13 Apr Supervisory Board Member Agreement
Example: an individual is a member of the company`s board of directors, but is also employed in the same company as an architect or accountant on the basis of an employment contract. In the situation, the member of the executive board assumes management and representation functions on the basis of the management agreement and takes charge of the specialized work within the framework of the employment contract. In other words, the person works under two different agreements. It should be noted that the termination or expiry of one contract does not automatically result in the termination of the other contract; In other words, any contractual relationship must be terminated separately in accordance with the law. Paragraph 1, paragraph 5, of the Employment Contracts Act clearly states that the provisions relating to employment contracts do not apply to agreements with directors of corporations and managers of branches of foreign companies. Therefore, if the member of the Board of Directors exclusively serves as a member of the Board of Directors, only one executive agreement may be entered into with that member of the Board of Directors, taking into account the provisions governing the licensing agreements in accordance with the obligation legislation. In our practice, problems with agreements with board members are often problematic. Board members often work in their position without agreement or under an ordinary employment contract, although this is not technically correct and often leads to litigation. In order to avoid litigation, it is advisable to formalize in writing an annex for the termination of the employment contract and to conclude a board contract, as required by law, the statutes of the company and the decisions of the decision-making body. If no written contract has been signed with the board member, the terms agreed orally by the parties apply. In other words, it is an oral contract arising from the legal requirements, the statutory provisions of the corporation and the corresponding decisions of the competent body (for example. B supervisory board or shareholder).
The case where a worker employed under an employment contract is elected to the board of directors Sometimes it is mistakenly considered that if an employment contract is concluded with the member of the board of directors, the social guarantees for the member of the board of directors are maintained within the framework of the employment contract. In fact, this is not the case because a member of the board of directors cannot be dismissed, a member of the board of directors does not have unemployment insurance coverage and board members cannot register for unemployment, etc. The main problems with board agreements arise when, before or after the election of the board member, an additional employment contract has been entered into with the board member. The Estonian Supreme Court has ruled that a member of a company`s board of directors may also work in the same company under an employment contract, but only if the work does not constitute the performance of the function and duties of a member of the board of directors. This means that, in addition to the board function, the board member has an employment contract with the company when performing other duties that do not overlap with the duties of a board member. A member of the board of directors may hold his or her position under an agreement of a member of the board of directors and, in some cases, the member of the board of directors may also work in the same company under an employment contract.