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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3840
Experience:  Solicitors 2 years plus PQE
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Hi,Thanks for your time. I have a company that I set up,

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Thanks for your time. I have a company that I set up, after approx a year I took on someone I had worked with previously as a Director (non Shareholding), we had talked about possibly giving this person a Share, but everytime we did he talked about leaving, so it never happened.
Eventually we had 3 projects on the trot that he mismanaged and we lost approx £70,000.00. After this he left the company and has not had any dealings with the company since 1st April. He is refusing to sign a resignation letter without having copies of all the accounts, VAT returns, Debtors and creditors lists; he also keeps asking to be paid off.
Question: where do I stand in removing him as a director.
Thank you in advance
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
Technically you do need him to sign a resignation letter - this is because you can simply vote him out by ordinary resolution and remove him from the register of directors.
The issue you have is if he was also an employee he will have the right to bring a claim for his loss of employment and that is why he is asking to be paid off. You will have to negotiate some form of settlement or compromise with him, otherwise you risk him bringing a claim - probably for constructive dismissal.
As for the information he has requested - I know why he has requested it, this is because he is concerned that if the company goes into liquidation he will face questions from a liquidator and would like to refer to this information in order to answer these questions. You are not obliged in anyway to provide him with this information, so I would suggest that you simply say that if for whatever reason he requires this in the future you will offer him reasonable assistance.
I look forward to hearing from you.
Kind regards
Customer: replied 3 years ago.

Thank you so much for the above.

One small question to the above. The person in question, resigned his position and walked away from the company, and we have other persons to clarify this.

Also he was not a PAYE Director, he was paid through his own company invoicing the company.

Would any of this make a difference.

Thanks again.

Mike Philpott

Thank you.
Was his resignation only verbal? If he resigned then obviously that does make difference, but it is preferable if he would confirm this in writing , and I would note his resignation does not preclude a claim for constructive dismissal. He will have 3 months to bring a tribunal claim before he becomes barred.
Not having PAYE and invoicing through his company can be used as evidence to show that he was not an employee - but ultimately if he brings a claim it will come down to a matter of fact and be for a tribunal to decide.
You have to bare in mind that if he does not sign a deed, resignation or compromise agreement giving up his rights to an employment claim, you are at risk of him bringing a claim regardless of how unfounded such a claim might be.
Your options are to either just ignore him and call his bluff or negotiate a compromise agreement with him.
Kind regards
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