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the company or were seen as outsiders rather than an integral part of the company. 112
In Hampson v Price’s Patent Candle Co, 113 the court allowed employees‟ interests to
be considered as long as it was in accordance with the shareholders‟ interests. The
Court of Appeal in Hutton v West Cork Rly Co Ltd 114 held that the company had
acted ultra vires in making gratuitous provisions for past and present employees. The
majority however, were of the view that management could consider employees‟
interests as long as they benefited the company. 115
In the case of Parke v Daily News Ltd, 116 the company sold one of its two
newspapers in order to avoid insolvency. The proceeds from the sale of such assets
were to be paid to employees by way of compensation for dismissal. Shareholders
objected and brought an action against the directors on the ground that such move
was ultra vires. The court held that the payment was not made in furtherance of the
company‟s interests. It also found that such action was detrimental to shareholders
and to the company as a whole. In normal circumstances, payment to employees can
be regarded as in the company‟s interests since it provides motivation to increase
productivity and improve labour relations. However, such an issue did not arise in
the case since the company was on the verge of insolvency and the employees had
been made redundant. Generally, directors have no duty to consider employees‟
interests, apart from those stated in the employment legislation, such as their safety
and health while at work.
112 Ibid at 148.
113 (1876) 45 LJ Ch 437.
114 (1883) 23 Ch D 654.
115 1883) 23 Ch D 654 at 672.
116 [1962] Ch 927.
140