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Employment of a General Director: What a Company Needs to Know

By Salans, Associate, Maria Landau, Alexandra Bludyan Employing a general director (president, general manager etc.) as a company's sole executive body is a complicated matter of particular concern to today's corporate owners and the authorized officials charged with the due maintenance of personnel documentation (i.e. HR specialists, accountants). A company's proper documentation of labor relations with its general director -- in accordance with the provisions of applicable law -- is key, first and foremost, to the establishment of a mechanism of interaction over the course of development in relations between the general director and the company's owners, and secondly, of ensuring the possibility of an amicable "divorce" should one become necessary -- an advantage with critical practical applications. It must be noted that under applicable RF law and practice, the relations between a company and its general director constitute employment relations, a fact which has been confirmed by the RF Supreme Court. Thus, the company will be obliged to enter into a written employment contract with the general director, to pay his/her salary, and to provide safe working conditions, etc. Moreover, if the company's general director is a foreign national, it will be obliged to obtain the required migration permits. The assumption by a foreign national of the duties of general director in the absence of duly-obtained migration documents constitutes a violation of migration laws and may result in the imposition of administrative liability against the employer, i.e. the company and its officials. In today's business world, the establishment of "non-competition" ground rules is of particular concern to employers. As distinct from the law of many foreign countries, Russian law neither defines nor accepts the concept of "non-competition." However, applicable legislation does provide for certain restrictions with respect to a general director's employment. Thus, a general director may only be hired by a secondary employer with the express permission of the company's authorized body. However, many other specialized rules pertaining to general directors and generally understood to fall under the "non-competition" concept are not directly established by RF law. In practice, therefore, companies frequently utilize other legal mechanisms to protect their interests, i.e. the establishment of "trade secret" regulations with respect to valuable information, which require the employers to implement a number of measures that are listed in law in order to ensure due protection of their trade secrets..

Full post as published by The Trade Secrets Vault on October 16, 2008 (boomark / email).