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The Court of Appeal has upheld a Tribunal decision that a director and shareholder who performed  part time work for a company without pay for at least 3 years, was in fact an ‘employee’ and ‘worker’ for the purposes of the Employment Rights Act 1996.

This case arose because the company’s other shareholders terminated the shareholder/director’s employment following a dispute, to which he reacted by claiming for unfair dismissal and unauthorised deductions from wages.

Reasonable rate of pay

The Court of Appeal ruled that each of the other shareholders were aware that the shareholder/director had agreed to contribute to the company by carrying out work, which implied a term that he should be remunerated for this.  It was then open to a Tribunal to imply a term that the shareholder/director would be paid a reasonable rate of pay from a reasonable starting date, in order to give business reality to the arrangements.

Unpaid wages legal advice

Unlawful deductions cases cover a wide range of things, including unpaid wages, holiday pay, and deductions when you leave employment.  If you have a question about any of these issues, contact one of our specialist employment law solicitors.

Bray & Bray have three main offices across Leicestershire, feel free to phone or pop in to talk to our solicitors.