Mrs C Blyth v Recruitment Training (Edinburgh) Ltd (in Voluntary Liquidation) — 2023

Mrs C Blyth had worked for Recruitment Training (Edinburgh) Limited (RTL) as Managing Director from 30 June 2008. She was a statutory director and held an 80% shareholding. The tribunal found there was no express contract of employment, written or oral, and no documentary material such as board minutes showing an agreed employee status. Her remuneration consisted of small PAYE payments and dividend payments: in the tax years 2019/20, 2020/21 and 2021/22 she received £8,628, £8,784 and £8,844 through PAYE, and in 2022/23 she was paid £748.48 per month through PAYE, with dividend payments of around £1,000 to £1,500 per month.

Applying Ready Mixed Concrete, Hall v Lorimer and Neufeld, the tribunal concluded that the evidence of the parties' conduct did not convincingly establish an implied contract of employment. It found that RTL did not exercise control over what the claimant did, or how or when she did it, that her hours were self-determined, and that she had no line manager. The tribunal treated the PAYE arrangement as a device to use the claimant's personal allowances rather than wages set by reference to hours worked or the national minimum wage, and it regarded the dividend payments as arising from her shareholding rather than from any contract of employment. It also noted that she knew the PAYE sums were below the national minimum wage for the hours worked and did not take action.

The tribunal held that, as at 19 January 2023 when RTL entered creditors voluntary liquidation, the claimant was not an employee within section 230(1) ERA 1996. As a result, she had no entitlement to notice pay or a statutory redundancy payment, and the tribunal said it had no jurisdiction to consider the claims under sections 166 and 182 ERA 1996. The judgment records that the claimant's complaints did not succeed and were dismissed.