The Employee Status of Directors

Abstract

Historically the leading characterisation of corporate directors was that they were agents to their corporations, though it was understood that they concurrently served as ordinary employees where they entered into contracts of service. Today some deny that directors, qua their director function, are agents in a conventional or exclusive sense. It is asserted that directors are (also) trustees, or that they hold an ‘office,’ or that their status is sui generis. My objective is to resolve the conceptual muddle. An examination of the relevant principles indicates that directors serve as employees of their corporations, while also often serving in an agent capacity, all in the orthodox sense of those two concepts. I recognise that the employee characterisation is in polar conflict with the common assertion that an appointment as director does not by itself create an employment relation. However, as I will explain, that assertion is defective.

Keywords: director employment, director status, employee director, office of director, sui generis