Who Amends the Employment Contract of a Dismissed GmbH Managing Director?

Germany's Federal Court of Justice (BGH) has clarified the authority responsible for amending an employment contract of a managing director at a GmbH (German limited liability company). The court's ruling emphasizes that the shareholders' meeting is primarily responsible for the conclusion, amendment, and termination of the managing director's employment contract, unless the company's articles of association stipulate otherwise.

A modification to the employment contract of a dismissed managing director falls under the purview of the new managing director only after the initial director-employment relationship has been converted into a standard employment agreement. This principle is rooted in established BGH jurisprudence, which reserves exclusive authority for such contractual changes to the shareholders' meeting, absent any contrary provisions in the company's statutes.

The case involved an attorney who served as the managing director of a GmbH he co-founded. Disputes arose over alleged non-payment of salary and the termination of his employment contract by the company. A claimed agreement in 2015 to amend the terms related to salary payments was deemed by the BGH to require the approval of the shareholders' meeting, not actions by individual shareholders or the subsequent managing director.

The lower court must now reconsider the case based on the BGH's decision. If the shareholders' meeting had indeed approved the alleged amendment to the employment contract, the plaintiff would likely lose the lawsuit.