Ms K Somerville v Angels’ Share Glass Ltd (In liquidation) — 2024

Ms Somerville applied to the Redundancy Payments Service for a redundancy payment after the insolvency of Angels’ Share Glass Ltd. The Secretary of State rejected the application on the basis that she was not an employee for the purposes of section 230 ERA 1996, and the hearing was listed to determine that question. The company took no part in the proceedings.

The tribunal found that Ms Somerville had set up the company with her father in 2013, that she became the 100% shareholder after his death in 2023, and that the company employed between 8 and 12 employees over the relevant period. Although she had issued herself with an unsigned contract of employment describing her as a director paid £6.09 per hour with 28 days' holiday and reference to capability and discipline procedures, the tribunal found that the document did not reflect the reality of the relationship. It noted that she had no manager, reported only to the advisory board by way of information and consultation, and that the advisory board had no power to discipline or dismiss her.

Applying the guidance in Secretary of State for Trade and Industry v Bottrill, Clark v Clark Construction Initiatives Ltd and Secretary of State for Business, Enterprise and Regulatory Reform v Neufeld, the tribunal considered whether there was a genuine contract and whether it gave rise to an employer/employee relationship. It found that the claimant had complete control of the company, that she decided when to take leave, and that she was paid in a way designed to combine a minimum director's salary with dividends to reach an equivalent hourly rate, which the tribunal said was not how an ordinary employee would be paid. The tribunal concluded that she was not an employee of the company at the material time.