Management agreements as an institute are always subject of interest and discussion and are especially tempting for Managers and Companies who want to give their mutual relationship special characteristics, individually defined rights, benefits, obligations and responsibilities.
In the Macedonian legislation, the Management agreement is stipulated in the Labor Law and the Companies Law, both offering specific elements of this agreement. However, in practice, the provisions from the Labor Law in combination with part of the provisions from the Companies Law are used in order to create an agreement that best suits the interests of the parties.
According to Article 54 of the Labor Law it is stipulated that If an employment agreement is concluded by business persons – Мanagers, the parties can arrange the rights, obligations and responsibilities of the employment relationship differently, especially for:
1) the conditions and limitations of the fixed-term employment relationship
2) working hours
3) provision of daily and annual leave
4) the payment of the work and
5) the termination of the validity of the employment agreement
Additionally, in Article 55 of the Labor Law it is provided that the Manager exercises the rights and the obligations arising from the employment relationship at with the employer to whom he is appointed or elected, according to the provisions of the Labor law, collective agreement and contract for employment of business persons, i.e the Management Agreement.
The above cited provisions actually define the diversity of the Managerial Agreement itself, allowing the contracting parties autonomy in regulating this “sui generis” (employment) relationship. Namely, when concluding a Management Agreement, it is necessary to carefully arrange certain key elements of this relationship, especially appreciating that usually the intention of the contracting parties is that the certain relationship will be with special privileges, rights and responsibilities, which will be largely different from those that have the other employees of the Company.
This means that the Manager as an equal party to the contractual relationship, has the opportunity and the right to negotiate and request that certain rights and benefits be granted to him/her. These may include a substantial amount of salary and compensation for their special duties and responsibilities, annual leave in a duration of more than 30 days, flexible working hours, private health insurance for him/her and/or his/her children, life insurance, access to a company car, assistance with their children’s private school, part of the Company’s annual profit and shares in the Company.
This also entails that the Company reserves the right to require the Manager to work beyond the standard 40 hours a week, and when necessary, even outside the Company’s regular working hours. The Manager may be expected to deliver tangible results in the Company’s operations, such as achieving specific annual profit targets or overseeing the management of multiple international subsidiaries of the Company.
We can conclude that, in the simplest terms, the Management agreement is a mechanism that conditions the Manager’s reward on the Company’s success. The better and more successful the Manager will be in achieving the established goals, the greater and more numerous benefits they will be entitled to receive.
As the possibilities for negotiation and agreement are limitless, Management Agreements became increasingly appealing for both Managers and Companies, making them a growing trend in the labor law practice.
We, at Tosic and Jevtic Law Firm are here to provide You with tailored guidance, assistance, and to assist in crafting and refining a Management Agreement that suits Your unique relationship with Your permanent or potential management.
Ljupka Naumoska Gjorgjievska