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
The Annual leave, as a legal institute of Employment law, is a right that affects EVERYONE, regardless of the industry, regardless of education, and regardless of job position.
The right to Paid Annual leave is a FUNDAMENTAL LABOR RIGHT, which the ILO elaborates significantly in its foundations and regulates in particular in the Holidays with Pay Convention (Revised) 1970 (No.132). Moreover, the EU also elevates this right to the position of FUNDAMENTAL with the Charter of Fundamental Rights of the European Union, as a right that should ensure Fair and just working conditions.
Every Employee enjoys this right arising from the employment relationship and every Employer is obliged to provide the same to every Employee. But if we look at it from the position of a lawyer, an interesting dilemma opens up: which right is a „greater„ right… the right of the Employee to use annual leave whenever he wants or the right of the Employee to approve the annual leave when the work process allows it?
The aforementioned ILO Convention determines an optimal period for paid annual leave – three weeks’ paid leave each year but also defines the right to a proportional part of the annual leave, where it determines that those Employees who have been employed with an employer for less than one year, but longer than six months, are to have a right to a proportional period of paid leave.
This determination and definition of annual leave is also present in the Macedonian employment law, or more precisely in the Macedonian Law on Labor Relations.
Namely, the Legislator in our Employment law determines the minimum number of days of annual leave to be 20 working days, while the maximum – is 26 working days, which in principle is equal to the determination of the ILO regarding the duration of the minimum with Paid Annual leave. In addition, the Convention specifies that it should be possible for an employee to take two weeks of annual leave in one block without interruption, which is also an obligation for Macedonian Employers.
Although there is a legal institute – proportional part of annual leave, it is general and it penetrates through working laws, however, details about its application remain in the “gray zone”. Hence, both Employees and Employers often seek legal advice on when and how to apply the days indicated as a proportional part of the vacation. For now, the strict application of this part of the employment law remains, that this legal institute is used only in the period before the right to a full annual vacation is acquired. That period is defined in Macedonian legislation as a six-month period from the establishment of the employment relationship with that Employer.
Also, The Convention also provides that the timing of the leave period should in principle be determined by the Employer, in consultation with the Employee or his or her representatives, which as a legal solution is also accepted in our labor law in article 138 of the Law on labor relations. So, the Employer BUT taking into account the needs of the work process above all, as well as the opportunities for rest and recreation of the Employee is obliged to provide this right as an absolute, mandatory, and unconditional right of the Employee.
Given that our country is aiming for the EU, we would like to point out that the EU has set minimum standards for working hours and rest, breaks, annual leave, and night work. In addition, those standards provide that derogations from some of the working time obligations are possible if allowed by national law. Such standards that refer to specific aspects of working time, among other things, and generally for Annual Leave, are covered by a separate Directive 2003/88/EC of the European Parliament and of the Council of November 4, 2003.
In this Directive, it is stated that each Member State shall take the necessary measures to ensure that every Employee is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and /or the practice. Hence, we can conclude that this standard, considering that it reflects the lower limit or the minimum of the duration of the vacation time is above the minimum provided by our Labor Law. So considering the above stated, it is obvious that the Employees in the EU in terms of this right that is within the working law puts the Employee in a better situation. The standard set by the EU in relation to annual leave is that the minimum period of paid annual leave cannot be replaced by an allowance instead, except where the employment relationship is terminated.
So, we can conclude that the conditions for the entitlement and granting of annual leave are subject to national regulation, but those could not be under the minimum legal standards which are accepted as fundamental.
We, as a law firm, are in line with the legal position that the entitlement of every Employee to paid annual leave must be regarded as a particularly important principle of Community social law from which there can be no derogations.
Moreover, the CJEU ruled that so-called ‘rolled-up holiday pay’ – the practice of incorporating the payment of annual leave into a worker’s hourly or daily wage without the worker receiving additional payment – is contrary to the mentioned Directive, as the practice does not guarantee that the minimum four-week leave will actually be taken, so this position of the CJEU, for us, is absolutely acceptable and we, as a law firm, support it in total.
But, definitely, this right should be in accordance with the needs of the work process above all, as well as the opportunities for rest and recreation of the Employee.
Ana Tosic Chubrinovski – Managing Partner