Question. Please tell me, if the sole owner of an LLC and a member of the board of directors holds both the position of board member and the position of doctor, which contract is required (the employment contract for the doctor or the employment contract with the board member stating that the additional duties are those of a doctor?)
Section 221(8) of the Commercial Code provides that “a member of the Management Board shall be entitled to remuneration commensurate with his duties and the financial situation of the company”, while Section 224(1) of the Commercial Code provides: “The meeting of members shall elect and recall the members of the board of directors by resolution.”
On the contrary, Section 44(3) of the Labour Law regulates that “members of the executive bodies of a capital company shall have an employment contract, unless they are employed on the basis of another civil law contract”.
Looking at these legal provisions, it can be concluded that there is a conflict here, since, on the one hand, the Commercial Code determines the manner in which members of the executive body of a capital company are employed and, on the other hand, the Labour Law requires the conclusion of an employment contract if no other civil law contract has been concluded. From the point of view of legal theory, it is clear that in the event of a conflict, the special rule applies over the general rule.
It is not necessary to conclude an employment contract with a member of the Management Board in order to establish an employment relationship with him, although this right is provided for by the Labour Law, and it is not necessary to conclude an employment contract with him in order to determine his remuneration, but a resolution of the meeting of members or of the Supervisory Board is sufficient. It follows that the Commercial Law (and other special laws and regulations governing commercial law), and not the general provisions of the Labour Law, apply to members of the board of directors of a capital company.
In its judgment of 19 October 2005 in case No SKC-653, the Senate of the Supreme Court concluded that “If there is no employment relationship but a member of the Management Board is entitled to act on behalf of the company, it is sufficient to have an authorisation agreement whereby one party undertakes to perform a certain task for the other, and the principal undertakes to recognise the principal's actions as binding on him pursuant to Article 2289 of the Civil Code. In the present case, the mandate agreement is the decision of the members” meeting to elect (appoint) A.B. as a member of the Management Board and A.B.'s agreement to be a member of the Management Board of the company."
Although the legal relationship of each member of the Management Board with the company is established on the basis of a mandate agreement, in view of the freedom of contract, the company may also regulate its legal relationship with a member of its Management Board on the basis of another civil law agreement, including an employment contract pursuant to Article 44(3) of the Labour Law. In the event of a dispute as to the nature of the contract concluded, in accordance with the established practice of the Senate of the Supreme Court, the expressed intention of the parties will be taken into account and the provisions contained in the contract will be assessed, and if the company has agreed with the member of the management board on terms which are typical of an employment relationship, such as the granting of leave, the contract may also be recognised as an employment contract.
So, summarising the above, I conclude that board members are not obliged to have employment contracts. But if a member of the Management Board has an employment relationship (in the legal situation in question, the member of the Management Board also holds the post of doctor) with fixed working hours, obedience to the employer's orders, regular remuneration and other features that are indicative of an employment relationship, then, of course, an employment contract for the work of a doctor must be concluded in this case. Alternatively, in this case, a single employment contract may be concluded with the additional job of member of the management board. In other words, there must not be two contracts of employment with the same employer. In the present case, a contract of employment as a doctor would probably suffice.
