16 June 2020
There are many types of directors and their positions differ, but most directors are regular employees.
Only the statutory director has a clearly different position in Dutch employment law.
Someone is a statutory director if that person has been appointed by the general meeting of shareholders or the supervisory board. The decision to appoint does not have to be a written decision (unless the statutes say otherwise).
After being appointed, it follows that the person will be registered in the commercial register of the Netherlands Chamber of Commerce (Kamer van Koophandel).
However, being registered as a director in the Chamber of Commerce is only an indication that the person may be a statutory director; alone it is not definitive. Being a statutory director is contingent on the appointment decision.
All that is required to dismiss a statutory director is a resolution of the general meeting of shareholders. Note that the shareholders are required to provide the ground for dismissal.
A statutory director is subject to both employment law and company law because they have a dual relationship with the organisation: they are (generally) employed by the organisation, and they are a part of the legal person managing the company.
When a statutory director is dismissed, they are therefore dismissed under both laws. Generally, but not always, the company law termination also leads to the employment law dismissal.
Under certain circumstances such as illness or pregnancy, where termination of employment is prohibited, the employment contract may be upheld until the prohibition expires.
As employees, statutory directors face many of the same challenges as other employees, such as workplace conflict, discrimination, personal disputes, disrupted employment relationships and unfair dismissal.
Due to their special position, they also face additional challenges, such as greater liability, fewer rights regarding dismissal and performance-related issues.
It is advisable for statutory directors to agree a compensation upon departure at the start of the employment contract; the so-called “golden parachute”. After all, this type of director runs the extra risk of being held personally liable for the policy pursued and they can be fired much more easily. Such a parachute may be combined with the payment of the legally required transition fee.
Learn more about the special position of the statutory director or ask us a question about this topic.
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