Are Executive Directors Employees?
by Liam
A couple of weeks ago, this blog posted a reminder to owner/managers of companies to count themselves as employees for the purpose of counting the number of employees employed by the Company for the purposes of statutory rights contingent on a Company being of a certain size in terms of number of employees http://www.pjhlaw.co.uk/blog/do-you-company-shareholders-who-work-for-the-company-see-yourselves-as-employees-as-well/.
A few days after this blog post the EAT handed down its judgment in Nesbitt v Secretary of State for Trade and Industry. Do the judges at the EAT read this blog? Nesbitt, agreeing with our earlier post, confirmed that unless there is a sham, owner/managers can be employees if they work under a contract of service, although the EAT did cite various authorities in the form of decided cases rather than the view of this blog!
This decision has wide implications. For example, if directors are employees they can claim unfair dismissal if they are not dismissed for a fair reason and following a fair procedure. They can also claim statutory payments from the Redundancy Payments Office if their Company becomes insolvent.
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