Craven v Forrest Fresh Foods Limited: EAT Clarifies Employee and Director Status

In August 2025, the Employment Appeal Tribunal (EAT) handed down judgment in Craven vs Forrest Fresh Foods Limited, a case in which After Athena’s employment law solicitors acted for the claimant.

The judgment holds key lessons for UK employers in understanding whether a statutory director position ends the individual’s status as employee.

Background to the Case

Mark Craven was employed in the business of Forrest Fresh Foods Limited (the Company), a business operated by his second cousin (Chris Craven), for a number of years. During this time, he had built his way up through the ranks. As an employee, Mr Craven received a monthly salary.

In April 2016, Mark became a shareholder of the Company and was appointed a statutory director in June 2016. Around this time, Mark started to receive minimal PAYE income and more substantial dividend payments.

Whilst living in the south of England working for the Company, Mark became involved in a separate business, VIP HQ Essex Limited, as a shareholder, and in January 2022 was appointed a statutory Director. Mark hadn’t told the Company about his shareholding, but after becoming a Director, decided that it was important to be upfront with Chris Craven and shared his news on 9 February 2022.

Sadly, Mark’s relationship with managing director Chris Craven deteriorated following the February meeting, and the Company undertook covert surveillance of Mark to establish how he was spending his working day (i.e. whether he was dedicated to his duties to the Company). The deterioration in the relationship led to Mark taking time off work due to stress from April 2022 and ultimately, he never returned.

In June 2022, the Company voted to remove Mark as a director (although this was never communicated to Mark and never recorded at Companies House).

Following June 2022, the Company ceased paying Mark during his sickness absence and despite raising a grievance, this was not resolved. Therefore, Mark pursued a claim for unlawful deductions from wages against the Company.

Unlawful Deductions from Wages Claim

Employment Tribunal

At first instance, the Employment Tribunal held that although Mark technically remained an employee following his removal as a Director, all payments had been made in his capacity as director. This meant Mark was not entitled to any pay following his removal, and the Tribunal subsequently dismissed his claim.

Employment Appeal Tribunal

The Employment Appeal Tribunal (EAT) held that the Tribunal had erred in its conclusion that Mark had remained an employee without entitlement to wages or work, and provided helpful guidance on dual employment and directorship issues.

The EAT considered that the main question was whether an appointment as a director automatically ended employment rights under an existing employment contract.

The EAT held that the existence of a written employment contract meant that Mark could be both a director and an employee simultaneously. However, the Tribunal had failed to examine whether the employment contract had been terminated or varied at any time (thereby removing Mark’s entitlement to work and pay as an employee).

In consequence, due to fundamental errors of law by Tribunal, the case was remitted for reconsideration by another Tribunal.

Constructive Unfair Dismissal

Mark made a further claim against the Company for constructive unfair dismissal. This was on the basis that he felt he had no choice but to resign from his position as an employee with the Company in February 2023. The reasoning for this was the Company’s breach of trust arising from their failure to provide an outcome to his grievance, continued failure to pay wages and invasion of privacy in light of the Company’s covert surveillance (amongst other things).

In this claim, Mark was successful. The Tribunal unanimously concluded that he had remained an employee until February 2023 and had been constructively and unfairly dismissed, following his resignation in response to fundamental breaches of contract by the Company. In particular, Chris Craven was identified as the “architect” of the breakdown in employment relations.

The remedy in this claim is yet to be determined, but in light of the Company’s failure to follow the Acas Code of Practice on Disciplinary and Grievance Procedures regarding Mark’s grievance, an uplift to compensation of 20% has been awarded.

Key Lessons for Employers

This case is a useful reminder to employers in the UK:

• An appointment of statutory director does not automatically terminate an employee’s rights under an existing employment contract.
• Employers should assess whether contracts have been lawfully varied or terminated before removing contractual entitlements.
• Failure to follow proper grievance and disciplinary procedures can lead to findings of constructive unfair dismissal. This in turn can result in the awarding of increased compensation. See the relevant Acas Code of Practice for more information.

The full judgment for this case is available here.

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