Can Directors Be Personally Liable for Breaches of Employment Contracts?
According to a recent case in the High Court, directors can be held personally liable for breaches of an individual’s employment contract.
In the case of Antuzis V DJ Houghton, the claimants were employed by Houghton for long hours being paid less than the statutory minimum wage. They were frequently not being paid the amounts due to them for the hours worked.
Generally, a director is not liable for a breach of contract where he is acting within the scope of his authority. However, if the breach of contract is a breach of statutory duty, such as the obligation to pay minimum wage, then the director has failed to comply with his statutory duties. In such a circumstance, the director may be personally liable to the employees.
In this case, the High Court concluded that the directors had not acted within the scope of their authority and were therefore personally liable for the breaches in contract.
This case acts as an important reminder of the duties which directors owe to their companies and, in turn, their employees.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
