Can I Claim Unfair Dismissal If I Was a Company Director?

Yes — if you are also an employee. Being a director does not automatically mean you are not an employee. Most executive directors who work full-time in a business under a service agreement are employees.

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What if I'm the sole director and shareholder?

If you are the sole director and shareholder with no separate service agreement, you are unlikely to be an employee of the company (you cannot employ yourself). However, if you have a formal service agreement setting out salary, hours, and terms, a tribunal may find you are an employee despite being the sole shareholder. The agreement matters — not just your shareholding.

What if I was removed as a director by board resolution?

Removal as a director is a separate matter from dismissal as an employee. A board resolution removing you as director does not automatically dismiss you as an employee. If you were also employed under a service agreement, removal as director does not end your employment — you can still be an employee and not a director. You may have remedies for both the removal (company law) and the dismissal (employment law).

What if my company was a one-person limited company?

Being a director of a one-person limited company where you are the sole owner and shareholder does not automatically prevent you from being an employee. If you have a service agreement and work under the contract terms, you can be an employee. However, courts are skeptical of employment claims by sole shareholders — the relationship must be genuinely employee-like, not just self-dealing.

Does the notice period in my service agreement apply?

Yes. If you have a service agreement as an employee-director, the notice terms apply. If the agreement requires 3 months' notice and the employer dismisses you without notice, that's wrongful dismissal (breach of contract). You can claim damages for unpaid notice in the civil courts.

What if I was also a consultant to the company?

If you were a director, an employee, AND a consultant, these are three separate roles with different legal consequences. You can be an employee for some purposes and a consultant for others. The key is the nature of each relationship: is there a contract of employment? A consultancy agreement? How did you work in each role?

Will my tribunal claim affect my directorship?

Bringing a tribunal claim for unfair dismissal does not automatically disqualify you as a director or remove you from the register. However, if you are removed as a director AND dismissed as an employee, you may have separate remedies under company law (eg. unfair prejudice petition) and employment law (unfair dismissal). These are different claims in different forums.

Can I Claim Unfair Dismissal If I Was a Company Director?

The role of director and the status of employee are separate legal statuses. You can hold both simultaneously. What matters is whether you had an employment contract, not your board title.

Last updated: April 2026 · Content reviewed against current UK employment law

Director vs Employee: The Two Separate Roles

Many people misunderstand this: being a director of a company is a corporate governance role. Being an employee is an employment law status. These are separate:

A director holds an office under the Companies Act. Directors have duties to the company and are responsible for management and decision-making.

Appointment to the board or articles of association.

Company law (Companies Act 2006).

An employee has a contract of employment with the company. The relationship is one of master and servant — the employer has the right to control how work is done.

Contract of employment (service agreement).

Employment law (Employment Rights Act 1996, etc.).

The same person can hold BOTH roles simultaneously. An executive director with a service agreement is both a director (company law) and an employee (employment law).

Who is NOT an Employee (Even if a Director)

Some directors are not employees:

Pure non-executive director

A non-executive director with no service agreement and no employment contract is not an employee. They hold the office of director but are not employed by the company. NED duties are corporate, not employment-based.

Sole director/shareholder with no service agreement

In an owner-managed company, the sole director and shareholder without a formal service agreement is generally not an employee. You cannot employ yourself. However, if there IS a formal service agreement, employment status is possible.

De facto director appointed by agreement only

If someone acts as a director without formal appointment or a service agreement, they may be a de facto director but not an employee. The absence of a formal contract suggests no employment relationship.

How to Establish Employee Status as a Director

If you are a director and want to claim unfair dismissal, you must show you are also an employee. Here's what tribunals look for:

1. Service agreement or contract of employment

You have a document titled "service agreement" or "contract of employment" setting out terms. This is strong evidence of employee status.

You are taxed as an employee via PAYE (not as self-employed or via dividends alone). Your payslips show income tax and National Insurance deducted as an employee.

3. Salary and set hours

You receive a regular salary for set hours of work (not fees or dividends alone). This is typical of employment, not directorship.

4. Job title and defined role

You have a job title (Managing Director, Finance Director) and defined duties described in a role description or contract, separate from generic board duties.

5. Subject to board authority

You report to the board or shareholders and are subject to their authority and control. An employee-director still works under the company's direction.

What Claims Are Available

If you are an employee-director, you have multiple remedies available:

Unfair Dismissal (Employment Tribunal)

If dismissed unfairly, you can claim compensation for loss of earnings, benefits, distress, and future loss. Requires 2 years' service.

Wrongful Dismissal (Civil Court)

If dismissed in breach of your service agreement (eg. without proper notice), you can sue for damages. This is typically limited to unpaid notice and pay in lieu.

Discrimination (Employment Tribunal)

If dismissed because of a protected characteristic (race, sex, disability, age, etc.), you can claim discrimination. No qualifying period required.

Removal as a Director (Company Law)

Separate from employment claims, you may have a remedy under company law (s.994 Companies Act — unfair prejudice petition) if your removal is unfairly prejudicial to your interests as a shareholder.

The Relationship Between Removal and Dismissal

Two important points:

Removal as director and dismissal as employee are separate

You can be removed as a director by board resolution or shareholder vote, but this does not automatically end your employment. If you have a service agreement, you remain an employee until formally dismissed with proper notice or grounds.

Both can occur simultaneously

The employer may remove you as a director (company law matter) AND dismiss you as an employee (employment law matter). You may have claims on both fronts: unfair dismissal in tribunal and unfair prejudice under company law in civil court.

Shareholder Rights: A Separate Remedy

If you are also a shareholder, removal as a director may breach your shareholder rights. You can bring a separate claim under the Companies Act 2006:

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Employment Rights Act 1996