Ratio Decidendi
A person can be both the controlling shareholder and managing director of a company and simultaneously be employed by that company as a worker. The company is a separate legal entity from its shareholders and directors, following Salomon v Salomon. A controlling shareholder can therefore enter into a valid contract of employment with the company they control.
Fapte
Mr Lee formed Lee's Air Farming Ltd, a crop-spraying company. He held 2,999 of the 3,000 shares and was the sole governing director. He was also employed as chief pilot under a contract of service. Mr Lee was killed in an air crash while piloting the company's aircraft. His widow claimed workers' compensation, which depended on whether Mr Lee was a 'worker' employed under a contract of service with the company.
Rezumatul hotărârii
The Privy Council held that Mr Lee was indeed a worker employed by the company. Applying the Salomon principle, the company was a separate legal person. There was no reason why one of its directors could not also be its employee. The fact that Mr Lee was both employer (as director) and employee (as pilot) did not prevent the existence of a valid contract of service.
Citate cheie
"The real question is whether the deceased was a 'worker' within the meaning of the Act. Was there a contract of service? The company was a legal entity. The deceased was employed by the company as its chief pilot."
— Lord Morris
Tratament ulterior
Followed as confirming that a controlling shareholder-director can be an employee of their own company.