Can the directors of a limited company be personally liable when their company breaches an employment contract?
Yes, according to the High Court in the case of Antuzis v DJ Houghton Catching Services Limited.
Antuzis and several others worked for DJ Houghton Catching Services
Limited. They received less than the minimum wage, worked long hours,
had payments withheld as a form of punishment and no attempt was made to
pay them for holiday or overtime. They brought various claims to the
High Court, including compensation for unpaid wages, distress and
consequential losses as a result of the unlawful actions. The issue here
was whether the company’s directors could be personally liable to Mr
Antuzis for the breach of his employment contract.
There is a
general principle in English Law that a director of a company is not
liable for causing a breach of contract by the company where the
director was acting genuinely with regard to the company and within the
scope of his or her authority. However, in the event that the breach of
contract has a statutory element, this may go towards suggesting a
failing on the director’s part to comply with their duties to the
company, thus making them personally liable for the company’s breach.
was the conclusion that the High Court came to in this case. The Court
concluded that the directors were not acting in the best interests of
the company, because they did not genuinely believe that the company was
paying the minimum wage, overtime pay or holiday pay nor were they
entitled to withhold payments. The directors were therefore personally
liable for the breaches of contract of the company, which they had
Can a contract that allows for a discretionary bonus be
varied so that the employee becomes contractually entitled to that
Yes, decided the Employment Appeal Tribunal (EAT) in the
case of Bluestones Medical Recruitment Limited v Swinnerton. However,
the EAT decided that a claim on this basis can only succeed where the
Employment Tribunal reaches clear findings on how that variation
Mr Swinnerton worked for Bluestones in a number of jobs
before becoming the General Manager. In his previous roles, his
contract allowed for discretionary bonuses. Once he became the General
Manager, he was to be paid a monthly bonus, which would be based on the
profits of the company. It was also expected that he would become a
shareholder in the near future.
The agreement between Mr
Swinnerton and the company with regard to the bonus payments was that
they were to be paid to him as loans and that he would repay the loans
from his share dividends once he became a shareholder.
before becoming a shareholder, Mr Swinnerton was suspended and then
eventually dismissed. While he was suspended, Bluestones stopped paying
the bonuses to him and Mr Swinnerton claimed that this amounted to an
unlawful deduction from his wages. He brought an Employment Tribunal
claim in respect of this and the Tribunal concluded that it was an
unlawful deduction of wages. The company appealed that decision to the
The EAT found that the Tribunal had not adequately
identified the legal mechanism whereby the employment contract was
changed or what the new contract required. This failure meant there was
no proper conclusion by the Tribunal on whether the contract now
contained a contractual entitlement to the bonuses or a proper
conclusion as to whether the payments should be classified as loans. If
they were loans, then the failure to pay them could not be considered as
a deduction from wages. The EAT therefore referred the case back to a
fresh Employment Tribunal to consider these points.
wardens/receptionists who were on call from evening to morning working
on “time work” under the National Minimum Wage legislation?
The answer in the case of Frudd v Partington Group was both yes and no.
and Mrs Frudd worked at a caravan site and were expected to be on-call
after their shifts ended (which finished at between 4:30pm and 8pm)
until 8am the following morning. They argued that whilst they were
on-call, they were still working on “time work” and therefore were
entitled to be paid the National Minimum Wage for this on-call time.
Employment Tribunal decided (and the Employment Appeal Tribunal (EAT)
agreed) that between the end of their shift and 10pm they were working
on time work because their responsibilities during that time included
showing round prospective customers and welcoming late arrivals.
Therefore, on this basis, they were entitled to be paid the National
Minimum Wage during the period up to 10pm.
However, they were not
required to carry out that work after 10pm, unless they were called out
for an emergency (in which case they would be paid for the time spent
dealing with the emergency). The EAT concluded that after 10pm, they
were not working on time work unless they were called out and they were
not entitled to be paid the National Minimum Wage for the time when they
were merely on-call.
Will an employer who provides a written
statement of terms and conditions late, but before a case begins in the
Employment Tribunal, have any award increased under s.38 of the
Employment Act 2002?
No, according to the Employment Appeal Tribunal (EAT) in Govdata Limited v Denton.
Denton was employed by Govdata on 1 December 2015. He was later given a
written statement of the terms and conditions of his employment as
required by section 1, Employment Rights Act 1996, but it was not given
to him until 15 June 2016, which was long after the two month deadline
from the start of his employment.
He was dismissed in August 2016
and brought a claim a few months later. He argued that he should be
paid compensation by Govdata for the company’s failure to provide him
with a written statement of the terms and conditions of his employment
within two months of his start date. The EAT concluded that the employer
had provided the statement, even thought it was provided late. Section
38 allows a Tribunal award to be increased for failure to provide a
written statement of the terms and conditions of employment, but only
where the employer was in breach of the duty when proceedings commenced.
Since late compliance was still compliance, Govdata was not in breach
of its duty when Mr Denton began his Tribunal claim and so Mr Denton’s
award was not increased.
It is important to note that on this
point that following The Taylor Review (Good Work: The Taylor Review of
Modern Working Practices), new regulations will come into force on 6
April 2020 under which a written statement of terms and conditions of
employment will need to be provided to employees before the start of