Entitlement to National Minimum Wage: Shadow directors
The legislation that applies to this page is as follows:
- National Minimum Wage Act 1998, section 54
The term “shadow director” is used to describe a person who is not on the formal list of directors but who nevertheless controls the company’s activities to a significant extent. They may be individuals or companies and again have the same duties and obligations as any other director.
The term “shadow director”, is defined in section 251 of the Companies Act 2006 as a person in accordance with whose directions or instructions the directors of a company are accustomed to act.
It is sometimes claimed that a “shadow director” should be treated as a director in respect of national minimum wage. However, whilst it is true that under provisions in company and revenue law a shadow director attracts some of the liabilities of a proper director, the term is not recognised in national minimum wage legislation.
A “shadow director” is not an office holder therefore the provisions under which a director may receive remuneration by virtue of his office do not apply. Any payments received from the company will likely be paid under a contract of some kind, either a contract of employment or a contract to perform services personally. Therefore, a “shadow director” is likely to be a worker (NMWM05020) under the National Minimum Wage Act 1998, section 54(3) and will be entitled to the national minimum wage if they are working under a contract.
See also: Directors, (NMWM05140)