Board-level employee representatives in limited liability companies
The whole article in the Slovenian language was published in the journal Delavci in delodajalci, No. 4/2019, co-authored with dr. Valentina Franca.
The Slovenian employee participation legislation does not make any distinction between organizational forms of corporate entities as regards election or appointment of the works council and board-level employee representatives. However, workers in limited liability companies may, because of insufficient legal provisions, experience much more challenging obstacles than workers employed in public limited companies. In the article, the authors analyse and present possible legal solutions for enabling equal position of employees in the implementation of employee participation in limited liability companies.
Employees in Slovenia may enforce the constitutionally guaranteed right to employee participation also through board-level employee representatives. The method of implementation of this right is specified in the Worker Participation in Management Act (ZSDU),1 which, however, does not distinguish between organizational forms. Therefore, workers are guaranteed the right, irrespective of whether they work in a public limited company (d. d.) or a limited liability company (d. o. o.), the only condition is that the company is either medium-sized or large, pursuant to the Companies Act (ZGD-1).2 However, considering the legislative wording, workers employed in a limited liability company have lesser chances of enforcing the right to appoint board-level employee representatives because the currently valid provisions are customized to public limited companies. Namely, the Worker Participation in Management Act sets forth the methods of appointment of board-level employee representatives in a one-tier and two-tier corporate management system, which are typical corporate governance models in public limited companies pursuant to the Companies Act. In limited liability companies, a supervisory board is not a mandatory body, and the management is most often represented by only one person, i.e. the director. Employees are thus left only with the option of making an agreement with their management and company owners to define the method of implementation of such right in the memorandum of association. However, the valid regulatory system does not set forth any sanctions for company members, if they are reluctant to implement those workers’ rights, therefore workers should be provided with efficient judicial protection of constitutionally granted rights. This leads to the question whether workers would be able to enforce their rights already directly on the basis of the Worker Participation in Management Act or the implementation of such rights is conditioned by the adequate explicit regulation in the memorandum of association. The authors analyse options for judicial enforcement of workers’ rights to appoint board-level employee representatives and worker-directors. The article also discusses the relevant judicial practice regarding the appointment of board-level employee representatives in limited liability companies.
1. Official Gazette of the Republic of Slovenia, no. 42/93 as amended.
2. Official Gazette of the Republic of Slovenia, no. 42/06 as amended.