Generally, a director is not personally liable when it comes to business matters. Indeed, this is one of the attractions of incorporating a company and enjoying limited liability. However, there are certain situations in which a director may find themselves liable if they do not act in accordance with the law.
Antuzis & Others v DJ Houghton Catching Services Ltd (2019)
Facts:
- The company concerned were employing Lithuanian nationals as chicken catchers. The workers were not paid in accordance with the minimum wage and worked very long hours.
- Deductions had been made from the pay of the workers as ‘punishments’ and there had been a failure on the part of the company to pay holiday pay.
General Position:
- Directors are not generally liable for inducing a breach of contract.
- A Director may be personally liable if, for example, there is a breach of statutory duty.
Outcome:
- In this case the Director was held personally liable.
- The court found that the Director was liable for inducing the company to breach the claimants’ employment contracts.
- The Judge found that the Director had not honestly believed that they were paying the minimum wage, overtime and holiday pay nor that they were entitled to withhold payments. As a result of the Directors actions, the company reputation had been damaged and had caused the company to lose its gangmasters' license, which is needed to employ workers.
The case sets out clearly the risk faced by Directors of companies in relation to employment law, many of whom do not have a deep understanding of the laws under which they work.
Ramsdens’ Jeremy Cook, Partner in the Litigation Department and Stephen Newman, Partner and Head of the Corporate Department will be hosting a free conference dealing with Directorship issues amongst other interesting topics on 1 October 2019.
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For further information, or to discuss issues around being a Director, contact our Commercial Litigation team at info@ramsdens.co.uk or call us on 01484 821 500.