Rainford v Dorset Aquatics Ltd EA-2020-000123-BA

Appeal against a finding that the Claimant was neither an “employee” nor a “worker” for the purposes of section 230 of the Employment Rights Act 1996 and that his claims against the Respondent company for unfair dismissal, unpaid wages, notice pay and holiday pay were therefore unsustainable. Appeal dismissed.

The Claimant, Bradley Rainford, and his brother Ben were co-directors and shareholders of the Respondent company, Dorset Aquatics Ltd, which did landscape work and made water features in the Dorset area. The company had been entirely owned by their father. It was later shared 50/50 between the father and Ben. After the father’s retirement in 2013, Bradley became more involved with the company, having previously done work for it on an ad hoc basis, and in mid-2015 he became a director and took 40% of the shares, with Ben holding the remaining 60%; Ben’s larger shareholding reflected the fact that he had lent the company money. There was no written contract or documentary record relevant to Bradley’s claimed status as an employee or worker and no evidence was given of any relevant oral agreement between the parties. In June 2018 a dispute arose and in due course Bradley brought employment tribunal claims for unfair dismissal, notice pay, unlawful deductions and holiday pay. The EJ decided at a PH that he was not an employee or otherwise a worker for the purposes of s 230 of ERA 1996 and that his claims were therefore unsustainable. The Claimant appealed.

The EAT dismissed the appeal.

(1) Although there is no reason in principle why a director/shareholder of a company cannot also be an employee or worker, it does not necessarily follow that simply because he does work for the company and receives money from it he must be one of the three categories of individual identified in s 230(3);

(2) It had been open to the EJ to find that Bradley had a right to substitute another to act as site manager in his place based on Ben’s evidence at the hearing that he would have no problem with that and notwithstanding that the issue never arose in practice;

(3) The EJ had not made the error of regarding Bradley’s status as a director and/or shareholder as being mutually exclusive with status as an employee. The level of Bradley’s control over the company and the fact that he shared with Ben in the risk as to the company’s success were referable to his status as a director/shareholder and not directly relevant to the question whether he was an employee or worker but they formed part of the “backdrop” and had not had any significant influence on the EJ’s decision.


Published: 15/12/2021 17:24

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