Wife of business owner fails to prove employee status despite stipend payments
A tribunal has dismissed claims of unfair dismissal, wrongful dismissal, and other employment rights after finding that a woman who received monthly payments from her husband's accounting firm was not an employee.
1 min read · Last updated 18 May 2026
Case details
- #no-consideration
- #no-contract
- #stipend
- #personal-relationship
- #redundancy-hypothetical
Key facts
- The claimant was paid a monthly stipend of £451.55 from May 2019, but the tribunal found she did no work in return.
- The claimant's husband, Mr Kotonou, ran the accounting business and the claimant alleged she worked as his assistant since 2002.
- The tribunal found no evidence the claimant performed any tasks such as flagging emails, scheduling appointments, or attending client meetings.
- The claimant's National Insurance record showed gaps with no earnings between 2003-2004 and 2007-2008.
- After Mr Kotonou's death in September 2020, the respondent issued a P45 with a leaving date of 1 October 2020.
Timeline
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Claimant alleges start of work
The claimant alleges she started working for ABC UK formally in 2002, having previously assisted informally.
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Resumption of payments
The claimant's National Insurance record shows earnings of £5,400 per annum from tax year 2008-2009 onwards.
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Reference letter
Mr Kotonou wrote a reference letter stating the claimant had been employed for 15 years as an Accountant's Assistant.
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Respondent company formed
Accountancy Business Centre Digital Limited was formed, with Ms Villa-Herrera as sole director.
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TUPE transfer
Staff of ABC UK transferred to the respondent under TUPE regulations.
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Claimant paid by respondent
The claimant was paid £451.55 per month via payroll, recorded as working 55 hours per month.
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Claimant furloughed
The claimant was put on furlough, with payments reduced to £361.24 per month.
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Meeting with Mr Kotonou and Ms Villa-Herrera
A meeting was held where Mr Kotonou proposed the claimant receive £1,000 per month after his death.
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Mr Kotonou died
Mr Kotonou passed away.
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P45 issued
Ms Villa-Herrera provided the claimant with a P45 showing a leaving date of 1 October 2020.
The legal issue
The tribunal had to decide whether the claimant was an employee or worker under a contract of employment, specifically whether there was consideration (work done in exchange for pay) and an intention to create legal relations between the parties.
The outcome
The tribunal dismissed all claims, including unfair dismissal, wrongful dismissal, failure to pay holiday pay, and failure to provide employment particulars.
The key reason was that the claimant failed to prove she had a contract of employment. The tribunal found that the monthly payments of £451.55 were not in exchange for any work — the claimant did not flag emails, schedule appointments, or attend client meetings. There was no evidence of an intention to create a legally binding employment relationship.
No compensation was awarded as the claims failed entirely.
Lessons & takeaways
- Being paid regularly does not automatically make you an employee — you must also perform work in return and have a mutual intention to create a legal relationship.
- If you are a family member of a business owner, keep clear records of the work you do and any agreements about pay and conditions.
- A reference letter describing you as an employee is not conclusive — tribunals will look at the actual working arrangements.
This case shows how important it is to have clear evidence of an employment relationship, especially when the worker is related to the business owner. The claimant, who was married to the owner of an accounting firm, received monthly payments of £451.55 for several years. But when her husband died and the payments stopped, she claimed unfair dismissal and other employment rights.
What went wrong for the claimant
The tribunal found that the claimant did not actually do any work for the money. She had no specific duties, no set hours, and no evidence of performing tasks such as handling emails or meeting clients. The payments were more like a personal allowance than a salary. The tribunal also noted that the claimant herself had told her husband he could skip payments when the business was short of cash — something that would be unusual in a genuine employment relationship.
The respondent, Accountancy Business Centre Digital Limited, was able to show that the claimant was not treated like other staff. She was the only employee put on furlough, and the decision was made by her husband, not the company director. After his death, the director issued a P45 with a leaving date of 1 October 2020.
What this means for similar claims
This case is a reminder that tribunals look at the reality of the working relationship, not just paperwork. A reference letter or payslips are not enough if the underlying facts show no work was done. For anyone in a similar situation — especially where there is a personal or family connection to the business — it is essential to have a written contract, clear job duties, and evidence that you actually performed work in exchange for pay.
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