| It has often been considered that a company | | | | company. The Court of Appeal held that the |
| director cannot claim redundancy, and loss of | | | | claimant, was an employee and as such he was |
| other benefits of his employment when his limited | | | | entitled to claim for redundancy money, notice |
| company goes into Liquidation. | | | | money and holiday pay owing at the date of |
| The Insolvency Service booklet “ Redundancy | | | | insolvency of the company. |
| and Insolvency a guide for employees” sets | | | | He had a contract of employment which existed |
| out the guidance on who can claim in a liquidation, | | | | at the time of the company insolvency. That |
| when and for what. The payments are made | | | | contract was found to be genuine and that he |
| from the National Insurance Fund in the case of a | | | | had a contract of service, and as such he was |
| company which is insolvent and cannot pay its | | | | entitled to benefit from the Business Insurance |
| statutory dues. The Redundancy Payments Office | | | | Fund the same as any other employee. |
| then deals with the claims and makes the | | | | One if the Judges set out a number of principles |
| payments. | | | | which it is important to bear in mind as a Director. |
| The guidance says that a company director will | | | | •“There is no reason in principle why |
| not qualify if they only deal with company policy | | | | someone who is a shareholder and director of a |
| or go to board meetings in return for fees. | | | | company cannot also be an employee of the |
| However if they have a job with the company, | | | | company under a contract of employment. |
| they have to show that they were working under | | | | •There is also no reason in principle why |
| a contract of employment. | | | | someone whose shareholding in the company |
| Many small businesses are run by their owner | | | | gives him control of it cannot be an employee. |
| managers who have specific roles and work | | | | •In short, a person whose economic interest in |
| alongside the rest of the workforce. | | | | a company and its business means that he is in |
| We are aware of the recent decision in the case | | | | practice properly to be regarded as their "owner" |
| of Secretary of State of Business, Enterprise and | | | | can also be an employee of the company” |
| Regulatory Reform v Neufeld [2009] EWCA Civ | | | | Hence, if you are a Director of a Limited |
| 280 CA | | | | Company and that company is going into |
| This was heard as you can see in the Court of | | | | liquidation, there is nothing to stop you making a |
| Appeal. The Judges decided that a person who | | | | claim for redundancy, unpaid wages, holiday pay, |
| was a majority shareholder and director of a | | | | notice pay and possibly a basic award for unfair |
| company could also be an employee of that | | | | dismissal. |
| company under a contract of employment, even | | | | The sums involved can be large indeed and it |
| if he had total control of the company. | | | | could pay to take advice. |
| In this case the claimant was a director of a | | | | Call 0808 160 5577 if you think that you might be |
| company. The company became insolvent. He | | | | entitled to help. |
| claimed statutory redundancy money from the | | | | |