Directors as employees Directors are professionals who manage the company for the benefit of themselves and for the benefit of the shareholders. However, if a director accepts employment in the same company under a separate contract of service, then, in addition to the directorship, he is also treated as an employee or servant of the company. In other words, when the director is appointed as whole time employee of the company, then that particular director shall be considered as employee director or whole time director. Example : Gunalan is a director of a company who has also taken an extra charge to act as a manager of the company.
But as per the contract of service as a manager he is entitled to receive a remuneration. Hence he is a director who also happens to be an employee of the company.