Mr Paul Rutherford v SITS Group Ltd and 1 other — 2020

The tribunal heard evidence on 27, 28 and 29 January 2020 from Mr Rutherford, Jeff Hodgson and Paul Watson. It found that Mr Rutherford was not an employee of Pivotal Networks Ltd, but a director/shareholder who provided input on an ad hoc basis as one of the owners. The dividend payments from the second respondent were linked to ownership and profits, not to employment, and there was no express or implied contract of employment with that respondent. The unfair dismissal claim against Pivotal Networks Ltd was therefore dismissed.

By contrast, the tribunal found that Mr Rutherford was an employee of SITS Group Ltd as well as a director/shareholder. It rejected the unsigned draft contract said to show a salary and dividend arrangement, and found that he was not working 37.5 hours a week as an employee. It held that his £9,996 annual salary was wages and did not offend the National Minimum Wage, but the dividend payments were not wages and were not referable to work done. The tribunal said there was insufficient evidence before it to determine any illegality bar to the unfair dismissal claim.

On 12 February 2019 Mr Rutherford asked whether he would be made redundant, refused to sign the merger documents for the planned TruStack merger, and the tribunal found that he had demanded either a guarantee of continued employment or a sufficiently attractive settlement. It held that the reason for dismissal was a breakdown of trust and confidence amounting to some other substantial reason, not conduct, and that dismissal on 14 February 2019 was within the range of reasonable responses under section 98(4) ERA 1996. However, the first respondent should have held a disciplinary meeting before dismissal. Applying Polkey, the tribunal found he would have been fairly dismissed on 19 February 2019 in any event, so he suffered no loss of earnings. It awarded £300 for loss of statutory rights, reduced by 90% for contributory conduct, resulting in a basic award of £278.73, a compensatory award of £30, and a total award of £308.73. It did not apply an ACAS uplift.