According to Government figures for 2017/18 there was a shortfall of almost £16million in employees not being paid the national minimum wage in the UK, with over 200,000 people being affected. As a result, employers were penalised £14million for not paying their staff the minimum statutory amount. Both the national minimum wage underpayments and company fines were record annual amounts.
A recent decision has held that a director of a company could be held to be personally liable for not paying workers enough, where they have been deliberately or actively involved in the process.
Antuzis v DJ Houghton [2019] EWHC 843 (QB)
In this recent High Court case, Mr Antuzis and other employees (the claimants) brought a claim against their employer, DJ Houghton Catching Services, that they were not being paid the national minimum wage and that wages were being withheld (due to alleged wrongdoings of the workers during their employment). Other compensation claims were lodged by the claimants which related to distress and personal injuries.
The High Court had to consider whether the company’s sole shareholder and director, and the company secretary, were personally, jointly or severally liable for the employees not being paid enough and if they had breached the employee’s contract of employment under section 17 of the National Minimum Wage Act 1998.
The Court found in favour of the claimants and that the company director and secretary could be held personally liable, as they knowingly and actively did not pay the employees the national minimum wage and did not have legitimate grounds to withhold payments.
Furthermore, their actions had a detrimental effect on the reputation of the business and had also caused it to lose its gangmasters’ licence, which was required to employ the workers.
Comment
The principle point to focus on as a result of the Antuzis v DJ Houghton case is that a company director can be held to be personally accountable and liable for failures of the business where they are or were directly involved in those failures.
In circumstances where a director has acted in good faith and within the boundaries of their authority they are extremely unlikely to be held to be personally liable. In reality this will be more difficult for smaller businesses to show where directors are often more hands-on.
How Nelsons can help
We can provide advice and training on directors’ duties and potential liabilities as well as national minimum wage rules and requirements as part of the framework of responsibilities owed by employers under employment law.
For further information on the points discussed in this article, please contact a member of our Employment Law or Corporate Services team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.