The Court of Appeal has recently given rulings that are of major interest to business shareholders who are also employees when a business becomes insolvent and the person then makes a claim under The National Insurance Fund for redundancy pay, notice pay and holiday pay. The case came before the Court of Appeal under the name Secretary for Sate for Business, Enterprise and Regulatory Reform v Newfeld and Howe.
It was held there was no reason why a shareholder and director of a company could not also be an employee even if the shareholding gives total control of the company. In addition even if the person had made loans to the company or guaranteed obligations he/she could still be deemed to be an employee for the purposes of the legislation.
From previous case law it has been held that the employment contract cannot be a sham and must reflect what the employee actually does in reality. Equally it is prudent to have the contract in writing
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