ALEC EVANS v BUSINESS FOCUS & DEVELOPMENT LIMITED (in liquidation) and 1 other — 2023

The claimant was the sole shareholder and a director of Business Focus & Development Limited, which was in liquidation. The tribunal had to decide whether he was nonetheless an employee for the purposes of claiming payments from the National Insurance Fund under sections 166 and 182 ERA 1996. The Secretary of State denied liability on the basis that he was only the owner/director and not an employee.

The tribunal found that the unsigned written contract relied on by the claimant was not created on 30 August 2002, because it referred to a pension scheme that did not exist in 2002 and to a NEST scheme that only came into being in 2008. It found instead that the document probably came into existence after 21 June 2016 and reflected the parties' actual relationship. Applying Ready Mixed Concrete, Nethermere, Neufeld and Clark, the tribunal held that the arrangement was not a sham and that the essential elements of a contract of service were present: the claimant personally performed the work, there was mutuality of obligation, and Mrs Evans exercised sufficient control over the claimant's work despite his shareholding and directorship.

Having found that the claimant was an employee throughout the relevant period, the tribunal upheld the claim for insolvency payments. It awarded arrears of pay, statutory redundancy pay, statutory notice pay and holiday pay. The arrears claim was reduced to £1,200 because section 184(1) ERA 1996 limits arrears of pay to eight weeks. The other sums were awarded at the agreed figures of £7,892.22 for redundancy, £3,323.04 for notice pay and £1,107 for holiday pay, making a total award of £13,522.26.

The tribunal dismissed the claimant's costs application. It accepted that the Secretary of State's ET3 had misstated the salary figure, but treated that as a typographical error that did not affect the conduct of the proceedings, and held that it was reasonable for the Secretary of State to defend the claim given the doubts about the origins of the unsigned contract.