In person For the First v Secretary of State for Business and 2 others — 2024

Mr D Loader was a director and shareholder of Markline Construction Limited and worked effectively as finance director. The company stopped trading on 3 July 2023 and entered administration on 14 July 2023. He had signed a Director's Service Agreement said to start on 1 December 2016 and to pay £55,000 a year, but the tribunal found his actual remuneration varied materially: the P60 figures showed £14,765.96 for the year ending 31 March 2020, £9,999.96 for 2021, £9,999.96 for 2022 and £12,500 for 2023. The company accounts also showed directors' salaries of £13,933 in 2021 and £10,000 in 2022, alongside dividends drawn by the claimant of £41,753 and £51,804. The claimant also confirmed to the Secretary of State that he was not owed any money by the company.

Applying section 230 ERA 1996 and the authorities it cited, including Ready Mixed Concrete, Autoclenz, Uber, Ter-Berg, Neufeld, Eaton, Fleming, Rainford and Bottrill, the tribunal held that the written Service Agreement had not had contractual effect for at least the three years before administration and was, to that extent, a sham. The tribunal found that the claimant and the other directors varied how they took money from the company according to trading results and tax efficiency, and that the claimant was in a position to control the form and timing of the payments he received.

The tribunal concluded that there was no genuine employment relationship in place at the relevant date for liability under sections 166, 182 and 184 ERA 1996. On that basis, the claimant's application for payment from the National Insurance Fund, which sought notice pay and statutory redundancy pay, was not well-founded and was dismissed. No award was made.