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Senior Partner
Senior Partner, Solicitor
Category: UK Employment Law
Satisfied Customers: 13325
Experience:  30 years experience
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We have a family business. One member of the family initially

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We have a family business. One member of the family initially said he would not take any wage for assistance given in the company(having been given many shares in the business at no cost to him). He has now approached the rest of the family saying that he would now like back pay for the last ten years for the input he has made but as the senior member of the family busienss I feel he was adequately rewarded by the gift of shares and dividends he has received. The other two members of the family involved in the business work full time and are paid wages.
Thank you for your question. Is he a director? How many hours does he work and in what capacity?
Customer: replied 3 years ago.


Yes he is a director, negotiates bank loans etc., when needed probably twice a year but does not take any part in the every day to day running of the company which is a property owing company let to students. Son in law and daughter do all the work in the management.

Ok thanks. the legal position is that a director who is not an employee is not entitled to any remuneration just for being director unless the shareholders agree so he has no legally valid basis of claim. If he was given shares in exchange for his work that certainly is sufficient to rebut any claim for pay.
It is quite common for non executive directors to be remunerated for their time but he has the choice to resign if he wants. If the business can afford it perhaps the sensible thing is to pay him a small non exec fee going forward if that will keep him engaged positively in the business.
Customer: replied 3 years ago.


Thanks for info so far. Actually he does receive the basic tax free wage for the past two years, but has now suggested a wage amounting to £35000 backdated for the past ten years for what he considers valuableadvice regarding investment properties etc.,certainly his input in this respect has been valuable but not at such a high rate. The rest of the family are not in agreement with this backpay at all and intend to refuse the request.

Well I can see no basis for the claim.£35,000 is about the level of pay for quite significant non executive roles not for private family companies but in any event he is only entitled to whatever the board agreed. You need to check the articles to see if it is the board or the shareholders but either way he has no legal claim if he was given shares and has been awarded and accepted a small payment. It is simply a matter for everyone else to agree or not and from what you say they do not agree. In that case he has no legal claim.
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