Mr J Hughes v Kinch Limited (in Voluntary Liquidation) — 2024

The claimants were former directors of Kinch Limited, which entered creditors' voluntary liquidation on 17 October 2024. They sought payments from the National Insurance Fund for redundancy pay, notice pay, holiday pay and one month's arrears of pay. The central issue was whether they were employees of the first respondent for the purposes of sections 166 and 182 of the Employment Rights Act 1996, which depended on whether they worked under a contract of employment within section 230.

The tribunal accepted that the claimants provided personal service and worked as directors in the running of the business. It found that each received monthly gross payments of £1,050, pension contributions of £21.20, net pay of £1,028.80 and an annualised gross salary of £12,600, together with monthly dividends of £500 each. However, it found that the written contracts they produced were generic staff contracts rather than directors' service agreements: they did not set out directors' duties or remuneration, they did not specify hours of work other than by reference to a rota created by the claimants themselves, and the claimants in practice decided their own hours and duties. The tribunal also noted that their pay was well below the National Minimum Wage for the hours worked.

Applying the authorities it cited, including Ready-Mixed Concrete, Eaton and Neufeld, the tribunal concluded that the contracts were not a true reflection of an employment relationship and that the claimants were not subject to control consistent with employee status. It found that they were holders of office and were acting on their own account, with the payments made to them as directors and, in the case of dividends, as shareholders. The claims for redundancy pay, notice pay, holiday pay and arrears of pay were therefore dismissed.