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Directors personally liable for employment law breach!

Posted
April 26, 2019
Employment Law

Generally speaking, if you are employed by a limited company and believe your employment rights have been broken, you tend to bring a claim against the company itself. The shareholders and indeed the directors are normally shielded from any personal liability. But are there cases in which claims can be brought against the directors personally? The recent High Court case of Antuzis v DJ Houghton suggests there are!


The facts

The claimants in this case were a group of employees, all of whom alleged that their employer (DJ Houghton Catching Services Limited) had committed various breaches of their contractual and statutory rights. These included (i) a failure to pay the national minimum wage, (ii) a failure to pay holiday pay and (ii) making other unlawful deductions from the employees’ wages.  


When bringing a claim for breach of contract, rather unusually, the employees sought to bring claims against the director and company secretary as well as the company itself.


The decision


When this case was considered by the High Court, the judge acknowledged that company directors would not normally be responsible for a breach of contract committed by the company itself if the directors have acted in good faith and in the interests of that company. However, on the facts of this case, the judge was satisfied that the director and company secretary had not acted in good faith. Instead, they knew that what the company was doing was wrong; indeed, in their position as officers of the company, it was they who had ‘induced’ the company to commit the relevant breaches of contract in the first place.


Given the circumstances of this particular case, the court found that the director and company secretary were personally liable for the breaches of contract concerned.


What does all this mean?


It will still be relatively rare for employees to bring breach of contract claims against the directors of the company for which they work; often, it will simply be unnecessary and overcomplicated. However, there may be situations in which it is practically and tactically wise for claimants to pursue the directors personally. As a result, it is important for company officers to bear in mind that where they knowingly act in a manner that breaks the contract of employment, they could find themselves personally responsible.


If you require advice on your position as a director or a company secretary, please get in touch.

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