Non-Executive Directors and ‘Worker’ Status – Guideline Ruling

Can a non-executive director who receives no more than an honorarium for services that he provides voluntarily enjoy the protected status of a ‘worker’? That was the thorny issue addressed by the Employment Appeal Tribunal (EAT) in a guideline case.

The case concerned a professional who was appointed to a four-year non-executive directorship of a national sporting body. In Employment Tribunal (ET) proceedings, he alleged that he had been subjected to detriments for whistleblowing. His claim was, however, dismissed on the basis that he was not a worker, as defined by Section 230(3)(b) of the Employment Rights Act 1996 (ERA).

His role was described as voluntary and there was no written contract between him and the body. Save for a £1,500 annual honorarium, he was paid nothing for his services. He held a full-time position with an unconnected business and was not required to attend the body’s board or committee meetings. Although he was unable to provide a substitute to perform his role, he was free to resign his directorship at any time without any requirement to give notice.

In its decision, the ET observed that the purpose of the relevant provisions of the ERA is to protect vulnerable workers from unfair treatment. It noted that the man was free to undertake his activities with complete independence. He was not in any sense a vulnerable individual in a position of subordination.

In upholding his appeal, however, the EAT noted that those observations had little relevance to his position as a non-executive officeholder. The sole question for the ET to determine was whether there was a contractual relationship between him and the body whereby he undertook to perform work or services personally. However, it failed to make a clear finding on that issue.

The ET had also failed to engage with particular factors that the man relied on as pointing to his having undertaken his duties pursuant to a contract with the body. In those circumstances, it was neither safe nor fair to uphold the ET’s decision on worker status. The matter was remitted for rehearing by a differently constituted ET.