Termination of managing director employment contracts

A notice of termination of a managing director employment contract during a contractually agreed minimum term can already be effectively declared during this minimum term if the notice period does not expire until after this term. The notice period shall commence upon receipt of the notice of termination.

Facts

The following case was heard by the Nuremberg Higher Regional Court: The plaintiff was appointed as managing director of a GmbH (limited liability company) and agreed a minimum term of five years with the defendant GmbH in the managing director employment contract. After expiration of this minimum term, the contract was to be terminable with a notice period of one year until the end of the following calendar year. Before the expiry of the minimum term, the parties concluded an amendment agreement providing for the indefinite continuation of the managing director employment contract with a notice period of six months to the end of the month.

During the minimum term, disagreements arose between the parties. The GmbH then dismissed the managing director and declared the ordinary termination of the managing director's employment contract during the contractually agreed minimum term. The managing director was of the opinion that the employment relationship had not ended as a result of the termination, but continued under unchanged conditions, and that he was still entitled to wage payment. This case was recently decided by the Nuremberg Higher Regional Court.

The ruling of the OLG Nuremberg dated March 30, 2022 (Case No. 12 U 3303/19)

The OLG Nuremberg first stated that an ordinary termination was excluded during the agreed minimum term. However, it clarified that an ordinary notice of termination, which refers to the period after the minimum term and thus only becomes effective then, can also be effectively declared before the expiry of the same. The notice period therefore also begins here with the receipt of the notice of termination.

Practical advice

In practice, a number of particularities must be taken into account when terminating a managing director. The reason for this is that a managing director is always involved in several legal relationships: If a managing director is terminated, contractual and company law aspects must be taken into account. This follows from the fact that the managing director is, on the one hand, the company's representative body. On the other hand, he has a managing director's contract which must be distinguished from his position as an executive body. Both relationships must be treated independently of each other.

The organ position of a managing director in a GmbH is terminated by a majority resolution of the shareholders' meeting (dismissal or revocation of appointment). The dismissal can take place without justification, so-called ordinary dismissal. Such a dismissal is always possible if the GmbH articles of association and other agreements do not provide for any impediments to the dismissal of the managing director (for example, dismissal only for cause). However, the dismissal itself does not affect the existing managing director agreement.

Extraordinary dismissal is to be distinguished from ordinary dismissal. This requires a majority resolution and the existence of an important reason, for which some regulations can usually be found in the articles of association.

But beware: With the dismissal, only the position as a member of the executive body ends. Therefore, the termination of the managing director's employment contract is also required. In principle, the shareholders' meeting is also responsible for this.

Both processes must therefore be strictly separated from each other. This can lead, for example, to the result that the dismissal of the managing director can take place effectively, but not the termination of the employment contract or vice versa. In order to avoid ambiguities here, two shareholder resolutions should therefore also be adopted.