What Drafting a Director's Contract Means
A director's employment contract is the most numerically loaded drafting task in the Georgian Labour Code: each of its clauses is tied to a specific article, and each article carries specific numbers. The first question is the term. Where the employment relationship exceeds 1 month, the contract requires written form. A fixed-term contract — unless the term is 1 year or more — may be concluded only on a ground listed by law: work of a specific volume, seasonal work, a temporarily increased volume, replacement of a temporarily absent employee, subsidised remuneration, or another objective circumstance.
The lawfulness of a fixed term is also tested by numbers: where the term exceeds 30 months — or the relationship, through consecutively concluded fixed-term contracts, exceeds 30 months — the contract is deemed open-ended. Consecutiveness is defined precisely: continuation of the existing contract immediately upon expiry, or conclusion of a new one within 60 days of expiry. The exception is the start-up: for an entrepreneur within 48 months of state registration the restriction does not apply, though within that frame a fixed-term contract cannot be shorter than 3 months.
Content — the Essential-Terms Frame
The contract's content follows the Code's list of essential terms: information about the parties, the start date and duration, working and rest time, the workplace, the position and the description of the work, remuneration and the manner of payment, the overtime remuneration procedure, leave, the termination procedure and, where relevant, the provisions of collective agreements. In a director's contract each of these items is written with particular precision, because in a top-manager's position every term is a potential subject of dispute.
Probation and Liability Clauses
Probation operates for directors too, under strict limits: it is possible only once, for not more than 6 months, and only in written form. Work performed during probation is paid; within the period the employer may at any time conclude a fixed-term or open-ended contract or terminate the existing one, and the general termination-procedure requirements do not apply to that termination unless the contract provides otherwise — remuneration is paid for the time worked.
The material-liability clauses matter especially for a top manager: a written contract may define the type and scope of the employee's individual liability where it follows from the specifics of the work; a full material-liability contract is concluded with an adult employee who stores, processes, sells, transports or uses in production the valuables entrusted to them — a standard element of a director's contract.
The Non-Compete — the Leader's Clause
The classic element of a top-manager's contract is the competition restriction: the contract may impose the obligation not to use the knowledge and qualification acquired in performing the work for the benefit of the employer's competitor. The restriction operates for only 6 months after termination, and only on condition that during that period the employer pays remuneration not lower than the amount at termination; it cannot be imposed on employees in education, science or culture.
What Does Not Apply in Georgia
The United States executive-contract doctrine — the "good reason" and "golden parachute" institutions — is not directly applicable in Georgia: every clause of a director's contract must rest on the countable norms of the Labour Code. A clause translated from a foreign template that does not fit the Georgian norm remains defenceless in a dispute.
Two technical rules of the content block often remain unnoticed in an executive contract. The first concerns internal labor rules: the contract may provide that the rules are part of the contract, in which case the employer must make the rules known to the person before the conclusion, and any amendment to the rules — within 14 calendar days of its introduction. The second is the balance of several contracts with the same employee: mutually complementary contracts remain in force and count as one; the previous one operates to the extent the new one does not change it; and where the same term is covered repeatedly, the last contract prevails. A term of an individual contract that contradicts the law or the collective agreement is void — unless it improves the employee’s position.
Frequently Asked Questions
Below we answer the questions most frequently asked about directors' contracts.
May a fixed-term contract be concluded with a director?
Only on a ground listed by law; otherwise it is deemed open-ended. A term above 30 months, or consecutive contracts exceeding 30 months in total, automatically makes the contract open-ended.
How long may probation last?
Not more than 6 months, only once and only in writing; the work is paid during probation, and on termination the remuneration for the time worked is paid out.
When is full material liability established?
By written contract — with an adult employee who stores, processes, sells, transports or uses in production the entrusted valuables.
For how long may a non-compete run?
Not more than 6 months after termination, against compensation — not lower than the amount at termination throughout the period.
What happens when internal labor rules change?
If the rules are part of the contract, the employer must notify the employee of an amendment within 14 calendar days of its introduction.
How We Help on Legal.ge
The Legal.ge team assembles a director's contract with article-tied precision: we choose the term formula on lawful grounds, complete the essential-terms frame, and draft the probation, material liability and non-compete clauses within the law's limits. Contact us — a top manager's contract is won where every number is in its place.