The directors of DJ Houghton Catching Services Limited were found liable for exploiting their chicken catcher employees and subjecting them to intolerable living conditions.
Directors owe various duties to their company, as well as its shareholders, lenders, creditors and employees. A director has a duty to promote the success of the company for the benefit of its members as a whole, including having regard to the interests of the company’s employees. Usually, directors of a limited company are not liable for the company’s debts and if a creditor takes action, only the company’s assets are at risk.
In the same way, a director would not normally be personally liable for inducing a breach of contract when acting in good faith on behalf of the company and within the scope of their authority. However, in the recent case of Antuzis v DJ Houghton, the High Court held that the directors were jointly and severally liable for breaching the employees’ contracts where they had knowledge that the company was not complying with its legal obligations.
The claimant chicken catchers were employees of DJ Houghton Catching Services Limited and worked long hours for less than the national minimum wage. They were often underpaid, did not receive pay for overtime work or holiday and were not permitted to take time off work for a bereavement.
As the breach of contract was in relation to the employees’ statutory rights to be paid the national minimum wage, holiday pay and their full salary entitlement, and owing to the directors’ knowledge, they were held personally liable for inducing the breach. The directors failed to prove that they honestly believed the company was complying with these rights, so the court held these acts to be in breach of their duty to promote the success of the company.
Directors must take care to fully comply with their company duties and ensure their acts do not breach employees’ statutory rights, particularly as the statutory provisions were imposed to prevent vulnerable workers from being exploited by their employers and, therefore, the courts are likely to find in the employee’s favour and apportion liability.
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This article is not a definitive statement of the law. It is designed as a free update on the law at the time of publishing. It is not a substitute for legal advice on specific facts and circumstances. BakerLaw LLP and/or the writer accepts no liability or responsibility for reliance on this article and recommends that you seek independent legal advice on your specific circumstances prior to taking any steps.