Labor - shareholders - employees or third party contractors? - Employment - IT

The case of Nesbitt and others v Secretary of State for Trade and Industry [2007] affected joint shareholder applicants who have employment contracts with their company. The plaintiffs were husband and wife. In February 1985, accepted the second applicant company, as the vehicle for a new company providing IT training for businesses and public institutions. In March 1986 the first applicant approached her in the business. On that date, the company's shareconsisted of 1000 shares, 529 of which were held by the second applicant, and 470 of which were held by the first plaintiff. One share was held by F, the second applicant's mother.

All three were members of the Board. In its heyday, the company had 20 employees in four offices. From the outset, the plaintiff had written a work contract with the company. These contracts are in the same form as in came with his first staff. The plaintiffs were paid forSalaries in relation to their role as managers of the company. She received no fees Directors' or dividends.

The company was managed on a day-to-day basis most of the applicants, also was employed when, finally, a project manager. Most decisions were taken relatively informal board meetings every six months to find, and convene additional meetings if necessary.

Unfortunately, in 2006 the company was insolvent. On 3 July 2006,the other employees, including the plaintiffs, were dismissed by the liquidator. Subsequently, the applicant for the Insolvency Service for redundancy payments and other arrears owed to them, pursuant to § § 166 to 168 and 182 to 186 of the Employment Rights Act 1996 (the Insolvency Rules) shall be applied.

Their claims were rejected by the Insolvency Service on the grounds that they are not employees within the meaning of the Act of 1996. The challenge this decision was rejectedby the Employment Tribunal. The court ruled, inter alia, that she had not employees of the company, because they prevent, in practice, a total of comprehensive control of the company and thus in a position to their own dismissals. The plaintiffs appealed.

The main problem that occurred will be determined by the court whether the court in dealing with the fact of control, as decisive for the question of whether the plaintiff had been employed by the company had committed. The complaint wasallowed.

In this case, the court had erred in treating the fact of control as authoritative. It was just one of many relevant factors, which fell to be considered in determining whether the plaintiff had been employed by the company. The plaintiffs had proper employment contracts and the contracts that are issued where the other first employee. They received their compensation by way of salary. The fact that the set-aside, there was noOther factors appeared employee status. Under such circumstances, the right to open in the examination of facts found by the court, the only conclusion that was the court that the plaintiffs were employees of the company. Accordingly, the claim would be to the court for the determination of the amounts due be paid to the victims.

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© RTCoopers, 2007. This briefing note provides not constitute a comprehensive or complete statement of the law on the issues being debated and not legal advice. It will deal only with general issues. Specialist legal advice should always be sought in relation to the particular situation.

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