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Directors are governed by the Companies Act 2006, which requires them to act in good faith in the best interests of the company, taking into account the interests of employees. Directors must also exercise reasonable care, skill and diligence in their duties. A director will not be liable for a breach of contract if they are acting in good faith and within the scope of their authority.

In Antuzis v DJ Houghton, the employees were chicken catchers on a farm. They worked extremely long hours and were regularly underpaid. They were not paid holiday pay and underpaid in relation to overtime. Pay was sometimes withheld as a punishment. In 2019, the High Court found that the directors liable for those breaches of contract, as well as the company. The directors had  known about the breaches of contract and had not complied with their general duties under the Companies Act. They were not acting in good faith or in the best interests of the company and induced the breaches of contract purely for financial gain. The High Court found that they were liable for the breaches of contract, together with the company.

The remedy hearing took place recently. The High Court awarded the employees the full amounts claimed for overtime, holiday pay and wages. The employees also asked the Court to award aggravated and exemplary damages. Aggravated damages are compensatory, exemplary damages are punitive. The Court said the contractual payments would not compensate the employees for the exploitation and abuse they had suffered. They awarded aggravated damages of 20 per cent of the sums awarded to the employees. They didn’t award exemplary damages because of the high sums awarded in aggravated damages and the fact that there was no evidence that the directors had made more money than this by exploiting their staff.

This case is an example of how employees can use a variety of claims to seek financial compensation that is greater than the sums owed. This case was an extreme one, where the employees were treated very badly. Although aggravated damages may be rare in such cases, it is a shot across the bows for directors who flout their duties under the Companies Act.

Find out how we can help.  Our partner, Jon Dunkley, heads the Wollens specialist Employment Department.  Contact him today for an informal chat, without obligation on 01271 342268 or via email at jon.dunkley@wollens.co.uk.