Summer 2007 Newsletter Content Reverse Charges Beyond The Grave Director's Two Hats IHT Plan Fails VAT And Cash Amnesty International An Inspector Calls Losing A Bet Caring Doctors TAAR Brush Made To Be Broken Flat VAT Safe Deposit Tax On Gas Working Late Composite Companies Excuses, Excuses

Director's Two Hats A director is an "office holder" in a company who has rights and duties set out in company law and in the company's articles of association. Directors are appointed by the shareholders in general meeting, and they can generally only be removed by the same people. If you belong to a board of directors which wants to get rid of one of your colleagues, you only have the right to vote them off if the articles of association say that - otherwise you have to get the shareholders to do it. A director may also be an employee. It's possible to be one without the other, and it's possible to be both - it depends on the circumstances and the nature of the duties. Someone who turns up only for board meetings is likely not to be an employee as well; someone who works every day in the company and is a fundamental part of the operation is probably an employee. In between there are grey areas. If a director is also an employee, all the rules of employment protection apply to them.You are supposed to issue an employee with a contract of employment or written terms within two months of the employment starting. The Companies Act says that a director's contract that will last more than five years has to be approved by the shareholders in general meeting, and one that will last more than 12 months has to be available for inspection by the members. If you dismiss them, you are supposed to go through all the normal dismissal procedures, and they will be entitled to compensation for unfair dismissal in the normal way. There's a basic problem here - a director can be dismissed by a vote of the shareholders in general meeting, and there's nothing that can take away that right of the members of a company. The vote will almost certainly entitle a director-employee to compensation, because the company won't have followed the correct procedure.