Tag: Employment

Personal liability of directors

Can the directors of a limited company be personally liable for the company’s breaches of an employment contract with its employees?  

The basic principle is that the company is a legally distinct and separate entity from those individuals that own and direct the company. That is precisely why business people set up as companies at all – i.e. to avoid unlimited personal liability.

There are exemptions to that principle where that rule can be overriden. For instance, if the company has become insolvent and has been trading whilst obviously unable to pay its debts, the directors may be found to be personally liable for debts, and indeed even criminally liable, under the provisions of the Insolvency Act 1986. That is known as either wrongful trading or fraudulent trading. I am not going to examine those concepts here but can advise on that if you contact Sterling Law.

The High Court very recently decided that directors in the case of Antuzis v DJ Houghton (2019) were personally liable because the company employed the employee claimants in a very exploitative manner, working extremely long hours, working less than the minimum wage, and frequently not being paid sums due at all. Payments due were often withheld, and holiday pay/overtime was not paid.

Usually, directors are not liable for inducing breaches of contract by the company where they are acting bone fides vis a vis the company. But where the breach of contract has a statutory element, that suggests a failure of the part of the director to comply with his duty to the company, potentially making them liable to a third party.

The court found that this was what had happened here. The directors had not acted honestly in what they did, which was a breach of statutory duty. They were personally liable for those breaches of contract which they had induced.

 So – what is the lesson for business-owners and directors from this case?

I would say that those who run their businesses honestly and in good faith have little to worry about. This case should only be of concern to those businesses operating at the shady edge of the spectrum, who do not worry about basic statutory requirements. If you are not sure about any statutory requirements for your business, please arrange a consultation with me and get some proper advice from me – it may prove to be well worth it!

 

Kuldeep S. Clair

Consultant Solicitor

Employment, Dispute Resolution and Litigation

+44 (0) 7484 61 4090

kuldeep@sterlinglawyers.co.uk

 

Notice pay after termination of employment – when can it be withheld?

Case study – how we recovered a significant sum for notice pay on behalf of a client recently

 Kuldeep S. Clair, our senior Consultant Solicitor in Employment Law and Civil Disputes offers his views and tells the story of one of his recent cases:

This question commonly arises particularly when an employee does not have the right to claim unfair dismissal due to short length of service. Or otherwise, it may be especially important where the employee is lucky enough to be entitled to a lengthy period of notice, or has been on a high salary.

I advised a client recently who worked with a notice period of six months, as a lecturer at one of the country’s most reputable universities. She had initially been dismissed with notice and the university had intended to pay her ‘in lieu of notice’. Within a matter of days afterwards, an allegation was made that she had breached certain confidentiality requirements after the termination of her contract and that the notice pay was to be withheld.

My client disputed any breach. I advised that the suggestion of a breach was nonsense, and I wrote to say that unless any serious evidence of a breach was brought forward by the employer’s HR department, we required payment in full. There was aggravated correspondence between me and the employer; I set out the legal principles which applied, and it did not seem that the employer was disagreeing with anything much that I said, but their HR manager seemed to regard it as a matter to be proven by my client, with the burden of proof on her, rather than on the University.

We were forced to issue a ‘letter before action’ to demand payment of the notice pay, combining my thorough employment law knowledge with my civil litigation skills. I considered that this approach would be the best in ‘upping the stakes’ and extracting payment as quickly as possible. It would also give us the right to claim interest and court costs, if the employer continued to be so obstinate. This was particularly so, given the large amount in question, a substantial five-figure sum for six months pay for a lecturer in London.

We were met with a response from solicitors instructed by the University. This was a well-known respectable ‘Legal 500’ firm with offices around the country. Although their letter was over two pages long and sought to defend their client’s position vigorously on the face of it, it ended in the final very short paragraph by surrendering to our very reasonable demand and offering to pay the outstanding salary. Our client readily accepted, was delighted with the result, and she received payment a few days ago.

Moral and conclusion of the story:

It is always a good idea to seek advice early as to your entitlement in an employment dispute:

Is there a valid wrongful dismissal claim? In this case, the answer was yes – a very substantial claim.

Is there a valid unfair dismissal claim? This is a completely different question. Here the answer was ‘no’ – and we advised our employee-client accordingly from the beginning.

Here, the employer was even seeking to recover alleged losses from my client for the so-called breaches of confidentiality that had been committed by her. Until eventually caving in totally and paying what was due to her!

And more to the point, we managed to conclude the dispute without having to resort to proceedings, although we would have issued proceedings if necessary.

 

Kuldeep S. Clair

Consultant Solicitor

Employment, Dispute Resolution and Litigation

+44 (0) 7484 61 4090

kuldeep@sterlinglawyers.co.uk

 

Immigration Law

Applying for a Sponsor Licence

Unfortunately, very often applicants do not pay the necessary attention to the accuracy of the submitted documentation, avoiding the required procedures and rules. However, this can be a turning point in a decision-making process – and this is what happened to our Client.

One of the Sterling Law clients – an active company incorporated in London sought to employ a foreign worker (outside the EEA). The reason being that the foreign candidate possessed specific skills and knowledge required for a new project launched by the company. According to the British immigration law, in order to employ a foreign worker, a company has to have a Sponsor Licence. This is an obligatory rule which will enable the company to sponsor Tier 2 (work) visa.

Following this rule, our Client firstly applied for a Sponsor Licence on their own, without legal assistance. The application was rejected due to the reason that not all necessary documentation was provided and not in the correct format.

Our Client launched a start-up with a focus on medicine development, so they were not ready to give up that easily. The new application was made with the assistance of Sterling Law Immigration Lawyer Nataliya Varahash. Nataliya addressed and corrected all the issues raised in the rejection letter.

Nataliya, therefore, managed to achieve a positive decision for the business.

We are glad to announce that now our Client can develop their newly launched projects with the help of skillful foreign workers. We believe, that not only British society but the rest of the world will benefit from it, which would be impossible without the right people on board.

 

UK Immigration & Legal Assistance

For expert advice and assistance in relation to your particular case and to enquire about the legal fees, please contact our lawyers on

Tel. +44(0) 20 7822 8599

Mobile / Viber: +44 (0) 73 0584 8477

e-mail: contact@sterling-law.co.uk

or via our online appointment booking form.

 

Natalia Varahash, Immigration Lawyer (OISC Level 2)

Email: nataliya@sterling-law.co.uk

Tel. +44 (0) 20 7822 8535

Mob. +44 (0) 73 0598 9936