Are the members of the administrative body employed again?

For years, the theory of the double bind has been discussed, according to which a member of the administrative body who simultaneously performs executive functions has a commercial relationship with the company and not a labor relationship (see, among others, the ST of the Supreme Court of 9 December 2009 or December 26, 2007).

This criterion, although it has multiple exceptions, is the criterion unified by the doctrine of the T.S. That is to say, the commercial link absorbs and nullifies the employment link, with the consequences of all kinds that derive from it.

With regard to this debate, the CJEU has ruled on a case brought by the Czech courts, where "a director of the company who is additionally a member of the administrative body must be protected as an ordinary worker in his remuneration rights in the event of insolvency of the company".

However, the reading of the aforementioned sentence is more technical than a brief headline supports, an issue that leads us to conclude that it will not imply by itself the immediate turn in the jurisprudence of the T.S. in Spain on double bind theories. In any case, we continue to recommend the usual: "in cases in which a member of the administrative body performs executive functions, it is essential to have a contract that guarantees rights in the event of termination" (shielding). The opposite will imply assuming constant concern and uncertainty for both the company and the manager himself, concerns that often end up in litigation.

Without wishing to be exhaustive, we will try to summarize some issues:

1. PURPOSE AND CONTENT OF THE DIRECTIVE. - Community Directive 2008/94 is intended to guarantee workers' credits in the event of business insolvency. In other words, it does not comment on many other debates related to the definition of the link.

2. EXCEPTIONS IN THE APPLICATION OF SAID WARRANTY.

3. CONTROVERSY OVER THE MEMBERS OF THE MANAGEMENT BODY WHO PERFORM EXECUTIVE FUNCTIONS.

The critical point judged focuses on determining whether this group (with a commercial relationship according to the consolidated criterion of the T.S.), has its labor rights guaranteed or not in the event of business insolvency.

The CJEU clarifies that what is essential is to determine whether or not said group is responsible for the insolvency, differentiating the cases. In the case of Directors who may be considered "owners" or have effective control of the company, it may be considered a general presumption of liability in insolvency and, consequently, they will not be protected by the guarantee in the event of insolvency. On the contrary, when these Directors are subject and subordinated to the majority criteria of the rest of the company, they must have the same protection as an ordinary worker in the event of insolvency.

4. NEW QUESTIONS THAT REMAIN IN THE AIR. - The Community Directive and the CJEU say what they say. From there, multiple controversies will continue to exist:

5. CONCLUSIONS AND RECOMMENDATIONS. - In short, we continue with the recommendation that we have been making for many years: "given the uncertainty of this group, formalize a contract in accordance with article 249.3 of the LSC and collect the guarantees in case of extinction (shielding).