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An interesting case has been announced recently from the High Court regarding the activities of a company that provided people to catch chickens. So why might this case affect you?

 

It has long been the case that the limited liability status of a company acts to protect directors from issues involving their company. For example, a debt on the company doesn’t affect the directors unless there have been personal guarantees provided. However this case, which is binding, puts a different perspective on the matter.  

 

The case in question, Antuzis & Ors v DJ Houghton Catching Services Ltd & Ors, revolves around a company that supplied labour to catch chickens, to farmers in England. According to the judgement the company and directors treated their east European workers appallingly, paying them well below the Agricultural Wages Order rates, and making all sorts of illegal deductions from their wages. The workers brought various claims against the company and the directors individually. The High Court upheld the claims and found the directors to be very unreliable witnesses who must have known their workers were being paid wrongly.  

 

The High Court effectively found that the directors had not been acting in good faith and had failed in some of their responsibilities under the Companies Act, namely to act in good faith so as to promote the success of the company and, in so doing, to have regard to matters such as "the likely consequences of any decision in the long term: the interests of the company's employees; the impact of the company's operations on the community; and the desirability of the company maintaining a reputation for high standards of business conduct". (Section 172, Companies Act)

 

So what relevance does the treatment of chicken catchers have for directors elsewhere? If an employer, with the knowledge of the directors, knowingly treats workers in breach of statutory requirements, such as payment of the National Living Wage, then the Directors themselves may become personally liable for the breach. Hopefully these circumstances won’t affect you, however you should be aware of the law. It is also possible that in the future the courts could interpret breaches of contract (rather than statute) as creating a liability on directors. Normally workers would bring a claim against their employer, but there will be occasions where the company has no assets, or where it is liquidated, when claims could be brought against directors personally. 

The judgement can be found at https://www.bailii.org/ew/cases/EWHC/QB/2019/843.html 

 

If there is anything relating to this which you would like further advice on, please don‘t hesitate to contact us.

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