Claimant v Secretary of State for Business and Trade
Outcome
Individual claims
Tribunal found claimant was an employee from 1 April 2011. He was aged 60 at date of termination and had 12 full years of service. Zenlo Ltd entered creditors' voluntary liquidation on 28 March 2024, making claimant entitled to statutory redundancy payment under s.166 ERA 1996.
Tribunal accepted claimant was not paid anything for March 2024. Arrears of pay for the period 1-28 March 2024 (4 weeks) were awarded at the statutory maximum rate of £643 per week under s.182 ERA 1996.
Claimant had 15.67 days of accrued but untaken holiday at termination. This included rolled-over days from previous holiday year, which were properly carried forward under WTR regulations 13(17) and 13A(7). Awarded 3.134 weeks' pay under s.182 ERA 1996.
Claimant entitled to 12 weeks' statutory notice pay under s.86 ERA 1996. Employment ended on insolvency without notice. Tribunal awarded notice pay at statutory maximum rate of £643 per week under s.182 ERA 1996.
Facts
The claimant was a 50% shareholder and director of Zenlo Ltd from incorporation in April 2011 until its liquidation in March 2024. He worked 40 hours per week performing multiple operational and strategic roles in the retail business. He was paid a combination of PAYE salary (below tax threshold) and regular dividends on accountants' advice, with this changing to full PAYE in the final months. Written employment particulars were only issued in February 2022. The company entered creditors' voluntary liquidation on 28 March 2024, owing the claimant wages, notice pay, holiday pay and redundancy.
Decision
The tribunal found that despite being a controlling shareholder-director, the claimant was an employee from 1 April 2011. The arrangement showed genuine mutuality of obligation, sufficient company control (particularly over holidays), and conduct consistent with employment. The payment structure via dividends reflected tax efficiency, not absence of employment relationship. The Secretary of State was ordered to pay from the National Insurance Fund: £11,574 redundancy pay, £2,572 arrears of wages, £7,716 notice pay and £2,015.16 holiday pay (total £23,877.16 gross).
Practical note
Shareholder-directors of small companies can be employees even with controlling shareholdings if there is genuine mutuality of obligation, company control, and conduct consistent with employment; payment partly via dividends for tax efficiency does not preclude employee status.
Award breakdown
Award equivalent: 30.5 weeks' gross pay
Legal authorities cited
Statutes
Case details
- Case number
- 6003343/2024
- Decision date
- 13 May 2025
- Hearing type
- full merits
- Hearing days
- 1
- Classification
- contested
Respondent
- Name
- Secretary of State for Business and Trade
- Sector
- central government
- Represented
- Yes
- Rep type
- lay rep
Employment details
- Role
- Operations Director / Purchasing Manager / Customer Service Manager / Operations Manager / Sales Manager / Account Relationship Manager / Financial Director / Finance Officer / Compliance Officer / Company Secretary
- Salary band
- £40,000–£50,000
- Service
- 13 years
Claimant representation
- Represented
- No