Compatibility of the cumulation of corporate positions and employment relationships: The clarifications of the INPS

INPS, with message no. 3359 of 17 September 2019, summarised and explained to the economic operators and their area offices, the principles established at the Supreme Court level regarding the compatibility between the ownership of corporate offices and/or the figure of the shareholder of corporations with a clear employment relationship.

The message is based on what has already been stated on the subject by the Institute itself in Circular Note 179 of 8 August 1989 (“Investigations and evaluation of the existence of the subordinate employment relationship“), partly revised in light of message 12441 of 8 June 2011.

The Social Security Institute, starting from the assumption that the position of director of a joint-stock company does not exclude a priori the configurability of a subordinate employment relationship provided its relative characteristics exist (i.e. the subjection to the authority of management, control and disciplinary management body), resides in the various corporate positions highlighting, for each of them, the limits to the compatibility with a parallel employment relationship.

Corporate positions

1. Chairman of the Board of Directors

First of all, the position of Chairman of the Board of Directors is examined, which, in the Institute’s opinion, is not incompatible with the status of a subordinate worker, without prejudice to the submission of the Chairman to the directives, decisions and control of the Board, even in the presence of the possible conferral of legal representation of the company.

• Sole Director

As above, unlike the sole director since “he/she has the power to express on his own the will of the corporate body, as well as the powers of control, command and discipline“. The position of sole director is, in fact, incompatible with an employment relationship because the employee would end up performing work ordered by the governing body, i.e. by himself.

• Managing Director

The compatibility between the office of Managing Director and a parallel employment relationship must be assessed, according to the Supreme Court and the Institute, on the basis of (i) the extent of the delegation conferred by the Board of Directors, (ii) the number of any other managing directors and (iii) the ability to act jointly or severally.

In view of this and without prejudice to the existence of the typical elements of subordination, the Institute – on the basis of the judgements examined – considers that the figure of the managing director to whom specific and limited powers are conferred and who acts in the presence of other delegated bodies is not an obstacle to the establishment of a genuine employment relationship.

• Sole shareholder and partner (not single)

On the other hand, it is not possible for the sole shareholder of a limited company to have an employment relationship, since the concentration of ownership of the shares by a single person in essence excludes his actual subjection to the directives of a corporate body, thus becoming the “sovereign” of the company itself.

The case of the partner (not single) of a limited company, on the other hand, is different. In fact, even in the presence of a simultaneous position as director, it is not abstractly possible for this figure to set up an autonomous subordinate employment relationship, subject to the concrete verification of the performance of activities outside the functions inherent in the working relationship, distinguished in any case by the typical characteristics of subordination.

Proof of the cumulative nature of corporate office and employment relationship

Lastly, the Institute focuses its analysis on the evidence that must be provided in court by the subject who wants to enforce the bond of subordination in the presence of a relationship of a purely managerial type.

Starting from the decisions of the Supreme Court, the INPS specifies that the cumulation of corporate office and employment relationship requires proof of the following conditions:

1. The assignment of decision-making power of the Company to a collegiate body aimed at forming the will of the entity both internally and externally;
2. the existence of the constraint of subordination also, possibly, in the attenuated form of managerial work, and in particular the subjection of the worker to an effective power of hierarchical supremacy of another subject;
3. the existence of a concrete differentiation between the activities carried out by the person concerned as an employee and as a director.

In this context, INPS specifies certain distinctive elements of subordination will be evaluated later, such as:

• the frequency and predetermination of the remuneration;
• observance of contractual working hours;
• The classification within a specific company organisation;
• The absence of even the slightest entrepreneurial organisation;
• The absence of risk on the part of the worker;
• the distinction between amounts paid as remuneration and those deriving from corporate income.

In essence, with the exception of the sole shareholder of a corporation, the Institute allows the cumulation of the office of director and that of subordinate worker provided that concrete and rigorous proof is provided of the performance of activities outside the functions inherent in the staff relationship and characterized by the typical characteristics of subordination.