The Court of Appeal has upheld the Tribunal’s decision that a director and shareholder was an employee and a worker within the meaning of the Employment Rights Act 1996.  This was notwithstanding the fact that the director had performed part-time work for the company without pay for over three years.  The fact that the parties had not expressly agreed a term about pay did not mean that there was no contract between them.

The Court in Stack v Ajar-Tec Ltd [2015] said it was open to the Tribunal to imply a term that the director would be paid a reasonable rate from a reasonable starting date in order to give business reality to the arrangements between them.  Whilst a contract may be created expressly or by implication, so too it may be formed partly expressly and partly by implication.  It was not fatal that the three parties in the business had failed to expressly agree a term concerning pay. It held that the Claimant was both an employee and a worker. He was thus entitled to pursue his claims for constructive unfair dismissal and unlawful deductions from wages.