What are the employment rights of a director?

As a company director, you may be well aware of the employment rights of your employees. But are you aware of your own employment rights as a director? Directors have different employment rights, depending on what type of role you have and your employment status.

If you have any questions or concerns about your personal employment rights while working as a director, please contact us. As employment law specialists, we can work with you to ensure that you are well aware of your employment rights as a director.

What are the types of directors for a business?

You will know that there are different types of directors. It's important to be clear on what type of director role you hold, as each type has different employment rights.

• An executive director carries out executive functions in the company. The director is usually a full-time or part-time employee of that company. 
• A non-executive director is not an employee of the company or holder of an executive office. The person may only spend part of their time working with the company as an independent adviser or supervisor. Typically, non-executive directors are self-employed.

As you can see from the distinction, your employment rights as a director will depend on whether you are an employee, a worker, or are categorised as self-employed.

What are the minimum employment rights given to an employed director?

The organisation will typically employ executive directors. Therefore, as an employee or a worker, you will be entitled to many employment rights.

These employment rights include:

• The right to be provided with a written statement of certain particulars of employment
• The right to a statutory minimum notice period
• The right to be paid at least the national minimum wage
• A limit on the number of hours which may be worked each week
• The right to be paid statutory sick pay (SSP) for periods of illness or incapacity, after the third day of absence
• The right not to be unfairly dismissed following completion of two years' qualifying service
• The right not to be automatically unfairly dismissed
• The right not to suffer a detriment for making certain complaints (i.e., health and safety whistleblowing)
• The right to a statutory redundancy payment, if made redundant, once they have been employed for two years
• Protection from discrimination on a number of grounds: 
  • Age
  • Disability
  • gender reassignment
  • marital status and civil partnership status
  • pregnancy and maternity
  • Race
  • religion or belief
  • sex and sexual orientation
• The right to receive equal pay for equal work performed by a member of the opposite sex in the same employment
• The right to maternity leave and pay, shared parental leave and pay, paternity leave and pay, adoption leave and pay, unpaid parental leave and time off for dependants
• The right to request flexible working

What are the minimum employment rights given to a self-employed director?

If you are a non-executive director, you will not be officially employed by the company. You will offer your services on an advisory or part-time basis. You will likely be self-employed and paid a fee rather than a wage.

Most non-executive directors will not have employment contracts. Instead, you may have a service contract. This will be more complex than a traditional employment contract. It may outline details such as remuneration packages.

If a NED is given specific duties, you could become eligible for protection of worker or employment rights, such as unfair dismissal rights and protection against discrimination.

At Birkett Long, we can work with businesses throughout Essex to advise on service contracts and employment rights for non-executive directors. We can help you understand the differences between the two director roles and provide appointment documentation for non-executive directors that clearly outline any entitlement to employment rights. 

What should a director know about office holders?

Even if the director is not an employee or a worker, they could be protected against discrimination due to their status as an office holder. 

An office holder is appointed to a specific position in a company but does not have a contract or receive regular payments.

Examples of office holders include:

• Statutory appointments. This could include registered company directors or secretaries, board members of statutory bodies, or crown appointments
• Appointments under the internal constitution of an organisation. Examples of this include club treasurers or trade union secretaries
• Appointments under a trust deed
• Ecclesiastical appointments (e.g., members of the clergy)

Office holders and applicants for an office are protected against discrimination, victimisation, and harassment. This will be by a person with power to recommend, make or terminate their office or to determine their conditions.

The employment rights of a director will be dependent on your employment status

Your employment status will impact what employment rights you are entitled to. There are many complexities surrounding company directors, particularly relating to your status as an employee, a worker, or a self-employed advisor.

We advise that if you have any questions regarding your employment status as a director, you should speak to a member of our employment law team. We can work with you to confirm your employment rights, whether you are working as an executive or non-executive director. Our expert team can also work with you to prepare employment or service contracts.

To find out how we can help your business, please contact employment team today.

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