Directors are considered to be office holders and therefore not entitled to the NLW.
Directors with a service contact, even if the terms are implied in some way, will be entitled to the NLW. Entitlement means that they must be paid at least the NLW or the employer (their company in most cases) will be subject to penalties.
I am not sure when a director could be considered to have an implied contract, but I think it would be prudent to have a clear definition. Any offers?
Many, if not most directors are advised to take the low salary, high dividend approach, and until we have some certainty about the definition of an implied contract, clients who have taken our advice in this way (typically, an £8,164 salary for 2017-18 and any balance as dividends) may be sitting on a compliance nightmare if HMRC come along and convert working practices into implied contracts of employment.
I am happy to post any comments received for the benefit of all…