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CEOs eliminated from Labor Code
22.04.2016
The Ministry of Justice will make amendments to the Labor code, stating that the companies’ contracts with their CEOs shall be mainly governed by the Civil Code. It will allow to recover full damages from directors - all disputes under such contracts will be resolved by arbitration courts.
The amendments are caused by the necessity to eliminate collisions between the Civil and Labor Codes concerning jurisdiction, lack of proper regulation of options, and damage recovery. Labor disputes with a director can be resolved by general jurisdiction courts, and corporate disputes with his participation - by arbitration courts. The “golden parachute” issue in case of their dismissal or resignation is not elaborated in the Labor Code, currently they may be cancelled by court, partner of YUST Law Firm Alexander Bolomatov told Kommersant newspaper. As an example, he referred to the dispute between ex-CEO of Rostelecom Alexander Provotorov and his former employer.
Besides, the explanatory note mentions that courts often question the possibility to recover damages from a director in full. There is another inconsistency: the Labor Code prohibits dismissal of a director during sickness, while the Civil Code does not include such limitations, Alexander Bolomatov mentioned.
The project seems fragmented and undeveloped, there are many concepts of director’s liability that should be discussed before their implementation, Alexander Bolomatov thinks, insisting on public discourse, the final word in which shall rest with the business community.
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The amendments are caused by the necessity to eliminate collisions between the Civil and Labor Codes concerning jurisdiction, lack of proper regulation of options, and damage recovery. Labor disputes with a director can be resolved by general jurisdiction courts, and corporate disputes with his participation - by arbitration courts. The “golden parachute” issue in case of their dismissal or resignation is not elaborated in the Labor Code, currently they may be cancelled by court, partner of YUST Law Firm Alexander Bolomatov told Kommersant newspaper. As an example, he referred to the dispute between ex-CEO of Rostelecom Alexander Provotorov and his former employer.
Besides, the explanatory note mentions that courts often question the possibility to recover damages from a director in full. There is another inconsistency: the Labor Code prohibits dismissal of a director during sickness, while the Civil Code does not include such limitations, Alexander Bolomatov mentioned.
The project seems fragmented and undeveloped, there are many concepts of director’s liability that should be discussed before their implementation, Alexander Bolomatov thinks, insisting on public discourse, the final word in which shall rest with the business community.
Read more