The basis of the activity of a member of the management board of the company is its appointment on the basis of the resolution of the meeting of shareholders or the contract of the company. Since the relationship of appointment alone does not constitute a basis for decommitment and for obtaining a title to social security, the majority of companies also decide to regulate the employment of a board member in another way.
one with the most popular forms of cooperation of the board member with the company, alongside the management contract, there is just a contract of employment. However, under labour law, is there some kind of question whether a member of the board of directors as head of the company can be its subordinate at the same time?
Consequently, whether hiring a member of the board of directors under a contract of employment meets the required by Article 22(1) Labour code condition for performing work “under the direction of the employer”?
The existence of the so-called "employment" is a necessary element for recognising that the work is carried out in the employment relationship regime defined under Article 22(1) The labor code.
When a member of the Management Board is at the same time a partner, the possibility of applying such a form of employment will depend on the ownership structure of the company.
The case law of the Supreme Court indicates that the particular problem is the qualification of the employment of those in the capacity of the governing bodies of the workplace. This is because it is the personification and alter ego of the employer who is the organizational unit.
There is a lack of authority to give her job instructions for her employer. The principle, as is apparent from the rules governing the arrangement of different types of legal persons, is the autonomy of the person acting as the governing body. This problem also concerns shareholders of capital companies and members of their boards.
(so, among other things, in the Supreme Court judgment of 17 October 2017, reference no.: II UK 451/16).
In the case of top-level management staff who are at the top of the organisational structure of the establishment and do not have a ‘man’ of the superior will be seen to be different from the classical pattern of employment typical of the serial worker. For these reasons, the component of ‘workable subordination’ for members of the Management Board should be assessed taking into account their management function.
The jurisprudence of the Supreme Court clearly indicates that the type and extent of subjugation of the employee in the employment relationship may vary according to the function(s). In the case of persons employed in managerial and managerial positions, the employer has the right to expect their activity in the way they perform their work, but this does not change the fact that they work under subordinate conditions within the meaning of Article 22 kp (yes: Supreme Court in decision of 11 October 2007, III UK 70/07).
As a rule, it is permissible to hire a member of the board of directors in the framework of an employment relationship. However, when a member of the Management Board is at the same time a partner, the possibility of applying such form of employment will depend on the ownership structure of the company.
On the basis of the previous case law of the Supreme Court, there is no doubt that it is permissible to employ employees of shareholders of multi-member limited liability companies in the positions of members of the board of directors (admissibility of the Supreme Court of 8 March 1995, I P P P 7/95, and judgments of 16 December 1998, II UKN 394/98, of 2 July 1998, IIUKN 112/98, of 14 March 2001, II UKN 268/00, of 23 October 2006, I PK 113/06, of 7 April 2010, II UK 357/09, of 3 August 2011, I UK 8/11).
On the other hand, this possibility is excluded where the sole shareholder of the capital company becomes the sole member of the board.
The Supreme Court took the view that, in such circumstances, it was impossible to speak of the employment relationship, since such a relationship would be devoid of the essential structural elements required by this type of relationship, and in particular it would lack the feature of the employee's broadly understood subordination in the work process.
Otherwise, it should be possible for a worker to be subject to ‘self’, which is essentially excluded. (yes: Supreme Court resolution of the day 8 March 1995, I P P P 7/95, Supreme Court judgment of 17 October 2017, reference no.: II UK 451/16).
However, the most controversial is the employment of the dominant shareholders of capital companies as board members. The Supreme Court does not accept the employment of such an employee when the participation of other shareholders in the share capital remains illusory (e.g. 99/100 to 1/100).
In such a situation, the parent shareholder is treated as the sole shareholder of the company, even though he remained only a majority shareholder (under the Commercial Companies Code). (yes: Supreme Court judgment of the day 7 April 2010 II UK Regulation (EU) 177/2009).
Author: Magdalena Mączka. Legal advisor, Russell Bedford Dmowski & Partners Law Firm Sp. k.