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Directors are often also workers and employees

View profile for Alan Massenhove
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It can easily be overlooked that in England & Wales a person who is an executive director of a company will often also be a worker, under the Working Time Regulations 1998 and an employee of the company, under the Employment Rights Act 1996 and various other employment laws.

A director will likely be entitled to all the benefits and protection enjoyed by the other workers and employees of his or her company, a summary of which is set out below:-

  • The right to be provided with a written statement of particulars of employment
  • The right to a statutory minimum notice period
  • The right to be paid at least the national minimum wage
  • A limit on the number of hours which the director may work
  • An entitlement to a minimum amount of paid holiday
  • The right to be enrolled in an automatic enrolment pension scheme under the auto-enrolment regime, with minimum contributions paid by the company
  • The right to be paid statutory sick pay for periods of illness or incapacity
  • The right not to be unfairly dismissed (after 2 years of continuous service)
  • Following a redundancy the right to a statutory redundancy payment (after 2 years of continuous service)
  • Protection from discrimination on the grounds of age, disability, gender reassignment, marital status & civil partnership status, pregnancy & maternity, race, religion or belief, sex and sexual orientation
  • The right to receive equal pay for equal work performed by a member of the opposite sex in the same employment
  • The right to maternity leave & pay, shared parental leave & pay, paternity leave & pay, adoption leave & pay, unpaid parental leave and time off for dependants
  • The right to request flexible working
  • Even if a director is not also a worker or an employee, under the Equality Act 2010 he or she may be protected against discrimination, victimisation and harassment by virtue of his or her status as an office holder.

So before appointing/terminating a director, generating a directors service contract, or taking any other step in relation to a director, it is important to first consider whether the director is also a worker and an employee. If so, the company should ensure that it does not do any act or thing which may prejudice or harm any of the benefits or protection enjoyed by the director in his or her capacity as a worker and an employee.

Overlooking this fundamental point could expose the company to a prospective claim by the director. Such a claim would be difficult to defend against, and not appreciating the fact that the director was also a worker and an employee of the company will be no defence.

I am based at our Chelmsford office and can be reached on 01245 453 829 or alan.messenhove@birkettlong.co.uk.
 

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