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Employed Earner definition?

Employed Earner definition?

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A new client was made redundant in April 2012, receiving a payout which meant he didn't need to earn any further salary in 2012/3.  He chose to invest his redundancy proceeds in a new limited company venture and consequently has a loan account owing to him.  We advised not to process any salary and to regularly draw some of the loan to cover his living costs.  Unfortunately, in November 2012 he broke his arm severely whilst working in the new business and has been unable to work since.  He applied for Industrial Injury Disablement Benefit and has been turned down because he is not an "employed earner".  Many directors only draw a salary at the end of a tax year, so it is not unusual for directors to have zero salary in any given month.  My client appears to be being penalised because he has chosen to try and start up a new business.  This is because he is only withdrawing part of his start up capital in the initial phase.  The start up phase will inevitably take much longer because his business requires physical work which he cannot undertake and will not be able to for some months yet.  Does anyone have any experience of this difficult situation?

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By neileg
31st Jan 2013 12:03

Yes, in a way

I was company secretary of a company without pay and then became employed but then given the boot. Counsel's opinion was that the period of unpaid office holding qualified as employment for unfair dismissal purposes. Unfortunately for me my case failed for other reasons but I was surprised that the unpaid period was deemed to qualify.

So it might be worth getting a legal opinion.

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