Board member and employment contract

Service

A management board member and an employment contract is an issue that becomes the subject of discussions in the company more than once. The appointment of a member of the company's management board may, but does not have to, involve hiring such a person. The functions within these two relations are independent of each other. In practice, however, it is common to enter into an employment relationship with members of the management board. This is to tie them to the company, provide them with a fixed remuneration independent of the company's profits, and provide additional benefits. A management board member employed under an employment contract has the same rights and protection as any other employee of the company and is subject to the provisions of the Labor Code.

How to hire a board member?

Pursuant to the provisions of the Commercial Companies Code, the contract for the performance of work for the company with members of the management board is concluded by the supervisory board or a proxy appointed for this purpose.

It happens, however, that the management board of the company is composed of one person - there is one member of the management board who is also the sole shareholder. How then to effectively conclude such an agreement? Well, in this case we are dealing with an exception, because the employment contract with a management board member is concluded with himself. This is due to the fact that the sole member of the board represents both himself and the company. In this situation, however, for the contract to be effective, it must be concluded in the form of a notarial deed.

Board member on a mandate contract

Although in practice the vast majority of management board members are employed under an employment contract, it is worth emphasizing that this is not the only possible form of employment. The provisions of the above-mentioned Commercial Companies Code indicate that management board members may provide work for the company not only on the basis of an employment relationship, but also on the basis of another legal relationship. Thus, a member of the management board may also be employed on the basis of a civil law contract. These contracts include, inter alia, a mandate contract or a management contract.

Management board member and the employment contract - contract terms

The contract with a member of the management board may be concluded for a definite or indefinite period. More and more often, however, employment contracts with a management board member are concluded for the duration of a specific job. The point is to combine both functions of a management board member, those related to the employment relationship and those resulting from the legal relationship - company management. The matter is then facilitated in that when a member of the management board is dismissed from his function, the employment contract automatically ceases to apply and is terminated. If there is no connection between the employment contract and the function of a management board member, the mere dismissal of a member from this function will not result in termination of the employment contract and termination of the employment relationship. The former member of the management board will still be an employee of the company, and his dismissal will have to be carried out under the terms of the contract and the labor code.