Claimant v Horizon Photography Ltd
Outcome
Individual claims
The tribunal found that the claimant was an employee of the respondent despite being the sole shareholder and director. The business ceased trading on 31 January 2024 following withdrawal of bank support, constituting a redundancy situation under s139(1) ERA 1996. The claimant had the requisite continuous service and was entitled to a statutory redundancy payment.
The claimant's employment was terminated without the statutory minimum notice period of 6 weeks required under s86 ERA 1996. Although she was paid to the end of January 2024, she was entitled to notice pay assessed at one month's net salary for the failure to provide proper notice.
Facts
The claimant worked for the respondent photography company from January 2018, initially part-time in administration. After COVID impacted the business, her son (the original director and shareholder) left in July 2020, and she became sole shareholder and director in September 2021. She continued working full-time managing the entire business operation until the company ceased trading on 31 January 2024 due to withdrawal of bank support. Throughout her employment she was paid through payroll with PAYE and NI deductions, received P60s and P45s, and made pension contributions.
Decision
The tribunal found that despite being the sole shareholder and director, the claimant remained an employee of the company throughout. The central issue was whether a controlling shareholder/director could be an employee. Applying Neufeld, the tribunal held this was a question of fact and found the claimant was employed under a contract of employment evidenced by her payroll arrangements, PAYE/NI payments, and continuing to perform work duties. She was therefore entitled to redundancy pay (calculated at £5,787) and notice pay (£2,407.62) upon the business ceasing.
Practical note
A controlling shareholder and sole director can be an employee entitled to statutory employment rights including redundancy pay if the factual matrix demonstrates a contract of employment, evidenced by factors such as payroll arrangements, PAYE/NI deductions, and performance of work duties for the company.
Award breakdown
Award equivalent: 11.8 weeks' gross pay
Legal authorities cited
Statutes
Case details
- Case number
- 8000281/2024
- Decision date
- 24 June 2024
- Hearing type
- full merits
- Hearing days
- 1
- Classification
- contested
Respondent
- Sector
- professional services
- Represented
- Yes
- Rep type
- lay rep
Employment details
- Role
- Administrator
- Salary band
- £30,000–£40,000
- Service
- 6 years
Claimant representation
- Represented
- No