Watch our webinar! “Tricky sickness issues”

Can employees be liable for debts of the company?

Publication date: 27 March 2017
Employees can be liable for the debts of the company when they were too much involved in the policy making of the company. When will they be in the “danger zone”?

corporate governance

Directors of a company can be jointly and severally liable for the debts of the company in the event of bankruptcy. For this, there must be maladministration and it must be plausible that this is an essential cause for the bankruptcy. Employees who interfere too much with the company’s policy can be considered as actual policymakers. In this case, they can be held liable. In what circumstances can an employee be considered an actual policymaker?

The employee as actual policymaker

It is not easy to determine when an employer can be considered as an actual policymaker. For the assessment, the court will consider, among other things, the following:

  • To what extent the employee acts as a director and goes beyond his authority. A finance director (who was not a director under the articles of association) was not just engaged in the financial administration but also acted as external contact of the company. He also participated in board meetings where he was engaged in typical management matters. Therefore, the court considered the director to be liable for the negative balance.
  • The relation between the employee and director(s). An executive of a call centre gave payment instructions and other tasks to the director under the articles of associations and received considerable bonuses that were not mentioned in the contract of employment. As he did not have a subordinate role with regard to the director under the articles of association, he was considered to be an actual policymaker.
  • The way an employee presents himself externally. A head of sales acted externally as an executive: he answered correspondence of the tax authorities that was directed to the director under the articles of association, contracted on behalf of the company and took the initiative for a name change of the company. Surely, contact with the tax authorities was no sales matter and therefore the employer was considered to be an actual policymaker.
  • To what extent the employee is involved in the management. According to the court, a manager could not be considered as actual policymaker. According to the trustee in bankruptcy, he was actively engaged in the accountancy and human resources. However, the judge did consider there was no (sufficient) evidence for this. The employee was indeed managing the business operations but it was the director who controlled them and eventually took the important decisions.

Conclusion

An employee acting within the scope of his authority and not engaging in executive tasks cannot be held liable easily. However, if the employee goes beyond the scope of his authority, he or she will be in the “danger zone”.

What can we do for you?

Are you or your employees being held liable? Would you like to know what to do and how to prevent this? Or would you like to make claims on a bankrupt company, its directors, or employees? Please contact us:

    Share on social media

    • Employment law and dismissal

    Three important topics to include in your employment contract under Dutch, US and UK law

    15 July 2021

    In the last issue of Stare Decisis, Priscilla de Leede of Russell Advocaten, Mary Edenfield of Mateer Harbert and Ed Belam of Marriott Harrison discuss the most important topics to include in your employment contracts regarding the termination of the contract. There are some important differences to take into account!

    read on
    • Corporate law

    Good governance: The advisory capacity of directors and members of the supervisory board

    28 June 2021

    Directors and members of the supervisory board support shareholders in an advisory capacity. From 1 July 2021 this also applies to directors and supervisory board members of associations, foundations and cooperatives. What are the consequences if the shareholders make decisions disregarding this advisory role?

    read on
    • Works Council
    • Corporate law

    Management and Supervision of Legal Entities Act: What are the changes?

    23 June 2021

    On 10 November 2020, the Dutch Senate adopted the bill on the management and supervision of legal entities. This affects all associations and foundations, but, above all, nonprofit organizations. As an officer of a sports club, are you now more likely to be liable? Do you have to meet additional requirements when you are a member of the supervisory board of a school?

    read on
    • Employment law and dismissal

    Dismissal of sick statutory director

    18 June 2021

    A sick employee may not be dismissed. However, an employee who knows of imminent dismissal, cannot avoid this by reporting sick. But when does the employee know that this is the case? This question was central to the court case concerning the dismissal of a CFO of Volksbank.

    read on
    • Expats
    • Employment law and dismissal

    17 June 2021: Employment Webinar “Tricky sickness issues”

    17 June 2021

    If your employee reports sick, this may raise many difficult questions. What are your reintegration obligations during the sick leave period? What are you allowed to record about your sick employee with regard to the privacy legislation? We answered these and other questions during a webinar. Watch the video!

    read on
    • Employment law and dismissal

    Be careful with the employer’s statement!

    14 June 2021

    Before obtaining a mortgage or rental contract, banks or landlords often ask for an employer’s statement. Such a statement can sometimes have unintended consequences for the employer. What do you need to be aware of?

    read on
    • Employment law and dismissal

    Statutory minimum wage as of 1 July 2021

    2 June 2021

    As of 1 July 2021, the statutory minimum wage and minimum youth wage will be increased. What are the new amounts of the minimum wage?

    read on
    • Works Council
    • Employment law and dismissal

    Works council

    4 May 2021

    Is there already a works council in your company? Are you a member of your company’s works council? What are the advantages of having a works council in your company? Jan Dop and Priscilla C.X. de Leede explain the role of the works council and give an overview of the works council’s most important rights.

    read on