Ms N Bale v Secretary of State for Business & Trade — 2024

The claimant brought a claim for a statutory redundancy payment from the Secretary of State following the liquidation of her company, Ginger the Art of Print Limited, of which she was the sole director and sole shareholder at the time of liquidation. The Respondent's position was that she was not an employee of the company for the purposes of section 230 of the Employment Rights Act 1996, and the central issue was therefore her employment status.

The Tribunal accepted the evidence of the claimant and her witness Miss Bower. It found that a written contract of employment relied on by the claimant had been backdated and did not reflect the reality of the arrangements: the claimant was not paid at the contractual rate, her pay varied according to what the business could afford, she received less than the National Minimum Wage in recent years, and she did not take holidays or sick pay. The Tribunal concluded that the written contract was, in effect, a sham and did not assist in determining her status, whereas other staff had contracts that reflected the key terms applying to them.

Applying Secretary of State v Neufeld and Howe and the authorities on the employment status of director/shareholders, and noting that the burden of proof lay on the claimant and was significant given her position as sole director and sole shareholder, the Tribunal found that the element of control pointed away from employment status: the claimant was in charge of her own destiny and was not subordinate to anyone else. The Tribunal concluded that she was not an employee at the time the company became insolvent and was therefore not eligible for a statutory redundancy payment.