Resignation by a managing director

Appeal in the interest of the law

Court: Netherlands Supreme Court

Date: April 15th, 2005

LJN number: AS2713

Case: In an apparent conflict between shareholders and the managing director of a Dutch company, shareholders had scheduled a meeting of shareholders in order to dismiss the managing director. Before the shareholders' meeting took place the managing director unilaterally resigned from his managing position, maintaining that this resignation did not imply the termination of the employment relationship with the company.  In fact he subsequently claimed the benefit of statutory dismissal protection regulations for ordinary employees. The company took the position that resignation meant resignation and stopped his salary payments. The former managing director brought a claim before the court for the continuation of these payments, which was granted by the court, ruling that the termination of the corporate relationship should be distinguised from the employment contract and that the latter can continue after a resignation as a managing director. The Chief Procecutor lodged an appeal in the interest of the law.

Held: The Supreme Court reconfirmed an earlier decision that an unilaterally resignation by a managing director does not need to be accepted by the company to have legal effect. The Supreme Court further ruled that a managing director’s unilateral resignation from the managing position as a rule also results in the termination of his employment contract. The decision of the Court was quashed in the interest of the law.