November 18, 2010
An individual from a firm in Halesowen has missed out on redundancy pay after the company went into liquidation.
Company boss, David Byng, was praised by tribunal judges after keeping Shenstone Pattern and Craft Ltd going for the sake of three employees, but, his request for financial recompense after the company’s closure was declined.
Byng was initially an employee at the firm, but, as he held shares was appointed Sole Director after the original two Directors decided to leave when the company began to struggle financially.
Mr Byng tried to keep the business running for over a year after their departure, but, eventually Shenstone Pattern and Craft Ltd went into voluntary liquidation. By keeping it going in his new capacity as Director Mr Byng was unknowingly sacrificing thousands of pounds in redundancy pay.
The Government’s Department of Business, Innovation and Skills declared that Mr Byng was not entitled to redundancy pay because he had been a Director and not an employee.
The sixty-four year old retiree made a claim for a payout from the Government’s Redundancy Office. He told a Birmingham Employment Tribunal: “The firm had 12 employees at its peak but it went down to just three when I became a Director.” He added: “I kept the firm going for another 14 months for the sake of the three employees but eventually the firm closed.”
But the tribunal supported the Department of Business, Innovation and Skills’ decision. Judge David Kearsley told Mr Byng: “You were an honest witness who loyally kept the firm going for another 14 months to keep three employees in work while losing your own redundancy pay.”
Employment legislation states that in order to receive redundancy money you must be an employee working under a contract of employment. Directors may be employees, particularly if the company concerned is small; however, they are unlikely to qualify if they have a controlling interest in the business.
