Do you have to consult the works council before you can terminate a managing director?


This question, which at first glance seems unusual, leads to a very crucial preliminary question for managing directors and their severance pay negotiations. Namely, whether they can be managing directors or employees or even both and whether they can sue in the labor court or have to sue in the civil courts (here regional courts) or even should sue in both.

Why do managing directors even want to sue in the labor courts?

The labor courts have special expertise in labor law; they are specialized in labor law (the civil courts are not); the bench at the labor court is also staffed by volunteer judges from the employee-employer community. The labor courts are overwhelmingly employee-friendly. They are even employee protection bodies.

Proceedings before the labor courts are also more cost-effective. There is no advance payment of court costs and in first instance judgment proceedings each party bears its own legal costs, regardless of the outcome of the proceedings. It is therefore significantly less risky than proceedings in the civil courts.

General rule:

A managing director belongs to the employer camp and cannot bring a dismissal protection claim before the labor courts. He has to sue in the civil courts (here regional courts). As a rule, he doesn’t have to have high hopes for a severance payment. Managing directors generally have no protection against dismissal – unless parties have agreed  to the protection in their contract. Unfortunately, this is rarely the case. When you get hired, you don’t usually think about termination or how you could protect yourself in case of it.

But what is much more common and unfortunately often overlooked is that a managing director can be both. He can be an employee and also a managing director, but his status is only formal (pro forma managing director), i.e. he is registered in the commercial register but actually has nothing to say. At least not in the way that would be expected from managing directors. Or, he is actually a managing director, but there is still an existing employment relationship that has not been formally terminated.

If he is an employee (in addition to or instead of his position as managing director), the works council must be consulted before the employee is terminated, according to Section 102 Paragraph 1 Sentence 1 of the BetrVG, otherwise the termination of the employment relationship is necessarily invalid.

I won a groundbreaking case at the Hessian State Labor Court that has been quoted and discussed very widely in the media and by lawyers and unions: A managing director who was entered in the commercial register was allowed to sue before the labor courts because he did not have a managing director’s employment contract, but only had an employment contract. He received an annual salary from his employer, even in a small business.

I refer to my blog post below from March 25, 2023 on the decision I fought for from the Hessian State Labor Court, file number: 19 Ta 507/21. I have also successfully represented managing directors in dismissal protection claims at other labor courts, e.g. at the Wiesbaden Labor Court and Offenbach am Main Labor Court, among others. I refer to my blog posts below.

Are you a managing director and have you received notice of termination? Contact us! Attorney at law, Ms. Hussain-Hämäläinen, LL.M. advises and represents you personally.