Notice Periods for GmbH Managing Directors

In a recent decision dated 5 November 2024 (case no. II ZR 35/23), the Federal Court of Justice (BGH) reaffirmed its previous case law on the applicability of the notice periods in Section 622 German Civil Code (BGB) to managing directors. The BGH continues to hold that the minimum notice periods of Section 622 BGB also apply to managing directors of a GmbH who are not majority shareholders. This confirmation is in contrast to the opinion of the 2nd Senate of the Federal Labour Court (BAG), which declared the shorter notice periods pursuant to Section 621 BGB to be applicable to service relationships (see judgement of 11.06.2020 - 2 AZR 374/19).

Different views of the BGH and the BAG

The BGH argues that managing directors are comparable to employees in terms of their social status and therefore the protective mechanisms of Section 622 BGB, which cannot be waived to the disadvantage of the managing director, should also be applied to them. This view aims to ensure uniform protection against dismissal for all employee-like persons, regardless of whether they are in an employment relationship or not.

In contrast, the BAG is of the opinion that the notice periods for managing director service contracts, which are not employment contracts, are based on Section 621 BGB. The BAG emphasises that Section 622 BGB is expressly only applicable to employment relationships and that there is no regulatory gap that would justify an analogous application to service relationships. The statutory provision in Section 621 BGB is sufficient for service relationships and there is no need to apply the extended notice periods of Section 622 BGB to managing directors.

Implications of the different opinions

The differing opinions of the BGH and the BAG lead to considerable legal uncertainty for companies and managing directors. As long as this divergence has not been clarified, companies should take this into account regarding the contractual documentation and in separation situations.

In practice, longer notice periods are often agreed with managing directors than the six-week notice period to the end of a quarter, which applies in accordance with Section 621 BGB in the case of an annual remuneration. The automatic statutory extension of the notice period in accordance with Section 622 (2) BGB, which is favoured by the BGH, is therefore more important in practice.

In addition, the current divergence will also influence the strategic consideration of which court an action should be brought before, if there is a choice. In relation to the notice period, an action before the labour court could be less advantageous for a managing director.

It remains to be seen whether and when the Joint Senate of the Supreme Courts of the Federation will be called upon to clarify this contradiction in case law. A swift clarification would be desirable in any case.