Employment relationship theories: Link Theory. When is a contract an ordinary job? When is it Senior Management? When is it commercial? Evolution in times of crisis
It is very common in acquisitions to warn of contingencies arising from a defective legal relationship of the management team with the Company that is the object of the transaction.
Senior Management Contracts
Regarding the termination of senior management contracts, a relevant practical issue arises since they do not have the written form “ad solemnitaten” but “ad probationem” (since the relationship can be proven, whether or not there is a written contract) and it is often necessary to define when we are facing a common labour relationship or an employment relationship of senior management staff and when it is a member of the Board of Directors.
Contracts of Senior Management and Commercial Contracts
There are times when there is a concurrence of tasks in which a senior manager in turn plays a position of administration. The problem occurs in the different labour regime they have; an administrator has a business relationship and a senior manager has a regime of special labour. The consequences of this is that having a different labour regime should be included in the self-employed regime.
Employment relationship theories: Functional Theory and Link Theory
This problem has been solved in different ways throughout history. The Fourth Chamber of the Supreme Court in its judgment of September 29, 1988, the so-called Huarte ruling, had established the so-called “functional theory”: it was necessary to analyze, on a case-by-case basis, the most relevant function performed, when several functions concurred, or as was said in the sentence: “it is necessary to insist, therefore, that the foundation of the exclusion of the labour scope is not in the class of functions performed by the subject, but in the nature of the link under which he or she performs them. Or said in this way, for the concurrence of the employment relationship of a special nature mentioned, it is not enough that the activity performed happens from the senior office, as defined by the regulatory precept, but to make them a worker, as the same precept mentions, and not a counsellor in the performance of their position.”
Link Theory, one of the most common employment relationship theories
At present, the thesis followed is the so-called “link theory” in such a way that it is completely incompatible, holding at the same time the condition of senior management and being a company administrator, so the commercial link held by the administrator absorbs the labor link that the senior manager could have (who is also an administrator.) STS (4th Room) December 9, 2009.
There are statutes that foresee this situation by differentiating both scopes and even sentences that admit this double bond (STSJ Catalonia of July 7, 2005, STSJ Madrid of June 17, 2005, STSJ of Asturias of December 23, 2004, STSJ Castilla y León (Valladolid) of April 29, 2003, the STSJ País Vasco of July 18, 2006 and the STSJ Madrid of June 6, 2006 …)
STJ Madrid December 19, 2012
According to the judgment of the Superior Court of Justice of Madrid of December 19, 2012 which reads as follows:
“The decision of this Chamber of December 9, 2009 (RJ 2010, 1182), recourse 1156/2009, has examined the situation that occurs when a worker, joined to the company by a special senior management relationship, happens to play a corporate position, as a member of the Board of Directors.
The sentence reasons: “As you remember the sentence of 22-12-94 (RJ 1994, 10221) (rec 2889/1993), when interpreting art. 1.3.c) of the Workers’ Statute (RCL 1995, 997), “It must be borne in mind that the activities of management, management, administration and representation of the company are the typical and specific activities of the administrative bodies of the companies. merchants, whatever the form they may be, whether it is a Board of Directors or a sole Administrator, or in any other manner permitted by law.
For this reason it is wrong and contrary to the true essence of the administrative bodies of society to understand that they must be limited to carrying out purely consultative functions or simple advice or guidance, because, on the contrary, they are responsible for the performance direct and executive, the exercise of management, direction and representation of the company. Therefore, all these actions involve “carrying out inherent tasks” to the status of administrators of the company, and fully fit in the “performance of the position of director or member of the administrative bodies in companies that have the legal form of society “, which is why they are included in the aforementioned article 1.3, c) of the Workers’ Statute.”
Ordinary Labour or Senior Management
Regarding the distinction between a manager (common labour relationship) and personnel of senior management, Additional Provision 27 of the LGSS that uses as a parameter the effective control of the company and understands that a person holds it, when it holds half of the share capital without that fits proof to the contrary (iuris et de iure).
On the contrary, there will be presumption – iuris tantum – when a group holds 50% or holds 33%, or 25% and also holds management functions.
Judgment of the Superior Court of Justice of Catalonia of December 18, 2012
“The decision of this Chamber of July 5, 2012 (JUR 2012, 297073), which makes a brilliant review of jurisprudential doctrine in the face of analogous assumptions to which we are concerned that:
“A constant jurisprudential doctrine has been sanctioning the lack of work in the relationship of the partners of a company that perform other tasks different from those of their own as a partner due to the lack of the note of alienation and when said partner holds the ownership of a determining societary fee so that the work that can be performed is carried out as a contribution to society. This case is understood to be concurrent when the participation quota exceeds 50% of the share capital (STS 12/26/07).”