Contrary to the company laws of the other Dutch Caribbean Islands of St. Maarten, Curacao and BES, the Aruba company law does allow for the company to enter into an employment agreement with its statutory director.
The statutory director/employee maintains a dual relationship with the company, i.e., a relationship under company law and labor law respectively. The dismissal of the director/employee under company law and the consequences thereof for his employment agreement under labor law are briefly discussed in this article.
The Aruba company law and labor law are laid out in Book 2 and Book 7 of the Aruba Civil Code (ACC), respectively. The Aruba Civil Code is hereinafter referred to as ACC. The general meeting of shareholders is assumed to be burdened with the appointment and dismissal of the statutory director under the bylaws of the company, for the purposes of this article.
Dismissal of the statutory director under company law
The general meeting of shareholders may dismiss the statutory director at all times. The latter is stipulated under article 2:136 (2) and 2:184 (3) ACC for the N.V. (Naamloze Vennootschap) and the VBA (Vennootschap met Beperkte Aansprakelijkheid), respectively.
However, the statutory director cannot be dismissed without reason.
The dismissal is subject to nullification (vernietigbaar) if it is considered unreasonable by the court (articles 2:7, and 2:21 (4) ACC). The court performs a marginal assessment (marginale toetsing) on the decision (ECLI:NL:OGHACMB:2021:97). The court assesses whether the general meeting of shareholders could reasonably have come to the decision to dismiss the statutory director after considering all the interests involved as mentioned under article 2:7 ACC. The formal procedure in the bylaws should be taken into account.
A decision of the general meeting of shareholders is furthermore null and void (nietig) if it is in conflict with the law or the bylaws of the company (article 2:21 (1) ACC).
The employment agreement is not affected by the dismissal under company law
The employment agreement of the statutory director remains in effect following his dismissal under company law (ECLI:NL:OGEAA:2019:438). The approval of the Director of the Labor Department (DLD) is required in order to terminate his employment agreement (article 4 (1) Ordinance on the Termination of Labor agreements, OTL). The ‘unapproved’ termination should be nullified within 6 months (article 7 OTL).
The employment agreement can end in the following ways: by death or expiration, by mutual agreement, by termination with or without immediate effect, by dissolution.
The approval of the DLD is not required for government foundations that are deemed ‘public bodies’ (publiekrechtelijke lichamen) under article 2 (a) OTL. That is the case when the ‘hire and fire policy’ of the foundation is controlled by the government. An example hereof is FMAA (Fundacion pa Maneho di Adiccion Aruba) (ECLI:NL:OGHACMB:2018:279). The legal consequences for the employment agreement (if any) of the statutory director of a ‘public body’ foundation may (in my opinion) differ from the consequences mentioned above.
No reinstatement of the employment agreement by the court
Aruba company law expressly excludes the reinstatement of the employment agreement by the court at the request of the statutory director (article 2:8 (5) ACC). A termination of the employment agreement by the company is final. The statutory director may only claim compensation for damages (schadevergoeding) which is granted by the court if the termination is considered unreasonable (kennelijk onredelijk).
The Netherlands
The situation in the Netherlands is the opposite from that in Aruba. The dismissal of the statutory director under Dutch company law usually results in the termination of his employment agreement with the company under Dutch labor law, unless a statutory dismissal restriction applies (wettelijk opzegverbod), e.g., sickness of the statutory director, or if the parties have agreed otherwise (HR 15 april 2005, NJ 2005/483 and NJ 2005/484). The approval of the Employee Insurance Agency UWV (the Dutch counterpart of the DLD) is not applicable to the statutory director.
St. Maarten, Curacao, BES
The company laws of St. Maarten, Curacao and BES expressly exclude an employer/employee relationship between the company and its statutory director. The relationship is deemed an agreement to provide services (overeenkomst van opdracht). The company may terminate the relationship at all times subject to reasonability and fairness (article 7:408 (1) CC).