Employee-elected members of the board

What is an employee-elected member of the board?

An employee-elected member of the board is elected by the employees of the company.

Do we always have a right or an obligation to elect employee-elected members of the board?

Whether the employees in a company want to elect representatives for the board is voluntary. You can elect representatives for the board if the company has had at least 35 employees on average for the past three years.

If there have been fewer than 35 employees, the company can decide in the statutes that employees can be represented on the board anyway.

If the general meeting elects five board members, for example, the employees can elect three members.

Employee-elected members of the board are also called company representatives.

Employee-elected members of the board are also called group representatives if they have been elected to sit on the board in a group. Together, a parent company and its subsidiaries make up a group.

The rules for electing employee-elected members of the board for a group board can differ slightly from the rules for electing board members to boards at limited companies, private limited companies and commercial foundations. These rules are not described here. Contact IDA for more information.

Purpose of an employee-elected member of the board

The purpose of an employee-elected member of the board is to gain insight and influence on the board’s decisions. The board also benefits from having representatives from the employees. Employee-elected members of the board participate in the management on equal terms with the other board members.

The overall strategy of the company is decided by the board, and it is important that the basis for the decision is as nuanced as possible. This is where you can make a difference as an employee representative. You have knowledge about operations and know the collaboration partners from your daily work, and perhaps you know what the market demands.

Tasks of the board

The board decides the general guidelines for the company's operations and development. The board must consider extraordinary business decisions such as major investments and mergers.

The board should not be involved in day-to-day operations. Day-to-day operations are managed by the board of managers, which is employed by the board. The board oversees how the board of managers runs the company.

Am I on the board to represent the employees?

Even though you are an employee-elected member of the board, you are not elected to represent your colleagues. Your tasks on the board do not differ from the tasks of the other board members. Your strength as a board member is that you have insight into day-to-day operations at the company, which the board members elected by the general meeting do not. This insight is essential for the decisions to be made by the board.

Checklist for newly elected employee representatives on a company board

• Make sure you have the company's statutes and read them. It is assumed that you know them.
• Make sure you have the company's rules of procedure and read them. It is assumed that you know them.
• Read the minute book of the board. Preferably as far back as you can. This will provide an overview of what has been discussed and of any conflicting interests on the board.
• Get hold of the financial statements for the past five years. Read them as well as you can and ask questions to the board of managers. The financial statements are always available at the Danish Commerce and Companies Agency.
• Read the auditors' records and ask questions if the auditor has made any observations.
• Review the register of shareholders and the special register for board members and any shares in the company owned by the CEO.
• Gain an overview of the structure and goals of the company.
• Gain an overview of the legislation relating to the primary activities carried out by the company.
• Check that IDA has you registered as an employee-elected member of the board.
• Get the company to take out liability insurance for board members.

Note that the company is obligated to make the necessary assistance available if you find it difficult to understand financial statements or other information at first.

Meetings of the board

Prior to each board meeting, you will receive an invitation with an agenda and the necessary appendices. You can ask for additional material, if necessary.

As a board member, you participate in discussions at board meetings, and you are entitled to receive answers to any questions. You should be active in board work, and you are entitled to ask questions and demand that an item be included on the agenda.

At each meeting, you must see the auditors' records. If there are new additions to the auditors' records, they must be signed by all members of the board. If you have any questions regarding the auditors' records or the financial statements to which you cannot get a sufficient answer, you are entitled to demand that the auditor be present during the board meeting.

A minute book of the board must be kept for all the discussions at board meetings. Thus, the minute book of the board must be signed by all those who attended the meeting. You and the other participants are entitled to have any disagreements recorded in the minute book. The minute book of the board may be different from the actual minutes.

Is the work on the board part of my working hours?

The time you spend as an employee-elected member of the board is not part of your working hours. Just like the other members of the board, you attend meetings in your spare time, unless you can agree with the company that the board work is part of your working hours. You must attend the meetings even if they are scheduled on inconvenient days or times, for example Saturdays or New Year's Eve.

Am I entitled to remuneration for my work as an employee-elected board member?

You are entitled to remuneration for your work on the board, if the other members of the board receive remuneration. All members must generally be paid the same remuneration. However, it is permitted to pay just the chairperson. The chairperson may also be entitled to receive special remuneration, typically twice the amount that the other members of the board receive.

Board members with special expertise or who have incurred loss of earnings may, in exceptional cases, receive higher remuneration if they can document their own expertise or loss of earnings. However, their expertise must be very special, as shareholder-elected board members often are elected to the board due to their expertise.

Am I entitled to attend meetings as a deputy employee-elected member of the board?

If the member for whom you are a deputy is unable to attend a meeting, the chairperson of the board is not obligated to automatically invite you to the meeting.

You are entitled to participate in the meeting instead if the board member has requested to have their deputy invited. The member for whom you are a deputy must notify the chairperson of the board that you will be attending the meeting instead, and the chairperson is obligated to invite you to the meeting.

The statutes or the rules of procedure may state when a deputy must be convened. The members of the board who are elected by the general meeting do not need to have deputies.

The person for whom you are a deputy should brief you regularly on what goes on at the board meetings, as you may be invited at short notice.

As a deputy, you have the same rights and obligations as the employee-elected member of the board.

Your liabilities as an employee-elected member of the board

You have both criminal liability and liability in damages. The liability is the same for employee-elected members of the board and members elected by the general meeting.

As a general rule, all members of the board are liable for errors made by the board. You only have this so-called joint and several liability if the board has acted together. Only those who voted in favour of a decision can be made liable. You will not be liable if you can prove that there is nothing to blame you for.

If the board is about to make a decision that you believe is completely irresponsible, you can ask to have your standpoint recorded in the minute book of the board. This is particularly important if the decision is not to be voted on. On most boards, this will be considered a drastic step. If you want to be absolutely certain of not being held liable, you should resign from the board. This is a last resort, which is only relevant in extremely rare cases.

You can be held criminally liable as a board member if you or the company violates the Danish Criminal Code or special acts in the area. The Public Companies Act is an example of a special act, and it includes rules about duty of confidentiality, submission of information to the Danish Commerce and Companies Agency and timely submission of the financial statements. If the Danish Commerce and Companies Agency does not receive the information or the financial statements within the deadline, you will have to pay a fine. Another special act is the Danish Working Environment Act, under which the company is responsible for ensuring that working conditions are appropriate from a health and safety perspective. The penalty may be a fine, simple detention or imprisonment depending on how serious the violation is.

You can be held liable for damages as a board member for any offences under civil law according to the general rules of Danish law. This means that the wrongdoer must replace the loss. You must pay damages if you have acted intentionally or negligently. You will only be exempt from liability if you cannot be blamed for anything.

There are only very few rulings on the subject. This is partly because liability is rarely aimed at the board and partly because many claims are not brought before the courts but are settled out of court instead.

Can I be dismissed as an employee-elected member of the board?

You can be dismissed as an employee-elected member of the board.

However, you are protected against dismissal in the same way as union representatives within your professional area or as union representatives within a similar area. Engineers and Masters of Science employed in the private sector are not covered by a collective agreement in which union representatives are protected. However, some private companies have a collective agreement for engineers and Masters of Science that includes rules for dismissal of union representatives.

If you are employed in a company where there is no collective agreement with protection of union representatives, you will have to find another collective agreement under which you can enjoy protection. Collective agreements with protection state that the union representative can only be dismissed if there are compelling reasons. The company must prove that you have been dismissed due to compelling reasons.

Compelling reasons could be if you have been dismissed due to shortage of work, failure to cooperate, refusal to work or if you have made threats against management.

If it turns out that you have been dismissed without a compelling reason, you will be entitled to compensation. The compensation can only be up to the maximum amount stated in the collective agreement that includes the protection. The amount depends on how long you have been an employee-elected member of the board and on the validity of the management's reasons for dismissing you.

The protection that the employer must prove that the dismissal is due to compelling reasons covers both employee-elected members of the board and their deputies.

If you have been dismissed, ask IDA to look into the matter and assess whether there were compelling reasons.

How can IDA support my work as an employee-elected member of the board?

IDA can help if you have any questions about the rules for electing company representation, about matters concerning your work on the board, and about your rights and obligations as a board member.

IDA has a training programme and courses for union representatives. Employee-elected members of the board and their deputies, members of the board of company groups (in Danish "VGs") and academic clubs (in Danish "AKs") at private companies, public-sector union representatives and health and safety representatives can attend the courses. IDA regularly holds courses for employee-elected members of the board, newly elected board members will be invited automatically. Therefore, it is important that you register your election on mit.ida.dk.