Top Managers In Slovak Companies: Employees, Directors Or Both?

• Law Firm: Kinstellar
• Subject Matter: Corporate/Commercial Law, Employment and HR, Corporate and Company Law, Contract of Employment
• Author: Mr Adam Hodoň and Matú' Kočí'ek
• Published date: 13 March 2023

This article refers to situations where a director of a Slovak company (i.e., a person appointed to be the statutory representative) is in parallel engaged as an employee, occupying a senior management position such as CEO, CFO, COO, etc., in the same company. These situations are relatively common in Slovakia, but they bring more practical and legal challenges than the company might expect.

Employee

Employment relationships are regulated by the Slovak Labour Code. In an employment relationship, the employee performs for the employer (the company) so-called dependent work characterised by the employer's authority and the employee's subordination.

Employment has the following main features:

• work is carried out personally by the employee for the employer,
• the employer gives instructions to the employee,
• the employee performs work on behalf of and for the benefit of the employer, and
• work is carried out during working hours and at the workplace determined by the employer.

Director

The common term "director" refers to an individual statutory representative or a member of a statutory body of a Slovak company (typically the so-called (in Slovak) konateľ or člen predstavenstva), i.e., an individual who is by law entitled to represent the company. The director's position and duties are regulated by the Slovak Commercial Code. Different to employment, the relationship between the company and a director is in principle a commercial relationship of equal parties. A director is typically appointed and removed by shareholders. Under Slovak law, the director acts on behalf of the company externally, i.e., represents the company vis-a-vis third parties and is also fully responsible for the management of the company "internally", i.e., for the operational and strategic decisions in managing the company's business.

A director's relationship with the company is based on a written "contract for performance of the office" (in Slovak zmluva o v'kone funkcie), which requires the approval of the general meeting. If no such specific contract is signed (which often happens in practice), the relationship is governed by the provisions of the Commercial Code in respect of mandate contracts, i.e., there is a "deemed mandate contract" between the director and the company. The application of other laws, in particular the Labour Code, on such relationship is excluded.

Based on the above, the director's function cannot be performed under an employment contract. Such employment contract...