Breach of Employment Contracts

Directors personally liable for breach of employment contracts

23rd April, 2019 by Graham Irons

In Antuzis and others v DJ Houghton and others, the High Court found directors of the defendant company personally liable for breaches of the claimants’ employment contracts.

The claimants complained that they were employed in an exploitative manner and that a number of their statutory rights (for instance rights to holiday and national minimum wage) and other contractual rights had been breached.

The High Court was asked to determine whether the directors of the defendant company should be personally liable for the breaches of the claimants’ employment contracts. It was argued that the directors had, in bad faith and in breach of their own statutory duties, induced the defendant company to breach the claimants’ employment contracts.

The High Court found the claimants’ statutory and contractual rights had been breached, and that the directors had knowingly allowed that to happen. The directors had therefore induced the defendant company to breach the claimants’ employment contracts and, because they had not been acting in good faith, they were held to be personally liable.

Graham Irons comments:

"This case is important as it highlights the circumstances where a court can infer liability onto company directors for breaches of contract which are ostensibly those of the company. Directors must also be mindful of their own statutory duties; where a director breaches these it may give rise to an inference that they have induced the company’s breach of its obligations owed to a third party, for example its employees."

If you would like to discuss this case or require any further advice please get in touch with a member of the team.

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