A director of an NV or BV (also known as a director under the articles of association) is in a special position. As an employee of the company, he is subordinate to the General Meeting of Shareholders (AGM). At the same time, he has a lot of authority as directors and acts as an employer on behalf of the legal person. A director has to deal with both company and labor law rules that apply to his position. Characteristic is that there is no general prohibition of termination for directors. The employer, in practice the AGM, can legally terminate the employment contract with the director without the permission of the UWV Werkbedrijf being required. Because this makes the employment law position of a director vulnerable, the employment contract is often already set down on a possible severance payment; the famous golden handshake.

What is discussed here applies to BVs and NVs, but not to associations and foundations. The normal (employment law) dismissal rules apply to the directors of these legal persons.

Dismissal of directors

Because a director also concludes an employment contract with the legal person of which he is a director, he is also an employee. Directors can be fired without the need for a dismissal permit from the UWV Werkbedrijf. The dismissal takes place by decision of the AGM or SB, usually after they have heard the director. The works council is asked for advice if the director has the highest say in the company. The (company) exemption from the position by the AGM or Supervisory Board often also leads to (employment law) termination of the employment contract. However, if the former director wishes to fulfill a different position within the company, there is no immediate employment law dismissal following the exemption from the position. If the employer later decides to proceed with a dismissal, a dismissal permit from the UWV Werkbedrijf is now required.

The company is more likely to opt for exemption from the position than for dissolution of the employment contract. The exemption does not require a dismissal permit, and dissolution by the court often leads to the award of compensation to the employee (director).

Cancellation bans and early termination

The dismissal of a director can be annulled if a prohibition on termination (dismissal) has been violated. Think of the well-known ban on termination in the event of an employee's illness. If there is an prohibition of cancellation, the director only loses his powers as director due to the cancellation. The courts will have to be called upon to dissolve the employment contract.

In practice, a director often receives a temporary employment contract at first. As a result, no compensation is due if the contract expires over time. Prohibitions on termination are therefore not an issue in this situation, and there can also be no question of (manifestly unreasonable) dismissal. However, it is not possible to continue to conclude unlimited temporary contracts; in the long run, continuing to renew will lead to an employment contract for an indefinite period.

If the possibility of early termination is arranged in writing in the employment contract, then the company does not need a dismissal permit for the termination. The option of early termination must be granted to both parties in the employment contract. Premature termination may violate a prohibition on termination and can therefore lead to manifestly unreasonable dismissal. Because the director himself also has the right to cancel prematurely, he can therefore leave prematurely, without being liable to pay damages to the company.