Introduction

In the case of Antuzis v DJ Houghton, the High Court has ruled that directors of a limited company can be personally liable for causing the company to act in breach of its contractual and statutory obligations.

Facts

The Claimants were employed by the Respondent, DJ Houghton Catching Services, as chicken catchers. They were subject to dreadful working conditions and had to work extremely long hours. In addition, they were paid less than the statutory minimum wage, were not paid overtime or holiday pay, and were frequently not even paid the sums due to them, as a form of punishment for leaving a cup in the sink for example. The Claimants also had to sleep in the back of a minibus between farms and were forced to work long shifts without any breaks.

The High Court had to consider whether or not the company director and company secretary were personally liable for inducing the company to breach the Claimants’ employment contracts and the company’s statutory obligations.

A director is not generally liable for inducing a breach of contract by their company where they act bona fide within the scope of their authority. However, if there is a breach of a statutory duty (i.e. the obligation to pay the minimum wage), then this may indicate that the director has failed to comply with their own duties towards the company. The court will focus on the company officer’s conduct and intention in regards to their duties.

Decision

In this case, the High Court held that the director and company secretary were personally liable for the breaches of the Claimant’s employment contracts. The court stated that the director and company secretary did not honestly believe that they were paying the minimum wage, overtime and holiday pay nor that they were entitled to withhold the Claimants pay. Specifically the Judge said that the director and company secretary “cannot…have honestly believed that what was being done by them to the chicken catchers was morally or legally sound”.

As a result of their actions, the director and company secretary had ruined the reputation of the company and caused it to lose the licence it needed to employ the workers.

Comment

Whilst the facts of this case are extreme, this judgment serves as a warning and a reminder to company officers that they can be personally liable to pay damages if they cause their company to breach contractual and statutory requirements.

Please contact us if you would like more information about the issues raised in this article or any other aspect of employment law at 029 2034 5511 or employment@berrysmith.com