A non-executive director, or NED, is a member of a company's board who provides oversight and governance but is not involved in the day-to-day running of the business. That lack of an employment relationship changes how their fees are treated.
What it means
Because a NED is not an employee in the ordinary sense, their fees have been treated differently from executive pay - notably not subject to the employee UIF and SDL, and with their own PAYE position. The distinction from an executive director is important, because misclassifying one as the other applies the wrong deductions.
Where it fits in
The NED classification sits in the nature-of-person and tax setup and links to the non-executive director directive, which governs any PAYE on the fees. It sits between a standard employee and an independent contractor in how it is handled.
Key rules
- A board member providing oversight, not employed in management.
- Fees are treated differently from an executive director's pay.
- Historically outside employee UIF and SDL.
- Linked to the non-executive director directive for PAYE.
