The High Court has held that a director may be personally liable for
inducing a company to breach its obligations in an employment contract.
Although a director is not generally liable for inducing a breach of
contract, if the breach of contract has a statutory element to it that
suggests a director has failed to comply with its duties, then the
director in question may be personally liable. In determining a
director’s actions the Court will look at the director’s conduct and
intention in relation to his duties to the Company rather than to a
third party.
In the recent case of Antuzis & Ors v DJ Houghton Catching Services
Ltd [2019] the Claimants, Lithuanian nationals, had been trafficked
into the UK and were working as chicken catchers. The Claimants worked
long hours and were paid less than the statutory minimum. The Company
had made deductions from their pay as punishment and failed to pay them
holiday pay. In addition, the Company had withheld payments for
accommodation costs.
The High Court held that the Company’s sole Director and Company
Secretary were not acting bona fides in relation to the Company as they
were fully aware that they were not paying the minimum wage, holiday pay
nor were they entitled to made any such deductions.
The Court held that the Director had induced the Company to breach its
contractual obligations causing a loss of reputation to the Company and
therefore the Director was held personally liable.
This case sets out the risk and liability imposed on directors if they do not operate their company in compliance with the law.
If you have a contractual employment issue you would like to discuss, please do give us a call on 01484 821 500 or email [email protected].