The Senior Manager’s contract and its peculiarities

Regulation of the Senior Management contract

The employment relationship of the Senior Manager is a special relationship as established in art. 2.1.a) of the Workers’ Statute, except when their activity is limited, purely and simply, to the mere performance of the position of director or member of the administrative bodies in companies that have the legal form company and provided that their activity in the company only entails the performance of tasks inherent to such position, in which cases it will be necessary to attend to civil and commercial regulations.

The employment relationship of Senior Management is expressly regulated in the Royal Decree 1382/1985, of August 1, therefore the common rules of the Statute of Workers and Collective Agreements, except in those aspects on which express reference is made in the contract.

The fact that it is considered a relationship of a special nature is given by the special circumstances surrounding your job, which is none other than the special trust that unites a businessman and a Senior Manager, derived from the unique position that the latter assumes in the field of the company in terms of faculties and powers.

The essential note of mutual trust has caused the legislator to give the parties special room for negotiation when it comes to regulating their working conditions.

Thus, the rights and obligations of the Senior Manager will be regulated mainly by what was agreed between the parties, always within the limits of the special regulations that is applicable and subject to the requirements of good faith.

The Royal Decree that regulates the Senior Management contract establishes a mere scheme or precepts of minimum rights that will be applied in case of not reaching any agreement.

Due to this freedom of agreement between the parties, the advice of a lawyer specializing in Senior Managers, in order not only to negotiate its terms, but also to draft the clauses that may later have to be interpreted by a court.

The Senior Manager’s contract and its peculiarities

Then we will present the main aspects of the Senior Management contract:

What is a Senior Manager?

First of all, we must be clear that we are really dealing with a Senior Manager, since the fact that the parties enter into a contract of these characteristics does not imply that said regulations apply. That is, the relationship is what it is, not what the parties want it to be.

In this sense, senior management personnel are considered:

“to those workers who exercise powers inherent to the legal ownership of the Company, and related to its general objectives, with autonomy and full responsibility only limited by the criteria and direct instructions emanating from the person or from the higher governing and administrative bodies of the Entity that respectively occupies that ownership.”

Characteristics of the Senior Management contract

It must be formalized in writing and in duplicate, one for each signatory party. In the event that there is no written contract, the relationship will be considered to be Senior Management as long as it holds the previously mentioned functions.

Trial Period for Senior Managers

The trial period may be set at the free will of the parties, but in no case may it exceed 9 months.

Term of Senior Management contract

The special employment contract will have the duration agreed upon by the parties. In the absence of a written agreement, it is presumed to be held for an indefinite period of time.

Work time

Freedom of fixation is established within the contract in relation to the working day, hours, holidays, permits and vacations, although agreements that significantly exceed those considered usual or customary within the professional field in which it is carried out.

Non-competition and permanence agreement

Unless expressly authorized, the Senior Manager may not enter into other contracts with other companies. On the other hand, in the case of a post-contractual non-competition agreement, in which case it must be indicated in the contract, this can never be more than 2 years and there must be a business interest in signing it and financial compensation.</p >

Termination by the will of the Senior Manager

The Senior Manager may terminate his employment contract without cause with a 3-month notice, unless the parties have agreed to another type of notice that may not exceed 6 months

In the event of a serious breach by the employer, substantial changes in working conditions or succession of the company, he shall have the right to terminate his contract without prior notice and with the right to the indemnities established in the contract and, failing that, in the applicable regulations.

Termination by the will of the employer

The Senior Manager may have his contract terminated by the employer as a mere withdrawal without cause, with a 3-month notice, unless the parties have agreed to another type of notice which may not exceed 6 months.

Likewise, the employer may dismiss the Senior Manager for disciplinary reasons for serious and culpable breach or for other causes included in the Workers’ Statute.

Extinction by the will of the employer has several peculiarities that were already explained in another of our articles (Read: Extinction of the contract of the Senior Manager by will of the employer) , as well as the corresponding compensation.

Penalty regime (faults and sanctions)

The Senior Manager may be penalized for non-compliance with the obligations derived from this special relationship, under the terms agreed in the contract.

Conclusions

The notes described here are the main characteristics that Senior Management contracts have in accordance with the Royal Decree that regulates them, although we must take into account that each point has its nuances and its casuistry, so correct advice at the time of drafting the contract is key to avoiding future setbacks.