Claimant was unable to make a redundancy claim through the department when her company was liquidated even though she claimed to be an employee of that company.

The claimant opened a beauty clinic named ‘Beauty Haven’ in August 2005. This was initially as a sole trader. On the advice of her accountant, she incorporated in February 2015 as Beauty Haven Ltd. The claimant was the sole shareholder and sole director. The claimant had some employees, and their contracts were transferred to the company. The claimant signed these contracts in her role as company director and also as an employee.

The claimant’s contract stated that she was a ‘beauty therapist’ and did not note that she was a manager. However, it was found that the work was more akin to a manager as she had done before incorporation. The contract indicated that payment would be on the 28th of the month by bank transfer.  However, the claimant had been receiving payment through payroll and some through dividends. Dividends were not mentioned in the contract. The claimant agreed that the disciplinary procedures would not apply to her as she controlled the company but that she held herself to the highest standards.

In September 2021 the claimant suffered a brain haemorrhage, and she was absent from work until March 2022.  During the absence the claimant’s husband and son helped with the running of the company. The claimant continued to be paid during this period but no sick pay provision for this was in the contract.

The claimant was unfortunately unable to return fully and in August 2022 she was advised to contact insolvency advisers. The claimant was advised to put the company into liquidation and to apply for a redundancy payment as she was an employee with regular hours.  The claimant claimed the redundancy payment through the respondent Department. This application was rejected leading to the Tribunal action.

The claimant relied upon her written contract to show that she was an employee.  The respondent challenged the validity of the contract and that the claimant was an employee in September 2021. The Tribunal made it clear that the fact the claimant was the sole director and shareholder did not point away from there being an employment relationship. The claimant argued that the contract applied to her in the same way as the other employees. On the point of payment, the Tribunal found that the fact there was a payroll payment, and a dividend payment was not inconsistent with being an employee.  However, the Tribunal found that the sick pay for five months from September 2021 to March 2022 was more than her contractual entitlement. The claimant argued that there had been a valid variation of contract, but this was rejected. The formalities outlined within the contract for variation had not been complied with. The Tribunal found that the claimant was able to pay herself sick pay because she had control of the company rather than any right as an employee under a contract of employment.  Therefore, the conclusion was that she was in that contract until September 2021 and after which she ceased to treat herself as an employee bound by contract.  Accordingly, the claimant’s claim failed.

The Tribunal has had to deal with some of these claims for redundancy over the past year.  In Hassard v Department for the Economy [2025] it was found that the claimant who was a director was also an employee and able to make the claim. The distinction here is the operation outside of the contract of employment by having that benefit of sick pay which the other employees would not have. That meant that the claimant ceased to operate as an employee and therefore the redundancy payment through the Department could not succeed.

NI Tribunal decisions are available on the OITFET website.