Negotiations of a legal entity with a collective statutory body with employees
The Supreme Court has recently investigated a legal question which has not been settled in decision-making practice so far, namely the registration of the authorisation of a member of a collective statutory body of a legal entity towards employees. Legal entities with a collective statutory body, i.e. in particular the Board of Directors of a joint stock company or agents forming a committee of directors within a limited liability company, should pay due attention to the following rules with regard to action against employees.
The rules do not apply to legal entities with more individual statutory bodies. Firms with a collective statutory body that have employees should take the following steps:
- appoint one member of the statutory body to act for the body when acting against the employees
The statutory body decides about this appointment at its meeting; the appointment can also be, e.g., included in the founding legal proceedings.
The appointed member represents the company in all legal actions against the employees. Other members of the statutory body are not allowed to act against the employees. A general restriction of the line of action (e.g. the principle of four eyes) will not be applied.
The statutory body can delegate labour issues to other persons, e.g. employees. They will then be appointed to carry out legal actions for the legal entity against the employees in addition to this appointed member.
- enter the appointments into the trade register;
- where appropriate, adjust the internal procedures or documents
If an appointment is not issued, this responsibility is then carried out by the chairman of the statutory body.
Although it may seem that this is just a formality, the failure to comply with these rules can have far-reaching consequences – e.g. an incorrectly signed notice can be contested for its non-validity. You can also imagine possible penalties for failure to comply with the written form of a contract, etc.
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