Is it legal for a director to remove another director’s employment unilaterally in the UK?

Question from Fifi, Is it legal for a director to remove another director’s employment unilaterally in the UK?

Answer from AI:

In the UK, the removal of a director’s employment and salary without proper procedure can raise several legal issues. Here are some key points to consider:

Understanding the Role of Directors and PSCs

Directors are responsible for managing the company and making decisions on its behalf. A Person with Significant Control (PSC) is someone who has significant influence or control over the company, but this does not necessarily grant them unilateral decision-making power.

Legal Requirements for Removing a Director

In the UK, the removal of a director must follow specific legal procedures:

• Board Meetings: Decisions regarding the removal of a director should typically be made during a board meeting. All directors should be given notice of the meeting and the opportunity to participate.
• Company’s Articles of Association: The company’s Articles of Association may outline specific procedures for removing a director. These must be followed to ensure the removal is lawful.
• Employment Contracts: If the director is also an employee, their employment contract may provide additional protections and procedures that must be followed for termination.

Potential Legal Issues

If your uncle has removed your mum’s employment and stopped her salary without following proper procedures, several legal issues may arise:

1. Breach of Contract: If your mum has an employment contract, unilaterally terminating her employment without following the contract’s terms could constitute a breach of contract.
2. Unfair Dismissal: If your mum is an employee, she may have grounds for claiming unfair dismissal, especially if she has been employed for more than two years.
3. Directors’ Duties: Directors have a duty to act in the best interests of the company. Unilateral actions that harm the company or its directors may breach these duties.

Steps to Take

If you believe that your uncle’s actions are unlawful, consider the following steps:

1. Review Company Documents: Check the company’s Articles of Association and any relevant employment contracts to understand the proper procedures for removing a director.
2. Request a Board Meeting: Request a formal board meeting to discuss the issue and seek a resolution.
3. Seek Legal Advice: Consult with a legal professional who specializes in company law to understand your mum’s rights and options. They can provide personalized advice based on the specific circumstances.

Resources

For more information, you can refer to the following resources:

• Being a Company Director – GOV.UK
• Companies Act 2006

Note: This information is intended to provide a general understanding of the legal issues involved. For personalized advice, it is crucial to consult with a legal professional.