The Judgment dated the 9th of March 2022 passed by Chamber 4 of the employment tribunal of the Supreme Court (ECLI:ES:TS:2022:1005) analysed the nature of the relationship between a self-employed person carrying out financial and economic consultancy services, as well as functions as a partner and board member (hereinafter referred to as the “Appellant”) of a limited liability Company (hereinafter referred to as the “Company”).
The Supreme Court based its conclusions on the case background and legal grounds set forth below:
Background
- On the 1st of March 2011 the Appellant concluded a services agreement with the Company for rendering financial advice services in exchange for a fixed monthly remuneration.
- He was registered as self-employed with the Social Security administration from said date.
- On the 17th of January 2012 he was granted a general power of attorney which was withdrawn on the 20th of April 2015, and new powers of attorney were granted to the Appellant on said date.
- On the 12th of June 2015 the Appellant was appointed board member.
- On the 10th of October 2016 he acquired 18% of the company membership interests.
- On the 30th of August 2017 he was notified of the minutes of a Board meeting wherein (i) his powers of attorney were revoked; (ii) the services agreement was terminated; (iii) he was prohibited from entering into the head office of the company and its other business premises; (iv) his cards and working tools were withdrawn.
- On the 12th of December 2018 the employment tribunal of the Supreme Court of Justice of Castilla La Mancha passed a judgment confirming the one passed by the lower Court, which rejected the dismissal action filed by the Appellant against the Company, on the understanding that a labour relationship did not exist.
Legal grounds
The Appellant sustained the existence of a labour relationship and brought forward a contrasting judgment passed by the employment tribunal of the Supreme Court of Justice of Castilla La Mancha in which:
(i) likewise, it dealt with a legal action brought forward against a Company;
(ii) the same Board agreements were appealed against;
(iii) it was mentioned that the affected party was also a member of the Board, had powers of attorney as a joint director and was the holder of 19% of the company capital; and
(iv) the professional category was that of a commercial agent, commercial functions were performed, as well as management and client maintenance functions and the affected party was registered in the Special Regime for Self-Employed Employees (RETA – Régimen Especial de Trabajadores Autónomos).
In the proceedings in which this judgment was handed down, the court of first instance had partially upheld the claim for disciplinary dismissal, deeming that a labour relationship existed, which was confirmed by the Chamber, arguing that the condition of partner was not decisive and that a fixed amount was received each month for providing services, which lead to the understanding that the relationship was of a labour nature, and there was no record that tasks of representation and management of the Company had been carried out.
In the case in question, the Chamber focused on the issue of determining whether the relationship maintained by the Appellant was of a labour or commercial nature. For such purposes the Judgment passed by the same Chamber on the 28th of September 2017 which explained that the exclusion of the labour relationship of partners who perform other tasks (as well as the partner’s own tasks) may derive from:
(a) insufficient non-involvement (50% or more of the company capital); or
(b) the lack of dependence in the case of persons who form part of the highest management body of the company, “the typical function of these persons being the representation and the highest management of the company, when the relationship does not derive from an employment contract, but instead from appointment by the highest governing body, thus the relationship is of a commercial nature”.
In order for these persons to have a labour relationship, they must carry out common and ordinary work. If, at the same time, they carry out duties corresponding to the post of board member and top management positions (Manager, General Manager) “the dual relationship has the sole purpose of the supreme management and administration of the company, that is to say that the post of director or board member in itself includes the very functions of senior management”.
The Chamber states that what determined the qualification of the relationship as either commercial or labour is not the content of the functions, but the nature of the relationship, so that if there is a relationship of organic integration, the relationship is not a labour one, but a commercial one, and only in cases of employment relationships under a dependency regime that are not of a senior management type, but instead a common type, would it be possible to allow the simultaneous performance of management tasks and an employment relationship.
Conclusion
The Chamber concluded that the activity carried out by the Appellant consisting of the performance of tasks inherent to those of a board member and management should be classified as commercial, given the existence of the relationship of organic integration in the company management.
Mireia Bosch
Vilá Abogados
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1st of July 2022
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