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.
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