The special position of a statutory director

A statutory director (or statutory managing director or formally a director under the articles of association) has a special position in employment law. Their relationship differs from that of a regular employee. In some cases, the statutory director performs work based on a management agreement instead of an employment contract. With regards to employment law, we summarise the special aspects of this position.

Provisions on the succession of fixed-term employment contracts

An employer can conclude three successive temporary employment contracts within a period of three years with an ordinary employee without there being any question of this being converted into a contract for an indeterminate period. However, an employment contract with a statutory director may provide that the period of three years can be extended indefinitely.

Transitional compensation and fair compensation

A termination under company law also results in the end of the relationship with the statutory director in terms of employment law. An exception applies to the statutory director of a foundation.Unlike an ordinary employee, the statutory director cannot request the employment relationship to be restored. Like an ordinary employee, he/she has the right to transitional compensation and possibly fair compensation. The latter is only possible if if a serious imputable act or omission can be attributed to the employer.

No period for reflection

An ordinary employee who has concluded a termination agreement with the employer can change their mind about it within 14 days. A statutory director does not have this right. Therefore he/she can only get out of a termination agreement by using the usual grounds for overturning it, such as error or deceit [vitiated consent].

No preventive test for dismissal

The statutory director of a private company or limited company (insofar as the latter still has an employment contract) is excluded from the preventive dismissal test. Therefore the employer does not need the consent of UWV or the district court for them to be dismissed. This is required to dismiss the director of a foundation, but it’s not required for the dismissal of a statutory director of an association.

Further information

If you have questions about the special position of a statutory director or you would like to submit a case directly, we invite you to contact our Employment law department.

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