If I have resigned as a Director do i revert to employee status?

[kissmyheathenass]

I was told to resign as Director of a company of which I hold a minority shareholding and work there full time with wages paid at the end of each month. My question is now I have resigned as a Director, am I now covered by the normal rights of an employee? There is no shareholders agreement and no contracts of employment.

posted in Legal too

[kissmyheathenass]

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[flowery]

"Told" to resign? By whom?

If you are a director of a company, with all the statutory duties and obligations involved in that, you could either be an employed director or not. As you have been working full time and paid regularly, you were probably already an employee.

Resigning as a director doesn't affect your employment status. If you're still working for the company full time and getting paid a salary monthly then you'll still be employed.

What are you concerned about? Have you been forcibly removed as a director? Is someone trying to deny you employment rights?

[kissmyheathenass]

Hi, thanks for your reply.

Yes, I was threatened that if I didn't resign I would be forcibly removed anyway and this would be bad for my record.

My partner who has a majority shareholding in the company, took six months off works as he was going through a difficult divorce. Upon his return he sent me an email saying that he not happy at what he came back to (though he never has specified what it is he is unhappy about). I was running the company on my own doing everything I could to keep it going only to be given this news on his return.

He will only communicate by email, refusing to meet or speak to me.

On one occasion only, since the dismissal email, he called me and asked me to resign as a director and an employee. Now he is denying I have employee status and therefore denying me of my employment rights.

[flowery]

On what basis is he saying you do not have employee status? Does he say you are self-employed instead? How do you get paid, do you invoice the business and then pay your own tax etc? Even if that's the case, that doesn't necessarily mean you're not employed, I'm just trying to understand what he believes your employment status is.

How long have you worked for the company? What percentage shares do you own?

[kissmyheathenass]

Thanks for your reply.

He says I don't have employee status because I am Director. I have told him it is possible to be both at the same time. He is denying it to avoid me claiming wrongful dismissal etc. I get paid at the end of each month though the PAYE system, Tax and NI deductions are made. He believes I am a Director only despite the fact I do all the tasks that any employee would from admin to cleaning out the dustbins.

I have 19% shareholding and have worked for the company for over 2 years (there was an other company I started to work for but everything was transferred to a new company about 20 months ago so I have TUPE) though only started drawing a salary from April 2014.

[Boosiehs]

He is wrong. Executive directors (ie who work for the company day to day as well as being a director) are employees as well.

TUPE does not affect continuation of employment. If you have over 2 yrs you have full rights.

If you are a shareholder you should have a copy of the articles of the company which will set out how a director is removed.

The "partner" telling you to resign is totally wrong, and you should not in my opinion do what he is asking.

[flowery]

So were you working for free before April 2014?

Has he dismissed you now then? Not just asked you to resign as a director? Are you still working?

[kissmyheathenass]

I was working for free before that in exchange for shares. His as told me my "Date of departure" from the business is 2nd August 2015.

I had to resign as a Director because he said if I refuse he will use section 168 (?) to hold a shareholders meeting for a vote and that it will be a foregone conclusion because he holds more than 50% of the shares. He also said he was going to use breech of trust and confidence as a reason however, he had never accused me of this prior to the email he sent to me a the beginning of the month.

[kissmyheathenass]

Yes I am working my notice until 2nd August, But I have now been told I won't get my wages until the handover has been completed to his satisfaction and the company has the funds to pay me. 2 weeks ago, before I was denied access to the bank account, there was plenty of money to pay the wages and the creditors. I didn't think you can just not pay wages and suddenly make them contingent on some workload.

[kissmyheathenass]

"He is wrong. Executive directors (ie who work for the company day to day as well as being a director) are employees as well. " That is what I thought but he said there is an HMRC test for my status and I would not get away with trying to claim I am an employee. He keeps referring to my wages as "fees". Can fees get paid by PAYE?

[Cinnamoncookie]

Kiss, you need to consult an employment lawyer as soon as possible. Obviously we don't know the precise details of your situation, but it certainly sounds like you are an employee. As PPs have said, the director/employee thing is a red herring.

There is information here about removal of a director, which refers to section 168 of the Companies Act, and there is clear information about directors as employees.

There is a factsheet here about an employer witholding pay.

Keep separate copies of all emails, if they went to your email address at the company, and make detailed notes of everything you've done there, your TUPE, etc.

You can search for employment lawyers local to you here, or check to see if your household insurance has legal cover included.

[kissmyheathenass]

Thanks Cinnamon. It seems to be a grey area whether I am or not. The only evidence I have is that I recorded the one and only call he made to me where he actually asked me to resign as a Director and an Employee. Since then he has suddenly denied I'm an employee. I'm sure it is because he realises he hasn't dismissed me properly as an employee and does not want me to take him to court.

[senua]

Whilst you are getting employment advice, it might be an idea also to get advice on the oppression of minority shareholders.

[kissmyheathenass]

Senua, oppression of minority shareholders. is something I am looking into. Do you know how might this aspect help me? TIA