Forrest Fresh Foods case clarifies employee-director remuneration disputes

The Employment Appeal Tribunal's decision in Mark Craven v Forrest Fresh Foods Limited ([2025] EAT 121) provides crucial guidance on the intersection between employment and directorship remuneration rights, particularly where individuals hold dual roles within the same organisation.

Mark Craven appealed against Employment Judge Cline's judgement following hearings in March and May 2023. The Employment Tribunal had concluded that Craven forfeited his entitlement to employee remuneration upon assuming directorship—a finding he challenged on multiple grounds.

Craven commenced employment with the respondent in 2009 as a driver before rejoining in sales. His written contract from August 2015 established his position as Business Development Manager with an annual salary of £10,600, specifying working arrangements that would later prove central to the tribunal's analysis.

The dispute concerned whether Craven retained salary and sick pay entitlements after his directorial appointment in June 2016. Evidence revealed that whilst Craven initially received employment wages, subsequent remuneration primarily comprised dividends and director loans. His income increased substantially from £32,878 in 2016-17 to £76,640 in 2017-18, with dividends constituting the predominant component rather than employment wages.

The original tribunal's reasoning turned on whether Craven could simultaneously claim employee rights whilst receiving directorial remuneration without explicit contractual provisions. His Honour Judge James Tayler observed that "The claimant cannot have it both ways," suggesting that dual status recognition did not automatically preserve employee benefit entitlements.

The matter became further complicated following Craven's removal from directorship in June 2022 after internal disagreements. He subsequently filed an unresolved grievance before resigning from employment in January 2023, citing unfair treatment during suspension and seeking unpaid wages for preceding months.

The tribunal determined that although Craven maintained employee status post-directorship, his actual remuneration structure during this period aligned with directorial rather than employment arrangements, thereby defeating claims for unpaid salary or sick pay. The judgement emphasised the necessity for precise contractual interpretation, contrasting Craven's original employment terms against the expanded responsibilities accompanying his directorship.

Deputy Judge John Bowers considered Craven's appeal grounds, particularly those concerning legal misapplication, as "reasonably arguable" given the complex interweaving of employment and directorial duties. Following comprehensive review, the Employment Judge was found to have erred fundamentally regarding employment rights within the statutory framework, necessitating fresh examination by a different tribunal.

This decision illuminates the intricate relationship between directorial appointments and pre-existing employment contracts. The case demonstrates particular significance regarding remuneration entitlements where directors receive financial benefits through mechanisms distinct from traditional salary structures.

The judgement establishes important precedent concerning the burden of contractual clarity when employees assume directorial roles. It reinforces that courts will scrutinise the substance of remuneration arrangements rather than merely formal designations, particularly where financial benefits accrue through non-employment channels.

The case highlights the critical importance of comprehensive documentation when structuring dual employee-director relationships. Without express contractual safeguards preserving employment benefits, tribunals may determine that directorial remuneration supersedes employment entitlements, regardless of continued formal employment status.

With further hearings scheduled, Craven v Forrest Fresh Foods represents a significant development in employment law jurisprudence, particularly relevant in contemporary employment structures where hybrid arrangements have become increasingly prevalent throughout the United Kingdom's evolving commercial landscape.