Xelector, a spin-off from Dublin internet holding group Enba, is still at risk and may not have a future, an employment appeals tribunal heard yesterday.Counsel for Xelector, a firm that operates a marketplace for financial services and utilities, also told the tribunal it had reduced staff to 28 from 150.

Xelector is defending a case for unfair dismissal taken by former senior manager Mr Fraser Thomas. The company claims he was made redundant rather than dismissed.

Xelector was the first Enba offshoot to be spun off in November 1999 and grew rapidly, attracting more than €23.5 million (£18.5 million) funding and a valuation of €175 million.

But along with First-e, another Enba-associated firm that went out of business last year, Xelector has been affected severely by the downturn in the dotcom sector.

During preliminary legal arguments yesterday, counsel for Xelector, Mr Tom Mallon, told the tribunal the firm was still at risk.

"The company may have a future and it may not have a future," he said. "Dotcom was a bubble and that bubble has burst."

It was also revealed that Xelector, along with partner firm Xeneration, had invested €4 million in a dotcom start-up for which Mr Fraser was employed. This venture, Choosy.com, failed to operate despite the investment. It never had customers or produced a piece of software, said Mr Mallon.

Mr Fraser joined Choosy in April 2000 and joined Xelector in November, after the former firm went out of business. Mr Mallon said Mr Fraser began working for Xelector in November 2000 and was made redundant in September 2001.

He claimed Mr Fraser was employed for just 11 months by Xelector.

This would mean he would not have the same employment rights as an employee of a year or more. But this was disputed by Mr Fraser's counsel.

Barrister Mr Marcus Dowling said Mr Fraser had enjoyed continuity of employment with Xelector from the time of his arrival at Choosy. He said evidence, which would be produced at a later hearing, would show Mr Fraser received a back-dated pension from this time.

The tribunal heard Mr Fraser, a British resident, earned a salary of £95,000 sterling (€155,508) while working for Xelector and flew back to Britain every weekend.

The case will continue at the employment appeals tribunal in March.