Mr D R Thomas v HT Installations Ltd (in Creditors Voluntary Liquidation) and Secretary of State for Business and Trade: 6007154/2024
EMPLOYMENT TRIBUNALS
Case No 6007154/2024
Between
Mr D R ThomasClaimantHT Installations Ltd (in Creditors Voluntary Liquidation) and Secretary of State for Business and TradeRespondent
Before
Employment Judge GilroyIn person for claimantDate 18 February 2026
JUDGMENT
The judgment of the Tribunal is that the Claimant’s claims against the Second Respondent under the National Insurance Fund in respect of statutory redundancy pay, arrears of pay (unpaid wages), holiday pay and statutory notice pay are not well founded and are dismissed. For the avoidance of doubt, the Tribunal has no jurisdiction to deal with the Claimant’s claims against the First Respondent, neither the consent of the liquidator nor the permission of the High Court having been obtained to enable those claims to proceed.
REASONS
[1]These are claims made by the Claimant against the Redundancy Payments Service for various monies stemming from the liquidation of the First Respondent in 2024. The Claimant was the Managing Director of the First Respondent and he brings claims in respect of four separate sums, as follows:• A redundancy payment of £6,164.11.• Arrears of pay in the sum of £966.92.• Holiday pay in the sum of £1,692.11.• Notice pay of £2,900.76.[2]The hearing proceeded on the basis that the Tribunal should determine first as a matter of principle whether the Claimant had the entitlement to bring these claims without considering the detail of those claims.[3]The Tribunal was provided with a bundle of documents (running to 179 pages) which included a contract of employment, a director’s questionnaire served by the Second Respondent and filled in by the Claimant, together with various payslips and bank statements.[4]Nothing stated in this judgment is intended to diminish either the value of the work that the Claimant performed for the First Respondent over many years or the fact that he devoted considerable time and effort, in certain circumstances without remuneration, in his efforts to keep the First Respondent not only viable but thriving as a substantial employer of a considerable number of employees.[5]In order for the Claimant to establish his claims as a matter of principle, the Tribunal has to be satisfied that there was a genuine contract of employment reflecting a genuine relationship of employer and employee and the Tribunal concluded that there was not such a relationship in this case. 5.1. The Claimant had a 99% shareholding in the First Respondent. 5.2. The Claimant had wage slips showing that in the period leading up to liquidation and the termination of his employment he was being paid a salary in the region of £241 per week. 5.3. As the wage slips indicate, no sums were deducted from the above salary payments by way of tax or national insurance and the simple explanation for that is that the income was not of a sufficient amount that it met the threshold for such deductions to be made. 5.4. The Claimant was perfectly candid in informing the Tribunal that he received dividend payments. His bank statements disclosed that the sum of £1,000 per week (gross) was being paid to him by the First Respondent. 5.5. The position is, therefore, that the monies the Claimant was receiving by dividends were approximately 3 times the amount allocated to salary. That arrangement does not speak of an employment relationship. It speaks of a tax efficient arrangement whereby salary can be paid at a sufficiently low level to avoid deductions from being made, thereby enhancing the overall net financial benefit gained by the shareholder. 5.6. The contract of employment referred to an annual salary of £12,500 - just over £240 per week. Again, the most rudimentary calculation would indicate that this was well below the national minimum wage, again supporting the argument that the level of salary paid was merely a device for tax efficiency rather than a genuine bargain between employer and employee. 5.7. Still on the issue of remuneration, the Tribunal had regard to the differences and discrepancies in the figures as between the Claimant’s P45 and his P60 in terms of income received. 5.8. Another indication of the lack of an employment relationship was that when it came to considering the question of holidays and holiday entitlement, the Claimant offered four different versions as to what his holiday entitlement was. In the response to the Director’s questionnaire at page 101 of the bundle, he said that the entitlement was 30 days plus bank holidays. He then suggested 39 days (at page 97 of the bundle), 38 days (at page 136 of the bundle), and in his oral evidence he said that the figure should have been 35. Such levels of inconsistency in terms of the alleged contractual arrangements again undermine the proposition that there was here a genuine, contemporaneously recognised, relationship of employer and employee. 5.9. The Claimant, unsurprisingly, invested heavily in the First Respondent personally. He referred to a payment of £250,000 to keep the business afloat and he was saddled at the time of the liquidation with an entitlement of £347,000 by way of a director’s loan. Whilst it is entirely understandable that he should have made such substantial investments in the business, again this aspect speaks of a relationship between a business as opposed to an employer/.employee relationship. 5.10. The Tribunal was satisfied there was a complete lack of control on the part of the First Respondent in its relationship with the Claimant.[6]In the final analysis, the Tribunal was required to examine the substance of the arrangements between the parties and not the form of those arrangements (A Autoclenz v Belcher [2011] UKSC 41). The tests for employment status are well known. Perhaps the best known is the 3 stage test articulated in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497, namely(1) personal service (the individual agrees to provide their own work and skill in exchange for a wage;(2) control (the individual agrees to be subject to the control of the employer to a sufficient degree, and(3) consistency (the other terms of the contract are consistent with a contract of employment). It is also a tenet of this area of the law that for there to be an employment relationship there must be what is referred to as an irreducible minimum of obligation either way as between employer and employee.[7]Having considered all relevant matters, the Tribunal was not satisfied that the Claimant was an employee of the First Respondent for the purposes of s.230 of the Employment Rights Act 1996, with the consequence that his claims are not well founded and are dismissed.