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Directors held personally liable for breach of contract in relation to exploited workers

View profile for Giles Betts
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A group of former employees of DJ Houghton Catching Services, a ‘chicken-catching’ business, has brought a successful claim in the High Court following serious contractual and statutory breaches committed by the company. The breaches included the failure to pay applicable minimum wages and holiday pay entitlements, the arbitrary withholding of wages, and charging of unlawful ’employment fees’. A subsequent hearing will determine the amount owed to the workers involved.
 
Perhaps the most interesting aspect of the ruling was that the judge held that the two directors of the company were personally liable to the workers for the contractual breaches. This decision allows the workers to claim compensation directly from the couple.
 
It is the second occasion that the High Court has found against DJ Houghton Catching Services. In 2016, in the first legal ruling against a British gangmaster business for modern slavery offences, the company had to pay £1m in compensation for loss of wages and poor working conditions to a group of trafficked Lithuanian workers. The workers were required to undertake long shifts without break, many hours of which were omitted from their payslips.
 
The latest judgment against DJ Houghton Catching Services should serve as a warning to company directors that they may be found personally liable for worker exploitation if they knowingly allow breaches of contractual and regulatory requirements, particularly if such breaches cause serious damage to the reputation or financial viability of their company. In this case, in light of the financial situation of the company itself, it appears that the claimants will now have a greater chance of recovering their losses directly from the directors involved.

The Modern Slavery Act came into force in October 2015 and requires all commercial organisations with a minimum global turnover of £36million, that supply goods and services and conduct business in the UK, to publish a slavery and human trafficking statement each financial year. This statement must be approved by the board, signed by a director and published on the organisation’s website with a link from the homepage.

The information that should be within the statement includes:

  • information about the organisation’s structure, its business and supply chains;
  • its policies relating to modern slavery;
  • its due diligence processes in relation to slavery and trafficking in its business and supply chains;
  • the parts of its business and supply chains where there is a risk of slavery and human trafficking taking place, and the steps taken to assess and manage that risk;
  • its effectiveness in ensuring that slavery and human trafficking is not taking place in its business or supply chains, measured against such performance indicators as it considers appropriate; and
  • the training about slavery and human trafficking available to its staff.

Where an organisation fails to produce a statement, the Secretary of State may seek to enforce the duty by applying to the High Court for an injunction. Failure by the organisation to comply with the injunction would amount to a contempt of court order and is punishable by way of an unlimited fine. It should also be noted that criminal liability could be attached to the director who signed off the statement.

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