Director or manager

Position

As director or manager you find yourself in a tricky situation when dealing with a labour dispute. You are put under pressure as the organisation no longer accepts the fact that you are responsible for a critical part of the operations while there is a conflict or conflict of interests. You personally experience it as a conflict of loyalty. The company has let you down. You carry on working regardless in the interest of the business. There is therefore increased pressure on solving the situation. Normal labour law applies to non-statutory directors.

>> Read more on dismissal law

Statutory director? Other dismissal rules apply to you

A statutory director (officer) actually has two employers. Apart from his/her position as officer (director) of the company (company law applies here) s/he also has an employment contract with the company (labour law applies here). A statutory director is usually appointed by a shareholders’ resolution during the General Assembly of Shareholders (known as the AVA in the Netherlands). This also applies to the dismissal. The articles of association of the company can give you additional information on this. You should be legally given notice before the General Assembly of Shareholders and informed that your dismissal decision is on the agenda. You will be given the opportunity to put up a defence against the dismissal decision of the AVA. If the AVA decides to dismiss you as director despite your defence then the relationship under employment law with the company also terminates at the same time. Your employer does not have to apply for permission for the dismissal from the UWV or the judge. The employer will, however, need to take into account the notice period. The employment contract of a statutory director often already includes a severance plan. As statutory director on the payroll you cannot demand reinstatement of the employment. You can, however, submit a claim for compensation after the dismissal to the judge using a so-called apparent unfair dismissal proceeding. Should you be ill during the period in which the dismissal decision was taken only your relationship under company law will terminate, i.e. only your position as director of the company terminates. In order to terminate your relationship under employment law with the company a separate application for termination will, in this case, have to be submitted to district court. Although the subdistrict court formula was not written to include dismissal of statutory directors it is usually applied in case law and in negotiations. In contrast to what is normally used by (subdistrict court) judges for ‘normal’ employees, in some cases the employers part of the pension contribution will be included in the remuneration factor B of the subdistrict court formula.

Publicity

Because of publicity and other damaging risks it is advisable to consider confidential negotiations in your labour dispute or dismissal situation. This is where you can suggest mediation.

>> Read more on mediation

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