Want to talk to an expert employment law solicitor?

You'll receive a callback from a specialist within an hour

Each private company must have at least one director – and public companies must have at least two. Directors effectively run the company – they have extensive powers to manage the business, including passing resolutions at board meetings to make decisions relating to company practice and procedure. However, the directors of the company are not its owners (these are the shareholders) so there are a number of duties that apply to the way directors exercise these powers. One of these duties is the duty for directors to take reasonable care, skill and diligence in the exercise of these powers. We’re going to have a look at this duty below, including examining the following:

  1. Where is the duty of reasonable care, skill and diligence specified?
  2. What standard of care do directors have to live up to?
  3. Is there any other way in which a director could be held to this standard?

Where is the duty of reasonable care, skill and diligence specified?

This duty, until the Companies Act 2006, was a common law duty. However, since the CA 2006 came into force the duty is codified under s.174 of the same Act. Under s.174 a director must exercise reasonable care, skill and diligence. This means the care, skill and diligence that would be exercised by a reasonably diligent person with:

a)      The general knowledge, skill and experience which may reasonably be expected of a person carrying out the functions carried out by the director in relation to the company; and

b)      The general knowledge, skill and experience that the director has

What standard of care do directors have to live up to?

Directors must carry out their functions with sufficient care and competence. However, there is a two-part test (derived from Norman v Theodore Goddard [1991] BCC 14) which lays down the standard of care expected from directors:

  1. A de minimis, objective test  – what is required of the reasonable director carrying out the particular functions that they’re responsible for
  2. A subjective test – whether, judged by the experience, skill and knowledge that the individual director has, they’ve fallen below a certain standard in their conduct

If the director has a higher standard of knowledge, experience and skill than that expected under the first part of the test then they will be judged on whether they have reached the standard expected in the second part of the test. For example, a director who has a long period of service will be expected to perform to a higher standard than a newly-appointed director.

Is there any other way in which a director could be held to this standard?

An executive director (who will normally have a written contract of employment) will be required to comply with the express and implied duties contained within their contract of employment, including the express term requiring a duty of skill and care.


About Chris Hadrill

Chris is a specialist employment lawyer at Redmans. He specialises in contentious and non-contentious employment matters, including breach of contract claims, compromise agreements and Employment Tribunal cases. He writes on employment law matters on a variety of websites, including Direct 2 Lawyers, Lawontheweb.co.uk, LegalVoice, the Justice Gap and his own blog. Contact Chris by emailing him at chadrill@redmans.co.uk

Want to talk to an expert employment law solicitor?

You'll receive a callback from a specialist within an hour

Share →

Our awards

Request a callback

    Your first name (required)

    Your last name (required)

    Your email (required)

    Your telephone number (required)

    Brief details of your enquiry


    4.79 Average

    339 Reviews

    James B

    Great and prompt service- would recommend and use again!

    Posted 9 hours ago

    Emma L

    Excellent service. From start the team where efficient and helpful, the whole process was made easy on a very stressful and upsetting situation. They worked well to support my situation and negotiate. Would highly recommend. Thank you to Chris, Sacha and the team.

    Posted 10 hours ago

    Brian H

    I must say, not seeing any of you and doing all on-line works very well. Very pleased with the service and would recommend you. Fantastic service. Many thanks Brian Haines

    Posted 11 hours ago

    Sheenu A

    Professionals with excellent quality of work.

    Posted 6 days ago

    Maris T

    I recommend Redman's Solicitors. Chris was very helpful and informative. He provided a speedy and efficient service at a reasonable price.

    Posted 1 week ago


    quick response, friendly staff, my issue was smoothly done. superb

    Posted 2 weeks ago


    Overall I was very satisfied with the service I received. Right from making initial contact to being contacted by Chris Hadrill. He was easy to talk to, friendly and professional and gave sound advice. I would certainly use Redman's again. Thank you for all your help, Chris. I would rate my experience as 5 star.

    Posted 3 weeks ago

    Jane K

    4 stars for quality of advise. the team are good but it feels rushed sometimes and hard to contact.

    Posted 4 weeks ago

    Arabella B

    I am so grateful to Caroline Lewis at Redmans Solicitor’s for helping me with my Unfair Dismissal Case. I was seriously impressed how easy Redmans made the whole case, and am very happy with my Settlement. I have recommended your firm to at least 5 people in the last 3 months.. Thank you Caroline and everyone at Redmans. You are Brilliant .

    Posted 1 month ago


    Highly professional and efficient service.

    Posted 1 month ago

    Tanya T

    I had the pleasure of Chris and Sacha’s experience with a work matter. They made me feel at ease with the process and explained everything thoroughly. Would happily recommend Redmans especially Chris and use them if needed I’m the future. Thank you!

    Posted 1 month ago


    I used the services of Redmans solicitors and was a quick outstanding service I engaged them in a settlement agreement after been made redundant extremely professional at all that was done and would definetly use them again

    Posted 1 month ago

    Adrian A

    Spot on support, enough to get the matter at hand sorted. No beating around the bush, no nonsense - got the job done and we all moved on.

    Posted 1 month ago

    Mark Q

    Five Stars I was most impressed by the attention, courtesy, speed and above all, professionalism in dealing with my Settlement Agreement. I would certainly have no problem in recommending this firm to anyone in need of their services.

    Posted 1 month ago

    Ade A

    I was surprisingly impressed by how Redmans Solicitors handle my case. From the moment I call them to the absolute end of my case, they always look after my best interest.

    Posted 1 month ago

    Malcolm P

    they were there when others were not

    Posted 1 month ago


    Excellent service all the way through from start to finish. Really great support and guidance from the team, they secured the offer that I wanted. I can't recommend Redmans highly enough and will be sure to use their services again should the need arise.

    Posted 1 month ago


    Efficient and quick service!

    Posted 2 months ago

    Karen B

    Quick response very helpful Issue raised dealt with very quickly

    Posted 2 months ago

    Carmen T

    Redmans give Great service and advice on reading contracts. They can explain all the solicitors jargon into words that you can understand. I received excellent service an I will use them again and again.

    Posted 2 months ago


    Very grateful for Mel’s efforts in handling my case from start to finish which I would have found very stressful without it. She was very professional, friendly and we had a positive outcome. Highly recommend.

    Posted 2 months ago