Executive positions are of critical importance, as they embody the key profiles that steer the course of a company. These roles carry exceptional responsibility and exert a profound impact on the organisation as a whole.
Naturally, the hiring of an executive comes with a number of particular considerations. The legal and employment framework applicable to senior management differs substantially from that of ordinary employees, demanding a tailored approach.
This article explores the most relevant aspects of the legal and organisational regime governing executives within companies.
To begin with, the selection process for such profiles is typically lengthy and rigorous. While there is no fixed rule, it is not uncommon for six to eighteen months to pass between the first interviews and the signing of the employment contract.
Moreover, executives often enjoy working conditions that set them apart from rank-and-file employees:
- They may participate in the company’s shareholding structure, acquiring the status of shareholders (and therefore owners).
- As representatives of the company, they effectively embody the employer itself.
- They manage their own schedules, working as many hours as necessary without being bound to a fixed timetable.
In this regard, one might say that the status of an executive takes on a dual nature in certain cases:
- By holding company shares, they are simultaneously employees and shareholders, which also brings commercial law considerations into play.
- They are employees and, at the same time, “the company itself,” as they act as its legal representatives and decision-makers.
Indeed, their legal framework is so distinctive that the Mexican Federal Labour Law classifies these individuals as “Employees of Trust” (Empleados de Confianza) by virtue of their managerial, supervisory, and oversight duties. In fact, Article 185 of the Law allows an employer to terminate a senior executive purely on the grounds of a loss of trust.
Consequently, the termination of an executive is invariably more complex than that of an ordinary employee. It may require shareholder meetings to remove them as equity holders, the formal revocation of notarial powers, and careful coordination of the transition to new leadership. Hiring a senior executive is therefore far more than merely selecting a candidate who appears to fit the company’s expectations; it demands foresight and meticulous planning to anticipate the legal, organisational, and strategic implications involved.
Therefore, the hiring of an executive is a strategic legal decision, due to the fact that it shapes the company’s direction and governance, and must be approached with a long-term vision that safeguards its future growth.
AUTHOR
Rodrigo Morán Díaz. Lawyer with experience in tax, administrative, and transactional law. Currently a lecturer in Legal Logic at Universidad Panamericana, Bosque Real campus. He earned his Law degree there from 2017 to 2022.
