Director of Edinburgh chicken takeaway who hired illegal workers disqualified from being company director

About this case:

• Citation:
  [2024] CSOH 53
• Judgment:
  External link
• Court:
  Court of Session Outer House
• Judge:
  Lord Braid

The respondent, Muhammad Azam, was the sole director of MA Fast Foods Ltd until July 2023. The company had since been the subject of a dissolution procedure, which was put on hold until the resolution of the petition under the Company Directors Disqualification Act 1986.

The petition was heard by Lord Braid, with Tosh, advocate, appearing for the petitioner. No representations were made by the respondent.

Unpaid penalty

Mr Azam’s company operated a takeaway premises known as Chicken Club at 46 Clerk Street, Edinburgh. The conduct which was said to render the respondent unfit to hold office as a director is that he employed workers without valid leave to remain in the UK or subject to employment conditions preventing them accepting their employment and so caused the company to breach section 15 of the Immigration, Asylum and Nationality Act 2006.

On 4 February 2022 immigration officers identified two adults employed in the Chicken Club in contravention of section 15 of the 2006 Act. One, Arslan Khan, was a Pakistani national who was found working in the kitchen area. He told the officers that he had been working there for an “Asam Khan” for three days a week for about three months, being paid between £30 and £50 in cash for his services. The other, Waqas Amjad, was a Pakistani student who admitted to working 20 hours per week over his permitted hours during term time.

The petitioner issued a Civil Penalty Notice of £20,000 to the company on 5 April 2022, which the respondent contested unsuccessfully. No appeal was made from the Home Office’s decision that the company remained liable for the penalty, which remained unpaid and was considered unlikely to be paid given the company was facing dissolution.

Counsel for the petitioner submitted that it was expedient in the public interest that a disqualification order under section 8 of the 1986 Act should be made against the respondent. His conduct as a director of the company made him unfit to be concerned in the management of a company and his use of illegal labour gave an unfair commercial advantage over his competitors. Given these factors and the outstanding penalty, a disqualification period of 6 years was appropriate.

Benefited from conduct

In his decision, Lord Braid said of the respondent’s conduct: “The conduct prayed in aid by the petitioner as giving rise to unfitness is unusual inasmuch as it is conduct which need not have been committed through the medium of a limited company, and is not said to have resulted in the company becoming insolvent, or creditors going unpaid (other than that the civil fine has not been paid). Nonetheless, paragraph 1 of schedule 1 to the 1986 Act is in wide terms, applying as it does to breach of any legislative requirement.”

He continued: “There is a raft of English cases in which disqualification orders have been granted against directors who deliberately or negligently caused or allowed a company to employ workers illegally. The gravity of the conduct lies in the fact that it gives an unfair advantage to the company which ignores the rules at the expense of those which abide by the law; it gives an opportunity for the exploitation of migrant workers who are usually in a precarious state to begin with; and it exposes the company to a fine.”

On whether it was appropriate for an order to made, Lord Braid noted: “On any view, a deliberate breach of immigration law is a serious matter. Here, the breach was in relation to two workers, committed over a period of months, with the potentially harmful consequences set out above, and demonstrates such a lack of probity on the part of the respondent as to render him unfit to be involved in the management of a company. A disqualification order therefore falls to be made.”

He concluded: “[The respondent] paid his two employees less than the minimum wage, thus enhancing the company’s profits, he exposed the company of which he was a director, and to which he owed a fiduciary duty, to a fine, and significantly, the fine has not been paid, and is unlikely to be paid. The respondent has therefore benefited from the illegal conduct, from which others have suffered, directly and indirectly.”

A disqualification order in the terms sought by the petitioner was therefore granted.