Dismissal of the general director of a joint stock company

Basic rules for dismissing a director

Upon dismissal of the general director, an extraordinary meeting of company participants is convened with a summons to terminate the employment contract.
However, this issue can be raised among others at the scheduled regular or extraordinary meeting. You also need to issue an order to terminate the employment contract and familiarize the general director with it. The remaining technical stages in the process of dismissing a director are standard: making an entry in the work book and personal card, calculations, handing out the work book. There are several situations in which it is impossible to terminate an employment contract with the general director:

• if the manager is a pregnant woman, the exception is liquidation of the company (Part 1 of Article 261 of the Labor Code of the Russian Federation);
• if the manager belongs to the category of persons named in Part 4 of Art. 261 Labor Code of the Russian Federation;
• during a period of temporary disability or the director is on vacation, with the exception of liquidation of the organization (Part 6 of Article 81 of the Labor Code of the Russian Federation).

When a director cannot be fired

Secondly, according to Art. 81 of the Labor Code, it is impossible to dismiss a director, like any other employee, during vacation or temporary disability (an exception here would be the liquidation of an organization or the termination of the activities of an individual entrepreneur). Despite all the illogicality of this rule regarding the change of management body, its failure to comply entails the illegality of dismissal (clause 50 of the Resolution of the Plenum of the Supreme Court of the Russian Federation dated March 17, 2004 No. 2). This position of the Supreme Court deserves criticism, since the literal interpretation of the articles of the Labor Code does not allow dismissal to be attributed to clause 2 of Art. 278 of the Labor Code of the Russian Federation to the termination of an employment contract at the initiative of the employer, namely, these guarantees apply, and the Supreme Court allowed a broad interpretation. In practice, this creates serious problems for the owner in the event of a conflictual dismissal of a director, who only needs to have a sick leave certificate “just in case” on the date of the decision to dismiss him.

In the future, we can predict the emergence of disputes where the basis for challenging the dismissal of a manager will be based on discriminatory motives. Here, the courts will also have serious problems, but so far this kind of basis for disputes is not common in Russia.

Dismissal of a director at the initiative of the owner

Since the general director is an employee of the company, his relations with the owners are regulated by labor law. Accordingly, when dismissing a director, it is important for owners to coordinate their actions with labor legislation.

In addition, the general director is a person with whom relations are regulated by corporate law. And this should also be taken into account.

An employment contract with the general director at the initiative of the owner can be terminated due to several circumstances:

• If there is a change in the owner of the company (clause 6 of article 77 of the Labor Code of the Russian Federation). The norm does not apply to cases where the composition of participants simply changes, as well as to reorganization in the form of affiliation.
• If a transformation of society has occurred, that is, the organizational and legal form has changed (division and separation). In this case, the owners may decide that it is necessary to terminate relations with the general director without indicating the reasons for dismissal.
• If by his actions the director caused damage to the interests of society (clause 9 of article 81 of the Labor Code of the Russian Federation).

• If the director grossly violated his job duties one time (Clause 10, Article 81 of the Labor Code of the Russian Federation).

Dismissal of a director due to a change in property ownership

The new owner of the property has the right, no later than three months from the date the right of ownership arises, to terminate the employment contract with management persons.

Having decided to terminate the employment contract with the general director, the owner must pay him compensation in the amount of no less than three times the average monthly salary (Article 75 of the Labor Code of the Russian Federation).

Dismissal due to damage caused by the actions of an official

In paragraph 9 of Art. 81 of the Labor Code of the Russian Federation defines a closed list of actions that can cause damage. According to the totality of labor law norms, in this case any actions that may be grounds for termination of an employment contract with an official are recognized. But such a procedure is quite complicated, since the fact will have to be proven. In particular, it will be necessary to conduct an internal investigation, demand explanations, etc.

Auditors, external consultants who conducted an analysis of economic and financial activities, as well as employees of the company can testify to the infliction of property damage by some decision of the general director. In this situation, it will be sufficient if the employee sees in the actions of the official a violation of the interests of society and informs the employer about this in writing. Based on the message, a decision is made to order an internal audit, an order is issued to create a commission, the issues that this commission will consider, as well as the facts and circumstances that it must establish, are determined.

Upon dismissal under Art. 81 of the Labor Code of the Russian Federation, it is necessary to remember that all decisions that entail a violation of the safety of property or its unlawful use are methods of disciplinary action. Dismiss the director under clause 9, part 1, art. 81 of the Labor Code of the Russian Federation is possible if two conditions are simultaneously met:

1. If the decision was made by the director unreasonably or beyond his competence, without a proper analysis of the situation, based on incomplete data, on an emotional level.
2. If the decision should entail negative consequences in the form of violation of the safety of property, its unlawful use or other damage to the organization’s property (clause 48 of the Resolution of the Plenum of the Armed Forces of the Russian Federation dated March 17, 2004 No. 2).

How can the owner find out that the general director has committed a violation regarding the safety of property? One of the employees can tell him. But often owners learn about this from consultants’ reports.

Dismissal of a director due to a single gross violation of labor duties

It happens that the general director falls under the provisions of clause 10 of Art. 81 Labor Code of the Russian Federation. According to the owners, a gross violation can be any violation of duties that are named in the employment contract. For example, the director must agree on the candidacy of an acting director during his absence. If he forgot to do this, it means he grossly violated the provisions of the employment contract.

A serious violation may be considered failure to submit required reports on time or failure to meet indicators that are named in the employment contract as responsibilities. It is worth noting that clause 10, part 1, art. 81 of the Labor Code of the Russian Federation applies only to managers and deputy managers.

Since dismissal on the grounds specified in Art. 81 of the Labor Code of the Russian Federation is a disciplinary sanction, then in order to register this sanction in the work book as a basis for terminating an employment contract, the employer will have to prove the fact of a disciplinary violation. To do this, it is necessary to conduct an internal investigation.

Algorithm for conducting an internal investigation

• An official investigation can be initiated on the basis of a report, inventory results, etc.
• An order must be issued to create a commission to conduct an investigation (it indicates the names of the commission members, their positions, purpose, date of creation, validity period, powers).
• All members of the commission must familiarize themselves with the order.
• Acts and other documents are drawn up during the investigation, and a final act is prepared based on the results of the internal investigation.
• The manager must familiarize himself with the acts.
• A written explanation is taken from the manager.
• An order is issued to apply a disciplinary sanction, which the manager must familiarize himself with.

It is important to remember that two disciplinary sanctions cannot be applied for gross violations of an employment contract. You will have to decide what disciplinary action to take.

Payment of compensation to a dismissed director

The amount of monetary compensation that is supposed to be paid to a director upon dismissal depends on:

• From the conditions specified in the employment contract;
• From the circumstances under which the manager leaves the company. Naturally, if the director is clearly at fault, he will not be awarded bonuses;
• It depends on the availability of terms and conditions of additional agreements concluded between the parties during the work process.

The amount of compensation depends on:

1. From the time actually worked at the enterprise;
2. The time remaining until the end of the employment contract is taken into account;
3. Based on the amounts that he would receive if he continued to carry out his work duties;
4. Additional expenses that the manager will incur in case of early dismissal.

Compensation paid upon dismissal is not subject to personal income tax. It is equal to the average monthly salary, taken three times.

However, if the employment contract does not contain any conditions for the payment of compensation to the dismissed manager, this does not mean that the LLC is exempt from paying it. If no illegal actions were established in the director’s actions, then the employer is obliged to pay the amounts due. You should remember that a dismissed employee retains the right to go to court, and he may decide to be reinstated.

Possible problems during the dismissal process and ways to solve them

1. During the one-month period of notice of dismissal, a new candidate for the position of head of the LLC was not found.

In this case, the “old” director has the right to again convene a general meeting of participants to decide on the transfer of affairs.

The general meeting of LLC participants may instruct one of the participants to take over the affairs of the resigning director by signing a corresponding act with him.

2. The notice period for dismissal has expired, the LLC participants have been duly notified, and the corresponding decision of the general meeting of LLC participants has not been made.

In this case, the “old” director, on the basis of Art. 80 of the Labor Code of the Russian Federation may stop performing his labor duties.

He can also independently make a record of dismissal in his work book, guided by clause 45 of the Rules for maintaining and storing work books, producing work book forms and providing them to employers, approved by Decree of the Government of the Russian Federation No. 225 of April 16, 2003.

3. Transfer of LLC documents to the new general director is impossible for some reason.

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In this case, depending on the specific situation, the general director may:

• submit documents to a notary for safekeeping on behalf of the organization;
• on a contractual basis, transfer documents to an archival institution for storage, providing for the possibility of return at the request of the society;
• store documents yourself.

Payments upon dismissal

As mentioned above, in case of forced dismissal (except for cases where the former manager committed gross violations), the director of the LLC is entitled to compensation in the amount of at least three times the average monthly salary.

The specified compensation can be paid:

• in full on the last working day of the General Director, together with all other payments due to him (for example, wages);
• in parts, for example, partly immediately, partly after dismissal, if such a possibility is provided for in the LLC documents.

Dismissal of a manager on the basis of Art. 278 Labor Code of the Russian Federation

1. Situation No. 1: The company is introducing bankruptcy proceedings (clause 1 of Article 278 of the Labor Code of the Russian Federation)

The decision to remove the manager from office in this case is made by the arbitration court. The following may apply for the removal of the head of a debtor organization from office: a temporary manager, a meeting of creditors, an administrative manager, or persons who provided security.

Key points for this situation:

• The basis for issuing the order is the ruling of the arbitration court on the removal of the head of the organization from office.
• The last day of work is the day when the owner of the organization’s property became aware of the entry into force of the court’s ruling.
• The director is not paid severance pay (with the exception of cases where such payment is provided for in an employment contract or other local regulatory act of the organization).

2. Situation No. 2: The authorized body of the legal entity decided to terminate the contract (clause 2 of Article 278 of the Labor Code of the Russian Federation)

An employment contract with a director may be terminated by a general meeting of shareholders or the board of directors. Dismissal of the head of the organization on the basis established in clause 2, part 1, art. 278 of the Labor Code of the Russian Federation, can happen at any time and without specifying motives.

Registration scheme using the example of dismissal of the general director of an LLC at his own request

In part, this process, as with the dismissal of an ordinary employee, comes down to agreeing on the decision to dismiss, recording it properly in the administrative document, the work book of the dismissed person, as well as issuing a calculation.

But, since we are still talking not about an ordinary employee, but about the general director, the typical dismissal scheme acquires new components. Thus, the founders take part in making decisions and actually formalizing the dismissal. And their final decision requires making appropriate changes to the Unified State Register of Legal Entities. The procedure for entering information about dismissal in the work book is also somewhat different.

The final payment to the general director is made as standard on the day of dismissal. The payment includes: salary due, compensation for unused annual leave, benefits (if applicable).

Dismissal at the initiative of the General Director

The manager has the right to terminate the employment contract early, but he must notify all owners of his intention to resign, in writing and no later than one month in advance (Article 280 of the Labor Code of the Russian Federation). Letters are sent to all founders, owners, shareholders according to the register, with notification of delivery. In the letters, the director asks to convene an extraordinary meeting with a summons to terminate the employment contract. The procedure for transferring affairs and property is determined in advance so that the owner does not initiate arbitration processes.

If a manager resigns at his own request, he is not paid monetary compensation in an amount not less than three times his average monthly salary.

Dismissal of the director due to the expiration of the employment contract

Since the executive body is appointed for three or five years, the powers of the director may be terminated due to the expiration of the contract. In this situation, dismissal is carried out in the general manner - the same as in the case of ordinary employees. However, the director must be warned by the employer (company owner) no later than three days before the expiration of the employment contract.

The employer sends the employee a corresponding notice, which is signed by him or an authorized person (for example, the head of the human resources department).

Next, a dismissal order is issued, a corresponding entry is made in the work book (Part 4 of Article 66 of the Labor Code of the Russian Federation) and a calculation is made.

Documenting

To terminate an employment relationship with the general director (regardless of the basis), a decision of the owner of the organization’s property or the relevant authorized body is required. In joint stock companies, this is, as a rule, a general meeting of shareholders or a board of directors (supervisory board) (clause 3 of article 69 of the Law of December 26, 1995 No. 208-FZ). In limited liability companies - a general meeting of participants (subparagraph 4, paragraph 2, article 33 of the Law of February 8, 1998 No. 14-FZ). Document the decision to terminate the employment contract with the general director in a protocol.

Based on the decision, issue an order for the dismissal of the general director using the unified form No. T-8 (Resolution of the State Statistics Committee of Russia dated January 5, 2004 No. 1).

Fill out the work book as follows. In column 3 of the “Work Information” section, make an entry about the reason for dismissal with reference to the article of the Labor Code of the Russian Federation. In column 4, indicate the details of the minutes of the general meeting or the decision of the sole founder, on the basis of which the general director is dismissed. This follows from paragraph 5.1 of the Instructions, approved by Resolution of the Ministry of Labor of Russia dated October 10, 2003 No. 69. Certify the record with the seal of the organization.

There are similar explanations in the letter of Rostrud dated March 11, 2009 No. 1143-TZ.

Example of formalizing the dismissal of a CEO

General Director of Alfa JSC A.V. Lvov was fired due to the adoption by the general meeting of shareholders of a decision to early terminate his employment contract. The decision was formalized in a protocol.

It happens that a company has one founder (participant, shareholder). This is especially true for LLCs. How to formalize dismissal in this case?

The general procedure applies. That is, you need to issue a dismissal order and fill out a work book. Only instead of a protocol, the decision of the sole shareholder (participant) is drawn up.

This follows from subparagraph 4 of paragraph 2 of Article 33 and Article 39 of the Law of February 8, 1998 No. 14-FZ.

What guarantees can a director count on upon dismissal?

First of all, compensation is provided in the form of three times the average monthly earnings (Article 279 of the Labor Code of the Russian Federation). However, as noted above, there are cases when this compensation is not paid - upon dismissal as a result of bankruptcy of a legal entity, upon expiration of the contract and at the request of the employee.

Compensation must be paid if the owner of the organization’s property changes (Article 181 of the Labor Code of the Russian Federation). At the same time, simply a change of company participants does not constitute a change of property owners.