Claimant v Kinch Limited (in Voluntary Liquidation)
Outcome
Individual claims
The tribunal concluded that the claimants were not employees within the meaning of section 230 ERA but were instead office holders as directors. They therefore had no entitlement to payments from the National Insurance Fund under sections 166 and 182 ERA.
The claimants' claim for notice pay from the National Insurance Fund failed because the tribunal found they were not employees but directors holding office, and thus not entitled to payments under section 182 ERA.
The claim for arrears of pay (one month for September 2024) failed because the tribunal determined the claimants were not employees but office holders, and therefore not entitled to payments from the National Insurance Fund under section 182 ERA.
The claim for holiday pay from the National Insurance Fund failed because the tribunal found the claimants were not employees within section 230 ERA but directors, and therefore not entitled to payments under section 182 ERA.
Facts
The claimants were directors and shareholders of Kinch Limited, which operated two cafés in Glasgow's West End. The company went into creditors' voluntary liquidation on 17 October 2024. The claimants applied to the Redundancy Payments Service for notice pay, arrears, holiday pay and redundancy payments, producing written contracts of employment. They each received £1,050 gross monthly (well below National Minimum Wage for their ~35 hours per week) plus £500 monthly dividends. They ran the operational side of the business day-to-day, with strategic decisions involving the former director Mr Gilbert Kinch.
Decision
The tribunal dismissed the claims, finding the claimants were not employees within the meaning of section 230 ERA but were office holders acting in a directorial capacity. Key factors: they were paid below NMW (lawful only for office holders), received dividends, set their own hours and duties, were not under the control of a board, and the written contracts were generic staff templates that did not reflect a genuine director's service agreement or the actual working relationship.
Practical note
Company directors seeking redundancy payments from the National Insurance Fund must prove genuine employee status under section 230 ERA, and payment below National Minimum Wage, receipt of dividends, and lack of control by a board will strongly indicate office holder rather than employee status.
Legal authorities cited
Statutes
Case details
- Case number
- 4100194/2025
- Decision date
- 23 May 2025
- Hearing type
- full merits
- Hearing days
- 1
- Classification
- contested
Respondent
- Sector
- hospitality
- Represented
- No
Employment details
- Role
- Director and café operator
- Salary band
- Under £15,000
- Service
- 15 years
Claimant representation
- Represented
- No