Stack The Odds In Your Favour - Directors' Agreements And Express Terms

SUMMARY

In a judgment released earlier this month, the English Court of Appeal has allowed a director to claim unpaid wages and compensation for constructive unfair dismissal from a company despite there being no formal contract of employment between himself and the company.

Indeed, the only express agreement that had been reached was an informal and, in some respects, apparently incomplete verbal agreement, concluded between the director and his business partners before they set up the company and went into business together, that the director would work for the company and would be paid for his work, but the amount he would be paid was not agreed and the company would only pay him once it could afford to do so. The Court of Appeal found on the basis of these facts that an implied contract of employment existed between the company and the director.