The Court of Appeal has confirmed that a shareholder and director of a company can also be an employee of the company, even in circumstances where their shareholding gives them total control over the company. The controlling shareholding is simply one factor to take into account when deciding whether in all the circumstances the individual concerned is an employee (Secretary of State for Business, Enterprise and Regulatory reform v Neufield).

Previous guidance on determining the employment status of director/shareholders had resulted in conflicting EAT judgments. The Court of Appeal has now given fresh guidance on the issue. This is important because it determines the eligibility of such director/shareholders to claim payments, including redundancy and notice pay, from the National Insurance Fund if their company becomes insolvent – DBERR receives in the region of 12,000 such claims a year.