Employment contract with the director - the sole founder

A manager is an employee who has rights and responsibilities. The General Director does not just carry out organizational work, he is the legal representative of the LLC, has the right to sign and is responsible for all areas of activity.

The labor relationship between the company and its director must be properly formalized in compliance with all labor law standards.

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Is a contract necessary if he is a founder?

Labor relations between the director and the company are regulated by laws and the Charter of the company. In general, the conclusion of an employment agreement is mandatory . and this seems obvious. However, when the sole founder and director are the same person, legal confusion arises as the person cannot employ himself.

The study of arbitration practice and analysis of existing legal provisions allowed us to give a reasoned answer.

The Labor Code contains a separate chapter 43 with provisions on the labor of managers. There are rules governing hiring and firing procedures, working hours, responsibilities and rights. However, all these rules do not apply to directors who are sole founders, as stated in Article 273.

Having studied this issue, lawyers from the Ministry of Health and Social Development came to the conclusion that despite the absurdity of the situation, a citizen cannot remain socially unprotected. Official labor relations are a guarantee of compulsory medical and pension insurance. In written explanations they confirm that a written contract must be concluded.

Banal logic can put an end to the dispute between the two departments.

Firstly, the general director enters into an agreement not with the founder, but with the company, that is, formally, the employer and the employee are different entities.
Secondly, labor law norms will not be violated if the general provisions of the Code, rather than the specific Chapter 43 of the Labor Code, are used to regulate labor relations.
Thirdly, all significant or specific legal issues can be written down in the Charter and followed.

Who signs this agreement

The contract is concluded after the general meeting of owners approves the proposed candidacy of the future director and confirms its decision with signatures in the minutes. In most cases, its appointment coincides with the beginning of the state registration procedure.

The tax authority carrying out registration works with a specific representative - the executive body of the company - its director. The employment contract is submitted to the inspectorate along with a full package of documents for registration, since the position of a manager, by definition, should not be empty.

In addition to the position of director, the minutes of the meeting of founders confirm the responsible member of the company who, on behalf of the meeting, will sign a contract with him:

If there is only one founder, then he also signs.
If the shares of the participants in the authorized capital are the same, then the responsible member is elected by voting.
If the amounts of contributions differ, then the agreement is signed by the one who contributed the majority, but another participant can be elected by voting.

All the features of hiring a general director are shown in the following video:

For how long is it usually concluded?

The Labor Code of the Russian Federation and the Law “On Limited Liability Companies” do not contain a direct indication of what the agreement with the director should be - fixed-term or unlimited. The maximum possible duration of the agreement with the director is determined by the participants of the company and is prescribed in the Charter.

If the owners deem it necessary, they may not limit the director’s tenure at all or change it on a case-by-case basis by issuing a Resolution of the meeting of participants. There is no need to make any changes to the Charter. When drawing up a contract, it may indicate a shorter period of validity than was provided in advance. A document is considered to be of unlimited duration unless the contrary is stated in any administrative or constituent document.

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Enough letters from regulatory authorities have been issued on the topic of concluding an employment contract with the director, who is also the sole founder of the company. Some of them openly contradict each other. Let's try to understand this complex issue.

In the Labor Code of the Russian Federation there is a rule that an enterprise is obliged to conclude employment contracts with all employees, this means that if the company’s staffing table includes the position of director, then it is necessary to conclude an agreement with him.

However, in 2006, Rostrud issued letter No. 2262-6-1 dated December 28, 2006, which stated that the only founder cannot be an employee of the organization. The same position was expressed in the letter of the Ministry of Health and Social Development dated August 18, 2009 No. 22-2-3199. As a result, enterprises stopped concluding contracts with directors - the only founders. This led to a decrease in revenues to the funds, after which the Ministry of Health and Social Development expressed a different point of view in a letter dated 06/08/10 No. 428n. In the said letter, officials stated that it is necessary to conclude an employment contract with the director, even though he is the only founder. This approach was justified by the fact that in this way the manager needs to provide social guarantees.

Then, most likely in order to finally clarify this issue, in 2011 amendments were made to the legislation on social insurance. In particular, in 212-FZ, in 255-FZ, in 167-FZ and in 326-FZ it was said that the manager - the only founder belongs to the category of insured persons.

These amendments were made in such a way that they gave managers a reason to make a voluntary decision to work under an employment contract and receive social guarantees, or not to enter into an employment contract and not to make any payments for pension, social and health insurance. As a result, these amendments did not clarify this issue.

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A little later, another letter from Rostrud appeared (No. 177-6-1 dated 03/06/13), which once again stated that an employment contract with the director is not the sole founder. This letter contained the following justification: an employment contract must be concluded between two parties to the labor relationship, but if the director is the only founder, then one of the parties is missing and the employment contract cannot be concluded. In this case, according to officials, the founder, by his own decision, must assume the functions of a manager, without concluding any agreement with himself.

And finally, in 2021, the Ministry of Finance also became involved in resolving this controversial issue. Letter No. 03-11-11/14234 dated March 15, 2016 was issued, in which specialists from the financial department indicated that labor relations with the sole founder director still exist. But such relationships are formalized not by an employment contract, but by his own decision. According to this letter, it follows that such a manager is still an employee of the enterprise and his wages need to be calculated, and therefore insurance premiums must be paid on it.

However, this approach does not answer the question: does a manager with whom an employment contract has not been concluded become an insured person? After all, the legislation clearly states that in order for a manager to fall into the category of insured persons, it is necessary to have an employment contract with him. And also the position expressed in the last letter directly contradicts Article 16 of the Labor Code, which states that labor relations arise only on the basis of an employment contract. Thus, the recommendation of the Ministry of Finance, set out in letter No. 03-11-11/14234, contradicts the norms of the Labor Code of the Russian Federation.

In addition, it is impossible to unambiguously answer the following question: Is it necessary to charge insurance premiums on the manager’s salary, which is paid to him not on the basis of an employment contract?

There is one more question: Is it possible to include the above-mentioned wages in expenses that reduce the tax base when calculating taxes? After all, according to the norms of Article 255 of the Tax Code of the Russian Federation, only those payments that are provided for in the employment contract can be included in expenses.

What should you do anyway, conclude or not conclude an employment contract with the director, the sole founder of the company?

Let's turn to other legislation. To the Law of 02/08/98 No. 14-FZ “On Limited Liability Companies”. It says that an employment contract is concluded with the director (sole executive body) (clause 1 and clause 4 of Article 40 of Law No. 14-FZ of 02/08/98). This law does not contain any exceptions for the director of the sole founder.

In addition, according to the norms of the Labor Code of the Russian Federation (Articles 20,56,57), there are no contradictions when concluding an employment contract with yourself. In this case, the same person acts as a representative of labor relations on the part of the employee and the employer. Since there are two parties to the labor relationship - a legal entity and an individual, an employment contract can be concluded. A similar conclusion is contained in the ruling of the Supreme Arbitration Court of the Russian Federation dated 03.06.09 No. 6597/09.

Another argument in favor of concluding an employment contract is that an ordinary founder of a company cannot act on behalf of the company: enter into transactions, make payments, etc. The founder assigns such powers to himself by appointing himself as a manager. And as mentioned above, the norms of the law on LLCs regulate the mandatory conclusion of an employment contract with the manager.

According to the norms of the law on LLCs, it is still necessary to conclude an employment contract with the manager - the sole founder, and if an employment relationship is formalized, then the employer must pay the employee wages (Article , Labor Code of the Russian Federation). The condition of remuneration is a mandatory condition of the employment contract (Article of the Labor Code of the Russian Federation). Thus, the absence of wage accruals in the presence of a concluded employment contract is a violation of labor legislation, which is punishable by an administrative fine (Part 1 of Article 5.27 of the Code of Administrative Offenses of the Russian Federation).

At the same time, it would be incorrect to say that the reward for a manager’s work may not be wages, but dividends. The fact is that a participant in an LLC has the right to dividends regardless of whether he manages the company or not (clause 1, article 8, clause 2, article 28 of the LLC Law). This means that dividends cannot be a substitute for wages.

No other legislative act, except the law on LLCs, contains clear recommendations on whether or not to conclude an employment contract with the sole founder director.

Therefore, after studying this material and links to legislation, we still recommend that entrepreneurs make their own decision whether or not to enter into an employment contract with themselves. / “Accounting encyclopedia “Profirosta” 04/25/2017

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Nuances of the agreement

The agreement with the manager is drawn up according to the rules common to all such documents. However, given the high degree of responsibility, it would be wiser not to get away with general wording or references to other documents, but to spell out all job functions and responsibilities in as much detail as possible.

The position of director involves a wide range of responsibilities, long working hours and frequent business travel.

Managers are one of the categories of employees for whom an individual work schedule can be established, and overtime or, conversely, additional rest periods are allowed.

Due to the flexibility of legal norms regarding the position of director, the main defining document becomes the Charter of the company. All nuances and specific responsibilities must be contained in the Charter, references to it must be present in the text of the agreement.

Main sections of the document

A typical contract outline contains the following sections:

Names and registration addresses of the parties.
Subject of the agreement.
Detailed description of responsibilities.
Detailed description of rights.
Operating mode.
Responsibility of participants in labor relations.
Remuneration and guarantees.
Procedure for extension and termination of the contract.
Settlement of disputes.
Details and signatures of the employer and employee.

Here you can download this document for free

You will find a sample power of attorney for the right to sign for the general director in this article.

What the job description of the general director of an LLC includes - see here.

How to extend it?

An extension or prolongation is needed if the agreement is of a fixed-term nature and has expired. The extension procedure is formulated in the text of the document itself. The following options are possible:

Automatic renewal - if the parties intend to continue working, they simply continue to perform their duties. There is no need to draw up additional agreements.
An additional agreement to the contract is drawn up if automatic renewal is not provided. Such a document must be drawn up in advance, usually a month before the end of the contract.
Re-conclusion of the document – used when the terms of cooperation change significantly.

The method of extension must be specified in the Charter and duplicated in the text of the employment agreement.

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What to do if the founder-manager wants to enter into an employment contract with himself?

The main reasons why a founder may be interested in concluding an employment contract with his organization are the following:

social guarantees - the opportunity to go on vacation, sick leave, maternity leave;
pension insurance experience - work experience as a director is included in the total length of service for calculating a pension;
the opportunity to receive income from the business in the form of a monthly salary, and not once a quarter in the form of dividends (and even then, if there is profit).

Since 2015, the tax rate on dividends for individuals has increased from 9% to 13% and is equal to what is withheld from an employee’s salary in the form of personal income tax, so there is no longer any economic sense in receiving profit from a business in the form of dividends. As for the organization’s expenses for insurance premiums from the director’s salary, they amount to a significant amount - 30% of the accruals. According to current legislation, insurance premiums are credited to the personal account of the insured person, but it is difficult to say whether the entire amount of contributions will be returned in the form of a pension.

What to do if the founder-manager does not want to enter into an employment contract?

Let's consider the opposite situation - when the founder assumes management functions, but does not want to enter into an employment contract. Most often, such reluctance arises at the start of a business, when the LLC is not yet properly operating, there is no profit, and the founder agrees with this state of affairs.

He is ready to invest a year or even more in the development of his business, and the existence of an employment contract with him as a manager obliges the organization to pay a salary not lower than the regional minimum plus insurance premiums. In addition, quarterly HR reporting for employees (even with one director) is quite complex, and without the involvement of specialists it will not be easy to submit.

Since we have just refuted the arguments of the Ministry of Finance and Rostrud that it is impossible to conclude an employment contract in this case, we will not refer to the above letters. Then on what basis can a founder manage his organization if an employment contract is not concluded?

This is where civil law comes into force. The provisions of Article 53 of the Civil Code of the Russian Federation, Articles 32,33, 40 of the Law “On LLC” indicate that the director is the sole executive body of the company and carries out the current management of the LLC’s activities.

The sole founder receives his managerial powers from the moment when he, by his decision, assumes the functions of the sole executive body. In this case, management activities are carried out without concluding any contract, including an employment contract.

Order of the sole founder to assume the duties of the General Director ()

By the way, indirectly, the fact that the managerial powers of the executive body is not the same as the labor duties of the director is evidenced by the fact that a director working on the basis of an employment contract is not deprived of his managerial functions while on vacation. A director on vacation still has the right to sign documents on behalf of the company within his competence and perform other functions assigned to him by law and the charter. It should be noted, however, that in such a situation there is a risk of disputes with the tax authorities, so the safest thing to do would be to recall the director working under an employment contract from vacation to sign documents.

Thus, the only founder who wants to manage his organization himself has the right to either conclude an employment contract or do without it . Rostrud cannot oblige him to conclude an employment contract with himself, because his official position contradicts this.

Background

Back in 2006, the Federal Service for Labor and Employment expressed its position on this issue. Thus, in letter dated December 28, 2006 No. 2262-6-1, Rostrud indicated that in such a situation, there is no employer in relation to the general director, and therefore, in this case, an employment contract with the general director as an employee is not concluded.

note

There is no common position yet on the issue of the need to conclude an employment contract with the director - the only participant, however, the regulatory authorities still recognized the emergence of labor relations, including on the basis of the director’s actual permission to work.

Later, in 2013, Rostrud supported its position in letter dated March 6, 2013 No. 177-6-1, indicating that an employment contract is an agreement between an employer and an employee, that is, a bilateral act. If one of the parties to the employment contract is absent, it cannot be concluded. Thus, labor legislation does not apply to the relations of the sole participant of the company with the company founded by him. Rostrud also explained that the only participant in the company in this situation must, by his decision, assume the functions of the sole executive body - director, general director, president, etc. Management activities in this case are carried out without concluding any contract, including an employment contract .

Employment contract with the director, if he is the founder

The general director (or simply director, president, manager) is a person who is entrusted with the functions of the sole executive authority in the management of the company. A person from among the founders or employees of the enterprise, as well as an outsider, can be appointed to this position.

If an organization has several founders, then the general director is elected on the basis of a general meeting. But what to do in situations where the company has only one founder?

In accordance with the Labor Code of the Russian Federation, enterprises are required to draw up employment contracts with all employees. Therefore, this document must be present when accepting the position of director of the company, even in cases where he is the sole owner.

Registration for the position of director occurs on the basis of a decision made by the sole founder. All documents are drawn up as for an ordinary employee, only there is no hiring order; instead, the decision of the founder is mentioned everywhere. Accordingly, an entry in the work book will also be made only on the basis of this decision.

an employment contract with the general director, if he is the founder, can be found at the bottom of the article.

We also offer an employment contract with the general director in this article.

Legal framework of labor relations

Regulation of legal relations between the director of an organization and such an organization itself, if we are talking about cases where the director and the sole founder are the same person, is carried out on the basis of Chapter 43 of the Labor Code of the Russian Federation. In particular, Articles 273 and 275 of this regulatory act are devoted to the rules for hiring a manager.

However, due to the fact that the Labor Code of the Russian Federation does not provide comprehensive information about the possibilities of concluding such employment contracts and the possible nuances of their use, one should also be guided by two more legal acts, namely:

Letter of Rostrud No. 177-6-1 dated March 6, 2013 , which provides recommendations on how mandatory contributions to various funds and other organizations should be made;
Letter of the Ministry of Finance No. 03-11-06/2/7790 dated February 19, 2015.

These legal acts do not provide comprehensive answers to questions about the mechanism for concluding such agreements, but they do allow you to obtain information about how the procedure for concluding an agreement with a director should be carried out, taking into account the existing nuances.

Sample employment contract with the founding director

The employment contract concluded with the founding director must contain all the points regulated by the Labor Code:

Full name and full details of the identity card (passport) of the future director (including registration and residence address);
address, tax identification number and full name of the organization;
functions and responsibilities assigned to the director;
information about who will sign the contract on the part of the company and on what basis;
date of entry into office;
date and city of signing the contract;
the amount of payment for the work (rate, salary, is there an allowance, incentives, bonuses, etc.);
social insurance conditions;
rights and responsibilities of the parties.

An employment contract concluded with the general director and the sole founder of the company as one person has 2 features:

the term of acceptance for the position is not written in it, since the contract is of unlimited duration;
signed by one person for both the employee and the employer.

After signing the employment agreement, all other standard procedures follow - a personal file is opened. The employment contract is registered in the journal, as well as the work book is drawn up (if it is missing, a new one is created).

If the sole founder, acting as the head of the company, decides not to enter into an employment agreement with himself, then he may face a number of negative consequences:

lack of social benefits, wages, the right to receive annual paid leave, as well as maternity payments at the expense of the Federal Social Insurance Fund of Russia;
When auditing a company, tax authorities may request a documented explanation for the payment of the general director. This document is precisely the employment agreement. In addition, they have the right to remove wages from an expense item for tax purposes;
length of service does not count.

Thus, in order to avoid any problems or disputes with the tax authorities, concluding an employment contract with the manager, who at the same time is the founder of the company, is advisable. In addition, this work is far from complicated and is carried out according to a standard procedure with a few exceptions.

Registration of the contract

Employment contract with the director, if he is the only founder, sample - download.

The correct procedure for concluding an employment contract with the sole founder

We draw up an agreement for the general director

The employment contract on the part of the employer is signed by the only participant in the company. The opinion that it is unacceptable for one person to sign an employment contract on both the employee’s side and the employer’s side, with reference to the provisions of Art. 182 of the Civil Code of the Russian Federation is also not based on labor legislation.

The application of civil legislation to the labor sphere in this case is unjustified, since civil legislation regulates, in particular, relations between persons engaged in entrepreneurial activities or with their participation, based on the fact that entrepreneurial activity is an independent activity carried out at one’s own risk, aimed at systematic receipt of profit from the use of property, sale of goods, performance of work or provision of services by persons registered in this capacity in the manner prescribed by law (Article 2 of the Civil Code of the Russian Federation).

Labor legislation regulates labor relations and other relations directly related to them. Yes, Art. 11 of the Labor Code of the Russian Federation determines that all employers (individuals and legal entities, regardless of their organizational and legal forms and forms of ownership) in labor relations and other directly related relations with employees are obliged to be guided by the provisions of labor legislation and other acts containing labor law norms. The activities of the director as an employee of the company relate to the sphere of labor relations, and not to entrepreneurial activity (entrepreneurial activity is the activity of the company itself, but not personally of the head of the company), and therefore the application of the provisions of Art. 182 of the Civil Code of the Russian Federation to labor relations does not seem justified. Consequently, the norm of Art. 182 of the Civil Code of the Russian Federation is applicable exclusively in civil legislation (for example, in relation to business contracts). This norm does not change the procedure for concluding employment contracts. In a similar situation, the FAS of the North-Western District came to the same opinion in the already mentioned resolution of May 19, 2004 No. A13-7545/03-20.

Thus, since clause 3 of Art. 182 of the Civil Code of the Russian Federation does not apply to labor relations; in this case, an employment contract can be signed on behalf of the organization by the participant (founder) of the organization, who becomes the manager. Such an agreement cannot be canceled, since the legislation provides for only one case of cancellation of an employment contract (Part 4 of Article 61 of the Labor Code of the Russian Federation), which has nothing to do with the situation under consideration. There are no rules in the Labor Code of the Russian Federation on recognizing employment contracts as invalid or unconcluded. Consequently, an agreement signed by the same person on the part of the employee and the employer will be valid and cannot be invalidated because it was signed by the same person on each side.

Another argument in favor of concluding an employment contract with the director is the provisions of the legislation on LLCs and JSCs. So, for our example with an LLC, the provisions of clause 4 of Art. 40 of Federal Law 02/08/1998 No. 14-FZ “On Limited Liability Companies” (hereinafter referred to as the LLC Law), according to which the procedure for the activities of the sole executive body of the company - the general director - and the adoption of decisions by him is established by the charter of the company, internal documents of the company, and also an agreement concluded between the company and the general director.

Well, finally, we put an end to this dispute between the FSS of Russia and the Ministry of Health and Social Development. First, the Social Insurance Fund of the Russian Federation issued a letter dated September 21, 2009 No. 02-09/07-2598P. It notes that the features of labor regulation of the head of the organization are determined by Ch. 43 Labor Code of the Russian Federation. At the same time, in accordance with Art. 273 of the Labor Code of the Russian Federation provisions ch. 43 of the Code do not apply to heads of organizations who are their sole participant (founder), member of the organization and owner of its property. At the same time, the Labor Code does not contain rules prohibiting the application of the general provisions of the code to labor relations when the employee and the employer are the same person. Thus, if the relationship between an organization and its leader, who is the only participant (founder)

, a member of this organization and the owner of its property,
are formalized by an employment contract
, then the specified manager, based on the above and established judicial practice, is among the persons subject to compulsory social insurance in case of temporary disability and in connection with maternity, and, accordingly, has the right provision of benefits for temporary disability and in connection with maternity in the manner and under the conditions established by the legislation of the Russian Federation.

Then the Ministry of Health and Social Development of the Russian Federation expressed its position.

Employment contract with the sole founder

A new-born small enterprise is often so small that the entrepreneur himself, as they say, is a Swede, a reaper, and a player of the pipe. And if we are talking about organizing an LLC - a limited liability company, then in most cases the founder of the company becomes its director, taking over the management of the company.

The director is a full-fledged employee of the enterprise, and it seems that all the norms of the Labor Code should apply to him. However, not everything is so simple here, especially if there is only one founder. Then the question arises: an employment contract with a single founder - to be or not to be? The answer to this question determines whether the director (who is also the sole founder) will be paid a salary and whether it will be subject to taxes.

Who is the director?

Let's look at the procedure for appointing a director from a legal point of view. An LLC can be established by several persons or by one – Art. 88 Civil Code of the Russian Federation. The highest governing body of the company is the general meeting of participants. If there is only one participant, then he alone can make decisions.

Director (CEO) is the sole executive body of the LLC. This director must be elected by the general meeting of participants. It turns out that if there is only one founder, then he alone makes the decision to elect a director. The director can be either one of the participants in the company or a third party (Article 91 of the Civil Code and Article 40 of the Federal Law “On LLC”).

Employers in labor relations are guided by labor law standards. To formalize labor relations between the employer and the employee, an employment contract is concluded - Article 16 of the Labor Code. According to Art. 56, 59, 275 of the Labor Code an employment contract is also concluded with the manager. If a third party is appointed director, then no problems arise; an employment contract is concluded with such employee-director, as well as with other employees.

Poles of opinion

A different situation arises if the LLC has one founder, and he will also act as director. Is it possible in such a situation to conclude an employment contract with the sole founder? There have been debates on this topic for many years and there is still no clear and unambiguous answer. There are two opposing approaches:

— a regular employment contract is concluded with the director. This is a contract “with yourself”. In this case, the director receives a salary, from which personal income tax is withheld at a rate of 13% and insurance premiums are charged.

- the director works without an employment contract - this is the official position of the Ministry of Finance, the Federal Tax Service, and the Ministry of Health and Social Development.

No employment contract!

For many years now, the official position of officials on the issue of whether to conclude an employment contract with a single founder has been this: there is no need to conclude an employment contract. The Ministry of Health and Social Development expressed its point of view in a letter dated August 18, 2009 No. 22-2-3199. And even earlier, Rostrud adhered to this position (letter dated December 28, 2006 No. 2262-6-1). And the letter of the Ministry of Finance dated 09/07/2009 No. 03-04-07-02/13 states that if an employment contract is not concluded, then wages are not paid and insurance premiums are not charged.

What is this point of view based on? Chapter 43 of the Labor Code establishes labor rules for heads of organizations, namely, the procedure for concluding an employment contract, its termination, guarantees, and liability. However, in Art. 273 of the Labor Code states that the norms of this chapter do not apply to those managers who are the only founders.

In favor of this position, the norm of Article 420 of the Civil Code is also often cited, according to which an agreement is recognized as an agreement of two or more persons to establish, change or terminate civil rights and obligations. And clause 3 of Art. 182 of the Civil Code – prohibition of transactions by a representative on behalf of the represented person in relation to himself personally.

If the company decides not to enter into an employment contract with the founding director, then the only document confirming his powers is the founder’s decision to assume the duties of the sole executive body. The charter sets out all the powers of the founder.

Why then does a director work who does not receive a salary? It’s not an idea, you have to think. He has the right to receive dividends from net profits. Dividends are taxed at a rate of 9% (clause 4 of Article 224 of the Tax Code of the Russian Federation). These payments are not taken into account when taxing profits (they are not included in costs) and insurance premiums are not charged on them.

Risks in the absence of an employment contract

The absence of an employment contract can give rise to a number of problems, including:

1. Banks in most cases require an employment contract with the director when opening a current account.

2. An organization can be fined by inspectors from the tax service, who do not always adhere to the official position of the Ministry of Finance. The director manages the company and works in it. The absence of an employment contract with an employee leads to fines (Article 5.27 of the Administrative Code).

3. A director without an employment contract is disadvantageous for the Federal Tax Service and funds, because receives less from the budget (personal income tax at a rate of 9% instead of 19%) and funds (insurance premiums are not charged).

4. An organization that has no net profit has no right to pay dividends. Work hard, director, thank you!

5. The absence of an employment contract with the director is a direct path to the lack of social benefits at the expense of the Social Insurance Fund. This deprivation is especially noticeable for female directors.

Thus, the arguments in favor of this point of view are very dubious, and the position itself is quite absurd. Yes, the provisions of ch. 43 do not apply to directors who are the sole founders. But is it explicitly stated somewhere that it is prohibited to enter into an employment contract with the director - the sole founder? There is no such prohibition!

Mandatory reporting

On the issue of the need to submit information about insured persons in the SZV-M and SZV-STAZh forms in relation to the head of the organization, who is the only participant (founder), the Ministry of Labor and Social Protection spoke out in letter dated March 16, 2021 No. 17-4/10/ B-1846, which indicated that an employer registered with the Pension Fund as an insurer of compulsory pension insurance is required to submit reports on individual (personalized) accounting in forms SZV-M and SZV-STAZH in relation to insured persons who are members of this organization labor relations, including managers who are the only participants (founders), members of organizations, owners of their property.

Please note: in this document, the ministry already recognizes the existence of an employment relationship between the general director - the only participant and the company, even in the absence of an employment contract.

It should be concluded that today there is no single position on the issue of the need to conclude an employment contract with the director - the only participant, however, the regulatory authorities still recognized the emergence of labor relations, including on the basis of actual admission to the performance of labor duties. This means that we can safely say that all the guarantees provided to employees by labor legislation are also provided to managers - the only participants in a limited liability company (LLC). In this case, the decision on whether to enter into an employment contract with the manager remains with the company itself.

Employment contract with the director of the LLC

Currently, limited liability companies are one of the most common forms of business organization in Russia. This is primarily due to the significant advantages of this form over individual entrepreneurship (read more here). Therefore, quite often there are such societies that are organized by a single participant, who at the same time also performs the functions of a director. Registration of labor relations in such cases often raises questions.

The requirements given in this article for drawing up an employment contract with the director of an LLC can be applied not only to situations where there is only one participant in the company, but also to any situations of concluding employment agreements between the LLC and a newly appointed director.

Tax increase due to lack of employment contract

Is an employment contract with the director required? All official expenses that may be associated with the official payment of salaries to employees, each organization has the right to take into account during the formation of the tax base. At the same time, possible remunerations that were accrued by the manager do not contribute to the reduction of taxable profit. As a result, it turns out that in order to take into account payments for the sole founder in your expenses, they must be provided for in an official employment contract.

The legality of accounting for all expenses paid can also be formally confirmed if the employment contract was not concluded in writing. After all, when a person is appointed to the position of manager, he enters into labor relations with the organization. At the same time, this approach may also cause some complaints from the tax authorities during the audit. The legality of such actions can also be defended in court.

What can be recommended to a director who is the only participant in such a situation among such different opinions? Obviously, the advantages of having an employment contract far outweigh the disadvantages, so there are some options:

drawing up an employment contract, paying and accruing wages is necessary based on the fact that many authorities support this option;
draw up an official employment contract, according to which you will need to receive a certain amount as salary, and then pay dividends as a participant in this company.

These two options are quite reasonable, justified and legal. At the same time, you can also save significantly on insurance premiums.

Is it necessary to conclude an employment contract with the director of an LLC?

The first question that arises in a situation where the founder is also the chief executive officer of the company is whether there is a need to draw up an employment contract with the director of the LLC. Here it is very important to understand the mechanism for appointing a director and its functionality.

The director of the LLC is appointed based on the decision of the participant (if there is only one) or on the basis of the decision of several participants at their general meeting. The procedure for recruiting and appointing the head of the company must be reflected in the Charter of the LLC. But in any case, the issue of choosing a manager is decided by the LLC participants (this decision is signed either by the sole participant or by the person presiding at meetings of its participants).

So, the sole founder decides that he will be the head of the company organized by himself. In this situation, from the date of this decision, executive functions are transferred to the director, and he assumes the corresponding rights to enter into employment contracts with hired employees. Therefore, from the point of view of the correct execution of such activities, of course, it would be fair to conclude an employment contract between the director and the LLC in order to clearly define his functions and ensure payments in his favor for social funds (pension, social insurance).

In this sense, it does not matter at all whether the director of the LLC is also a member of the company or not - he performs labor functions and the employment contract must be drawn up.

general information

You can often see a situation where a person registers his own company and, being its sole owner, takes over management. That is, he occupies a certain leadership position, for example, general director. But when it comes to working in your own company, many questions arise about the design. Since he is working, he must go through a certain registration procedure. And first of all, this is the conclusion of an employment agreement.

Is it necessary to conclude an employment contract with the general director? After all, if you don’t formalize it, how can you calculate wages and pay taxes? According to labor law, the question of whether a contract should be concluded should not arise. An employment contract with the director of the LLC is drawn up, even if he is its only founder.

Despite this, the debate among experts does not stop. Several years ago, Rostrud issued a document which stated that since in this situation there is no employer, an employment contract with the director, the sole founder, is not signed. This decision was supported by the Ministry of Health and Social Development of the Russian Federation in 2009. The officials justify their position by the fact that the performance of work by the boss is regulated by Chapter 43 of the Labor Code of the Russian Federation.

But the provisions of this chapter do not affect a person if he is a director and founder in one person. Disputes also concern who signs the employment contract. The employment contract with the founding director is signed by him himself for both the employee and the employer. And this does not contradict the norms of labor legislation. In civil law, it is prohibited to formalize transactions if both parties are the same person. But this rule of law does not apply to labor relations (Article 2 of the Civil Code of the Russian Federation).

Reference: many are of the opinion that the employer in such a situation is a legal entity, for example, a limited liability company.