Claimant v English in Manchester
Outcome
Individual claims
The tribunal found the claimants were not employees within the meaning of s.230 ERA 1996 but were instead office holders/directors who controlled their own pay and hours. Additionally, they failed to comply with the s.164 time limits for claiming redundancy payment from the employer.
The tribunal determined the claimants were not employees but directors/office holders. As such, they had no entitlement to bring a claim for unlawful deduction from wages under the Employment Rights Act 1996, which requires employee status.
The claim for notice pay failed because the tribunal found the claimants were not employees within s.230 ERA 1996 but were directors with autonomy over their own terms. Without employee status, they had no entitlement to statutory notice pay.
The tribunal rejected the claim for 35 days unpaid holiday. It found the claimants were not employees and also found on the balance of probabilities that the claimants had sufficient control over their working hours that they chose not to take holidays during the last financial year.
Facts
The claimants were directors and 49% shareholders of English in Manchester, a company that entered creditors voluntary liquidation on 6 January 2022. They had service contracts purporting to provide £30,000 annual salaries but in reality paid themselves below national minimum wage, sometimes taking no salary at all. They had autonomy to vary their pay, substitute others to perform their duties, and were not supervised. They claimed redundancy and insolvency payments from the Secretary of State after the company became insolvent. Neither claimant attended the final hearing.
Decision
The tribunal dismissed all claims, finding the claimants were not employees within s.230 ERA 1996 but were directors/office holders with control over their own pay, hours and leave. The written service contracts did not reflect the reality of the working relationship. Additionally, the redundancy claims would have failed on time limit grounds as the claimants never made written claims to the employer within the statutory six-month period.
Practical note
Company directors who hold significant shares and control their own remuneration, hours and working arrangements will not be considered employees even where service contracts exist, particularly where they pay themselves below national minimum wage and have no mutuality of obligation or control.
Legal authorities cited
Statutes
Case details
- Case number
- 2409436/2023
- Decision date
- 17 February 2025
- Hearing type
- full merits
- Hearing days
- 1
- Classification
- contested
Respondent
- Sector
- education
- Represented
- No
Employment details
- Role
- Director
- Salary band
- Under £15,000
- Service
- 5 years
Claimant representation
- Represented
- No