When a managing director’s contract is terminated, other provisions apply than those of a “normal” employment contract. Managing directors are in fact not employees in terms of German labor law. This is due to the fact that, as a representative of the company and due to the nature of their activities, they tend to be “on the team” of the employer.
Managing directors have more time for legal action against dismissal
In the event of termination of the managing director contract in Germany, managing directors may not file a complaint with the labor court, but only with the district court (Landgericht).
Since the labor court does not have jurisdiction, the three-week period from the date of termination for employees does not apply to the filing of such an action. Managing directors therefore have more time to oppose a dismissal than employees.
Caution in case of removal of representative status
As an exception, however, the labor court has jurisdiction if the managing director is dismissed from his or her executive position as managing director and is therefore no longer able to represent the company. In this case, managing directors are also regarded as employees. Since the managing director’s contract is not necessarily linked to the position as a member of a representative body, it continues to exist even after the managing director has been dismissed from the latter. The managing director is therefore still entitled to his or her salary as long as the contract has not been terminated.
The labor court is also responsible if the managing director’s service agreement is terminated after the dismissal as a representative. In this case the three-week preclusive period also applies. This means that if an action is not brought within this period, the dismissal can no longer be challenged.
WINHELLER provides counsel to managing directors and companies
We therefore recommend that managing directors in this situation check carefully whether, in addition to ending the managing director’s contract, the position of the managing director as an executive representative has also been terminated. We will be happy to assist you in these matters and will advise both managing directors and companies on all questions relating to the termination and dismissal of a managing director. Please contact us at info@winheller.com or +49 (0)69 76 75 77 80.
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Managing Directors Are No Employees in Germany
Management Service Agreement in Germany
