No special reasons required (unless otherwise specified within the statute of the company or the contract itself).
Where the managing director has a service agreement, the provisions of that service agreement (and consequently the Croatian Obligations Act) will apply.
If the managing director is a member of the management board according to the statute of the company (and not only appointed by resolution of the shareholders), the company statute may set out that revocation is only possible for special reasons.
In Peru, directors do not qualify as employees, so they can be removed from their position without observing any legal formalities, except as provided for in the company’s bylaws. However, if a director is also in charge of the management of the company, he is considered an employee and in this case the legal provisions regarding the dismissal of employees must be observed.
Managers and managing directors who have passed the probationary period can be dismissed (i) for fair reasons, in which case it is necessary to follow the dismissal formalities applicable to all employees in general or (ii) via a vote of no-confidence (without invoking a fair reason), in which case the person in question has the right to receive compensation for unfair dismissal.
Regarding the dismissal of managers, the following should be taken into account:
- If the employee was hired from the beginning as a trusted employee or to occupy a position classified as an executive one (someone who works in direct contact with managers and who has access to confidential information belonging to the company) and is dismissed without fair reason, they will be entitled to receive compensation for unfair dismissal.
- If the manager was initially hired to fill a non-executive position or position of trust, attains a management position and is then dismissed without fair reason, the person has the right to choose whether to claim reinstatement in the last position not qualified as an executive or trust position, or to receive compensation for unfair dismissal.
Despite the provisions in law, the Supreme Court recently established jurisprudential criteria for the rights of management or trusted employees upon dismissal via a vote of no confidence that differs from the Law:
- For those employees who directly entered into an executive position or position of trust, the compensation payment for arbitrary dismissal does not need to be paid if their employer terminates the employment relationship via a vote of confidence.
- For employees who initially began their employment in a position in which they performed common or ordinary functions, and subsequently acceded to an executive position or a position of trust, they are entitled to receive compensation for arbitrary dismissal if (i) their employer prevents them from taking up their former position after the withdrawal of confidence; or (ii) if the employee himself decides not to take up his former position again.
It is important to point out that these criteria do not formally constitute binding precedents of mandatory application. However, in practice they are applied to judicial instances. This should be taken into consideration when negotiating the termination of employment agreements.
It is also important to bear in mind that a few months ago the Government published a draft supreme decree to modify the regulations of the Law on Labor Productivity and Competitiveness, in which, among other things, the right to compensation for arbitrary dismissal corresponds to any employee dismissed without justification, including management and trust workers. If this regulation is approved, judges would be forced to apply it.