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Relevant legislation

The legislation that applies to this page is as follows:

• National Minimum Wage Act 1998, section 54

General

The term “shadow director� is used to describe a person who is not on the formal list of directors but who nevertheless controls the company’s activities to a significant extent. They may be individuals or companies and again have the same duties and obligations as any other director.

The term “shadow director�, is defined in section 251 of the Companies Act 2006 as a person in accordance with whose directions or instructions the directors of a company are accustomed to act.

It is sometimes claimed that a “shadow director� should be treated as a director in respect of National Minimum Wage. However, whilst it is true that under provisions in company and revenue law a shadow director attracts some of the liabilities of a proper director, the term is not recognised in National Minimum Wage legislation.

A “shadow director� is not an office holder therefore the provisions under which a director may receive remuneration by virtue of his office do not apply. Any payments received from the company will likely be paid under a contract of some kind, either a contract of employment or a contract to perform services personally. Therefore, a “shadow director� is likely to be a worker (NMWM05020) under the National Minimum Wage Act 1998, section 54(3) and will be entitled to the National Minimum Wage if they are working under a contract.

See also: Directors, (NMWM05140)