This week we are looking at Director’s personal liability. This is an issue we covered previously in the case of Timis & Sage v Osipov. That case found Directors could be liable for whistleblowing awards.
In this case, the question is:
Can Directors be liable for breaches of an employee’s contract of employment?
Mr Antuzis was one of several Claimants employed as a chicken catcher by DJ Houghton Catching Services Ltd, the Defendant (this is a County Court claim, not Employment Tribunal). The Claimants were from Eastern European states, mainly Lithuania, and became employed by the Defendant after replying to a local newspaper advertisement.
Upon arrival in the UK, the Claimants were transported to houses owned by the Defendant’s Directors and associates, including Jacqueline Judge and Darrell Houghton. The Claimants lived and worked in dreadful conditions, including:
- Sharing small accommodation with at least ten other employees
- Being charged for accommodation and employment fees
- Being paid below the National Minimum Wage
- Having their wages withheld or delayed for arbitrary reasons
- Being prevented from taking rest breaks, including having to urinate in bottles
- Working hours that exceeded 48 hours per week
- Being prevented from taking annual leave
- Being prevented from attending funerals or visiting ill relatives
- Being threatened and intimidated when attempting to query the conditions
The Defendant was raided by the police and the Claimants brought claims for breach of contract in the County Court. Normally, Directors of the Defendant would not be personally liable for such litigation. However, the County Court held that as the breach of contract was statutory – not paying the NMW, complying with Working Time Regs etc. – then they had not upheld their duties as Directors and were thus personally liable.
The Takeaway Point:
Yes, Directors can be liable for breach of contract claim, providing the breach of contract was also a failure of the Director to perform their duties to the Company in this case the statutory obligations to pay NMW and comply with the law under WTR. This case sets out a risk posed to Directors if they run companies in contravention with the law. In future cases it might be argued by the owners/shareholders of a business that the Directors are ultimately liable for any award made by the Court.