The warning relates to a recent case of Antuzis and others v DJ Houghton and others, where 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, including 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 held 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 the directors had knowingly allowed that to happen. Consequently, the directors were held to be personally liable.

Commenting on the implications of the case for recruitment agency bosses Graham Irons, partner at law firm Howes Percival, told Recruiter the case serves as a reminder that they could be found personally liable for breaches of their employees’ employment contracts.

“Ensuring employees’ employment contracts comply with minimum statutory requirements (for example, s. 1 Employment Rights Act 1996 and National Minimum Wages Regulations 2015 among others) will go a long way to protecting directors from similar risks,” he added.

Meanwhile Stephen Jennings, partner at Tozers Solicitors, told Recruiter the most pertinent point for agency bosses is that operating through a company does not necessarily insulate them from these sorts of claims – especially where the company doesn’t have the money to pay employees what they are owed.

“While this is a fairly extreme case, the price of non-compliance can be steep – potentially directors could find themselves personally liable for the full amount of underpayments to employees. In the case of the NMW, claims often run into the tens of thousands if multiple employees are involved over anything like an extended period.”

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