Claimant v Secretary of State for Business and Trade
Outcome
Individual claims
The tribunal found the claimants were not employees within the meaning of s.230 ERA 1996. They were directors and shareholders but failed to prove an employment contract existed. There was no written contract, insufficient evidence of mutuality of obligation or control, fluctuating pay below minimum wage, and conduct inconsistent with employment.
Claim for unpaid wages from August to December 2024 failed because the claimants could not establish they were employees. The tribunal could not determine whether non-payment was due to the claimants choosing not to enforce a contractual entitlement or because no contractual obligation to pay existed.
Claim for accrued holiday pay failed because employment status was not established. The tribunal noted evidence that at least one claimant took no holiday for two years, suggesting they were not acting in accordance with employment rights and obligations.
Facts
The claimants were 50/50 shareholders and directors of Galltan Limited, a family construction business incorporated in 2003. The company entered creditors' voluntary liquidation in December 2024. The claimants claimed redundancy payments and unpaid wages from the Secretary of State, asserting they were employees as well as directors. They had received fluctuating PAYE payments (often below minimum wage), there was no written employment contract, no clear records of hours worked, and inconsistent evidence about working hours and holiday entitlement. The claimants did not attend the hearing due to Mr Gallagher's back injury.
Decision
The tribunal dismissed all claims, finding the claimants were not employees within the meaning of s.230 ERA 1996. The tribunal found insufficient evidence to imply a contract of employment in the absence of a written contract. Key factors included: no evidence of mutuality of obligation or control; fluctuating pay below minimum wage; inconsistent evidence about hours; one claimant taking no holiday for two years; no company records supporting employment; and unexplained gaps in bank statements. The claimants failed to discharge their burden of proving employment status.
Practical note
Director/shareholders of small family companies claiming employee status against the Secretary of State on insolvency must provide robust evidence of an employment relationship beyond merely being paid via PAYE; absence of a written contract, fluctuating sub-minimum wage payments, and conduct inconsistent with employment rights will defeat such claims.
Legal authorities cited
Statutes
Case details
- Case number
- 2400501/2025
- Decision date
- 7 October 2025
- Hearing type
- full merits
- Hearing days
- 1
- Classification
- contested
Respondent
- Sector
- central government
- Represented
- Yes
- Rep type
- lay rep
Employment details
- Role
- Director/shareholder of Galltan Limited (construction, civil engineering and groundworks)
- Salary band
- Under £15,000
- Service
- 21 years
Claimant representation
- Represented
- Yes
- Rep type
- lay rep