Legal Updates

A shareholder in a company who is the living spirit of a company which illegally employs an employee may be held personally liable for the company debts

October 6, 2020

An employee was employed in a restaurant through a manpower agency. The company was liquidated and the employee was terminated with immediate effect.
The Labor Court held that the shareholder is personally liable for the employee’s unpaid social benefits. When the company’s conduct and decisions taken by it indicate that the shareholder himself does not see himself as a separate entity from the company, and when the shareholder is the one acting personally in the name of the company and was the living spirit therein, it is only befitting that he should be personally liable for the consequences of such actions. Acting through a company does not absolve the manger or shareholder from acting pursuant to the law. Here, the shareholder was the single shareholder and the only manager of the company. The shareholder was also the one who knowingly created an illegal contractual relationship with the employee and is thus personal liable for the company’s debts to the employee for social benefits.