Cases3315216/2023

Claimant v SMS Farming Limited

28 February 2025Before Employment Judge SkehanWatford

Outcome

Claimant fails

Individual claims

Unfair Dismissalfailed

The tribunal found that the claimants were neither employees nor workers of the respondent. They were shareholders/directors operating within a quasi-partnership family business without the necessary control, mutuality of obligation, or personal service required for employment or worker status. Therefore, they had no standing to bring unfair dismissal claims.

Breach of Contractfailed

The claim for failure to provide notice pay failed because the tribunal concluded there was no contract of employment. The claimants worked as shareholders and directors in a family business structured as a quasi-partnership, not as employees entitled to notice.

Otherfailed

The claim for failure to provide statement of employment particulars failed because no employment relationship existed. The tribunal found the claimants were not employees or workers but rather shareholder-directors in an informally managed family farming business.

Working Time Regulationsfailed

The breach of maximum weekly working time claim failed due to lack of worker or employee status. The tribunal found the respondent exercised no control over the claimants' working hours, and the claimants determined their own work patterns as shareholders/directors.

Holiday Payfailed

The claim for failure to provide annual leave or holiday pay failed because the claimants were found not to be workers or employees. They took holidays at their own discretion based on farm needs, not under any employment arrangement requiring employer approval.

National Minimum Wagefailed

The failure to pay national minimum wage claim failed as the claimants lacked worker or employee status. The tribunal found their weekly payments were more akin to directors' drawings than employment wages, unconnected to actual hours worked.

Unlawful Deduction from Wagesfailed

The unlawful deductions from wages claim failed because no employment relationship existed. The tribunal concluded the payments made were directors' drawings in a quasi-partnership arrangement, not wages from which deductions could be unlawfully made.

Facts

The claimants, a married couple, were shareholders and directors in a family farming business. Richard owned 25% of the company and worked long hours on practical farm work; Julie developed a direct meat selling business. Both received modest weekly payments (£350 and £300 respectively) that bore no relation to hours worked. The family operated the business informally as a quasi-partnership. Following a breakdown in family relations in 2023, the respondent purported to terminate their 'employment', leading to this tribunal claim and concurrent High Court litigation.

Decision

The tribunal found that the claimants were neither employees nor workers of the respondent. The respondent exercised no control over their work, both could provide substitutes, payments were more akin to directors' drawings than wages, and there was no intention to create an employment relationship. All claims requiring employee or worker status were therefore dismissed.

Practical note

Shareholders/directors in family businesses structured as quasi-partnerships are unlikely to be found to be employees or workers even if they perform significant work and receive regular payments, particularly where control and personal service obligations are absent.

Legal authorities cited

White v Troutbeck SA [2013] EWCA Civ 1171Zuijs v Wirth Brothers Pty Ltd (1955) 93 CLR 561Commissioners for His Majesty's Revenue and Customs v Professional Game Match Officials Ltd [2024] UKSC 29

Statutes

ERA 1996 s.230(3)ERA 1996 s.230(1)

Case details

Case number
3315216/2023
Decision date
28 February 2025
Hearing type
preliminary
Hearing days
1
Classification
contested

Respondent

Sector
agriculture
Represented
Yes
Rep type
barrister

Employment details

Role
Farm work and business development

Claimant representation

Represented
Yes
Rep type
barrister