The directors represent the companies and manage their day-to-day business under the provisions of the law, bylaws, or, where applicable, partnership agreements.
The liability for lack of diligence in the performance of their duties is regulated according to the field they refer to:
- Liability in the commercial field under the Capital Companies Law
- Liability in the field of taxation under the General Tax Law
- Criminal liability in the Criminal Code
However, liability in the labour sphere is not explicitly provided for in labour law, for example, in the event of non-payment of labour or social security debts. This legal vacuum has led the Spanish courts in those cases to apply the provisions of the Capital Companies Law or the General Tax Law, depending on the matter.
Thus, for the directors to be held liable for lack of diligence or poor performance of their work-related duties, they will be considered employers, assuming the same obligations.
In this way, the company directors are people who assume the tasks and responsibilities of management and organisation, unifying the figures of the employer, partner, and director. As such, they are considered direct decision-makers of the company and thus responsible for the consequences.
Consequently, in the event of liability arising from the employment relationship between the employee and the company, the existing accountability under corporate or tax law can be enforced. This liability may be the result of breaches of remuneration, social security, compensation, or administrative offences of a labour-related nature, for example:
Labour liability under company law
The Capital Companies law provides for:
- The social action of liability and
- The individual action of liability.
Both seek to compensate and claim damages that shareholders or creditors have suffered for the improper actions of the directors. Employees are considered creditors and can claim credits or debts derived from labour obligations or liability for the poor diligence or management of the company administrators (insofar as the company assets are insufficient to satisfy these needs).
Labour liability under tax law
Likewise, directors incur a tax liability if they have not performed the necessary acts to comply with their tax obligations and duties. In other words, failure to diligently carry out the actions inherent to their representation entails liability in tax matters.
In Spain, there is a legal vacuum regarding the liability of directors in the employment field. Despite this, corporate and tax legislation has managed to regulate this matter.
If you require addition information regarding director’s liability in the labour law field in Spain,
This article is not considered legal advice