plan something and then find new investors who can either take over the team or invest in it.

      His methods surely are grubby and to say I like seeing him around would be wrong. But there could have been worse outcomes for the team (see BMW selling to some unknown backers ending in almost making Sauber disappear)

  14. So disappointing. I had high hopes for Lotus Racing when they joined back in 2010 and gradually they became less likeable. I wouldn’t gave thought Manor (Virgin/Marussia) would outlast Lotus Racing (Team Lotus/Caterham F1), but with Marussia Motors gone, their future is not THAT bright either.

    1. Pay drivers might help bolster their future, especially if they try and recruit Jolyon Palmer next year. That would bring his dad’s MotorSportVision marque on board.

    2. Currently being 9th will bolster them at least another year. I wouldn’t be surprised if that money is 50% or more of their total year income.

  15. @wsrgo

    They have pay drivers ?

    @ Caterham –Some one is telling porkies,
    and I bet the lawyers are getting paid,

  16. In a bizzare twist ,
    Lawyers representing Caterham to sue employees over misrepresentation have themselves appointed lawyers to sue Caterhams new owners over failure to pay the original lawyers .
    Not to be outdone , the ex employees Lawyers have filed against Caterham’s claim of misrepresentation claiming the misrepresentation claim is actually misrepresenting their original claim !

    A spokesman for Law Firm
    Ecclestone & Associates said

    ” this is great for business , we have already billed the team equal to next years budget”

    To be cont ,

  17. To be honest, while it doesn’t make the team look good in any sense, it’s worth remembering that this is an inevitable consequence when any business is bought out. Inevitably a number of staff will be made redundant during restructuring, and by the sounds of it they have taken a logical step to end a contract outsourcing a number of jobs. Again, outsourcing is pretty normal, and there’s always a clause about recompense for early termination. Presumably Caterham’s new owners fulfilled those obligations but there may have been a number of verbal assurances made which were not kept to. Or maybe there weren’t and it’s a case of disgruntled employees wanting to hit back at the company who made them redundant. Contract work always carries a certain degree of risk; the money is good, but the job security is poor, and things like this can happen very easily. Contractors are effectively a disposable workforce.

    Consider as well that without making those sort of cuts, it’s likely that Caterham would have disappeared completely as soon as the backing was pulled in the first place. Remember that German working laws prevented Toyota from downsizing its operation, which is one of the reasons it folded. Caterham was consuming huge resources, several times as much as Marussia, and showing very little for it, which smacks of chronic mismanagement, and very possibly the abundant expense of outsourcing a chunk of the workforce. Caterham couldn’t have continued to survive as it was previously running, so it was a case of slim down or die. Nobody wants to be made redundant, but this is the world of motorsports contracting where everything is transient.

    1. Redunancies may be inevitable but they must be paid off according to their contract and/or the employment laws of the land.

      1. @HoHum Absolutely, though we can’t say exactly what recompense those employees may be entitled to, as we don’t know the exact nature of their employment. If they were contract staff, then they haven’t technically been made redundant, they have had their contracts (or the one contact with the external consulting agency) terminated, in which case they’ll be liable to the terms of the clauses and safeguards built into the contract. Most likely it’ll be a case of there being a notice period built into the contract, maybe a month, maybe more, and that they will have been paid for that notice period (or should have been) once the contract was terminated.

        Obviously, given the nature of the industry, when you terminate a member of staff, the first thing you do is tell them, and the second thing you do is escort them immediately to the door and make sure they have no access to any of your systems.

  18. “Caterham F1 Team’s staff are employed by a company that is a supplier to the company that holds its F1 licence”

    “Every individual currently employed by Caterham F1 Team was paid their July salary in full on 25th July”

    Every individual currently employed was paid? But they just said that nobody is actually employed by Caterham. Even if they were, the issue isn’t for current employees, it’s for people who were fired. Am I completely misunderstanding this, or does it just not follow?

Comments are closed.