We have recently considered some of the issues surrounding various tax efficient strategies for paying director shareholders. One aspect of this complex area that we have not yet examined is whether company directors need to be concerned with employment legislation in relation to the minimum wage. At the most basic level, company directors who do not have a contract of employment are defined as office holders. Office holders are neither employees nor workers. Directors who are considered to be office holders do not qualify to receive the National Minimum or Living Wage.However, company directors who also have an employment or worker’s contract can be both an office holder and an employee at the same time. If this is the case, the director would need to be paid the National Minimum Wage (NMW) or National Living Wage (NLW). The NLW is currently £7.50 for those aged 25 and over. The hourly rate of the NMW is £7.05 for adults 21-24 year olds.Planning note:Where there is a requirement to pay a director the NMW or NLW this would impact the strategy to pay a director’s salary at a minimum level that qualifies the director for state benefits but does not involve payment of any NICs. Careful consideration needs to be given in these cases, especially to directors of personal service companies to ensure the correct tax treatment is in place whilst at the same time considering the implications of employment law and the minimum wage legislation.If you need advice in this area please call for more information.