Tag Archives: Attorney

Politics Law Society

Occupational rehabilitation management program and dismissal due to illness

Occupational rehabilitation management program and dismissal due to illness

Occupational rehabilitation management program and dismissal due to illness

In the case of sick employees, employers ought to closely explore the possibility of an occupational rehabilitation management program. Otherwise, dismissal due to illness may be invalid.

Employers are obliged to offer employees who are continuously or repeatedly sick for a period of six weeks within the space of a year what is referred to as a „betriebliches Eingliederungsmanagement“ (BEM) [occupational rehabilitation management program]. We at the law firm GRP Rainer Rechtsanwälte note that the employer is supposed to look into how the employee“s unfitness for work can be overcome or how to prevent him from becoming incapable of working again. If the employer considers a BEM to be pointless, it must be able to justify this in detail before issuing notice of dismissal due to illness. Otherwise, as is clear from a judgment of the Landesarbeitsgericht (LAG) Rheinland-Pfalz [Regional Labour Court of Rhineland-Palatinate] from January 10, 2017, the dismissal may be invalid (Az.: 8 Sa 359/16).

In the case in question, the employee had worked at the company for many years as a machine operator. Over several consecutive years, the employee was absent from work for several weeks due to illness. The employer subsequently had a discussion with the employee in advance of the occupational rehabilitation management program. According to the company, the employee stated during the discussion that his illnesses had been „fateful“ and there was nothing the employer could do to prevent his unfitness for work. After the employee later fell ill and became unfit for work once again, the employer issued notice of dismissal due to illness, which the employee then resisted. It was argued that there had been no social justification for the dismissal. Moreover, the employer ought to have carried out a BEM before issuing notice of dismissal.

The LAG Rheinland-Pfalz granted the action for wrongful dismissal, ruling that the dismissal had not be socially justified and was therefore invalid. The Court went on to say that dismissal due to illness is socially justified if there is a negative prognosis in relation to the probable duration of the period of unfitness for work and this results in a significant detrimental effect to the company“s interests that places a burden on the employer which is no longer tolerable. The Court held that the employer had not sufficiently demonstrated that this was the case, pointing out that the latter had failed to carry out a BEM as required by law and yet also failed to sufficiently make the case for there having been no other possible milder measures than dismissal. The LAG concluded that this rendered the dismissal disproportionate. If the employer considered the BEM to be pointless, it needed to explain why more recent illnesses could not have been prevented by this.

Employers can turn to lawyers who are versed in the field of employment law for advice on all legal issues pertaining to the workplace.

https://www.grprainer.com/en/legal-advice/employment-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en

Politics Law Society

BAG: Dismissal with the option of altered conditions of employment needs to be sufficiently precise

BAG: Dismissal with the option of altered conditions of employment needs to be sufficiently precise

BAG: Dismissal with the option of altered conditions of employment needs to be sufficiently precise

In the case of dismissal with the option of altered conditions of employment, the offer to continue the employment relationship needs to clearly define the new terms. That was the verdict of the Bundesarbeitsgericht (BAG), Germany“s Federal Labour Court (Az.: 2 AZR 68/16).

Dismissal with the option of altered conditions of employment entails the existing employment relationship coming to an end. At the same time, the employer offers to continue the employment relationship on the basis of revised terms. We at the law firm GRP Rainer Rechtsanwälte note that these terms must be clearly defined such that the employee is able to quickly and readily decide whether to accept the offer. This was confirmed by the BAG in its ruling of January 26, 2017.

In the case in question, an employee had suffered serious injuries in the course of an accident. Following a work assessment, the employer came to the conclusion that the employee was no longer able to complete the tasks he had hitherto performed, including programming software. The employee subsequently received an offer to continue the employment relationship under different terms in the form of dismissal with the option of altered conditions of employment. Going forward, the employee was to assume responsibility for carrying out predominantly warehouse tasks or courier services as well as earn significantly less. The employee accepted the offer with reservations while lodging a timely legal action.

Despite being rejected by the courts of lower instance, the action was successful before the BAG. The BAG held that the ruling of the Landesarbeitsgericht (Regional Labour Court) was flawed in many respects. The BAG stated that it had assumed that the plaintiff was permanently incapable of performing his work as agreed and laid out in the employment contract. It went on to say, however, that it had only been established that he was no longer able to carry out the programming work, which only represented part of the agreed range of services. The Court ruled that a comparison could not be made between this and being permanently unfit to work, which would make it impossible for the employee to perform any of the work agreed and stipulated in his employment contract.

Furthermore, it was said that the new contractual offer was not sufficiently specific such that the employee would have been able to accept it without further ado. The Court argued that he had not been able to identify with sufficient reliability the work he would have to perform in future. The BAG also noted that the new offer came with a salary that was clearly too low in light of the work he had previously done.

In cases involving dismissal with the option of altered conditions of employment, one should always consider whether the employee is able to perform any of the work he had previously carried out as well as whether the new contractual offer clearly defines the work that is to be performed going forward. Lawyers who are experienced in the field of employment law can advise employers.

https://www.grprainer.com/en/legal-advice/employment-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en

Politics Law Society

GRP Rainer Rechtsanwälte – Experience in commercial agency law

GRP Rainer Rechtsanwälte – Experience in commercial agency law

GRP Rainer Rechtsanwälte - Experience in commercial agency law

In the event that a commercial agency agreement is terminated, the commercial agent often has a right to compensation. Frequent points of contention include the extent of any such entitlement and the classification of new clients.

A lot of businesses across all industries rely on the use of commercial agents. However, if the commercial agency agreement is terminated after years of successful collaboration, this often gives rise to disputes concerning the extent of the commercial agent“s entitlement to compensation. Our lawyers at the commercial law firm GRP Rainer with a great deal of experience in the field of commercial agency law note that, as a matter of principle, a commercial agent is entitled to be paid compensation if the company continues to profit from the business contacts which the commercial agent established while working for the company. On the other hand, this very subject is also a point of issue in many cases. The question is which contacts did the commercial agent actually establish and to what extent the company will profit from the commercial relationships with these clients going forward.

Another point of contention is whether an existing client can also be categorized as a new client if the commercial agent set up said client with a new product from the company which he represents. In this context, the Court of Justice of the European Union (CJEU) has expanded the definition of „new client“. In its ruling of April 7, 2016, the CJEU ruled that a new client can also be a client with whom commercial relations had already existed and were then expanded by the commercial agent to other products offered by the company.

According to the CJEU“s definition, the term „new client“ should not be too restrictive. Even if commercial relations with a client had already existed, this does not preclude the existing client in question from also being a new client. It went on to say that this is certainly the case if the efforts of the commercial agent led to the expansion of commercial relations to additional products. The Court held that an assessment of whether a client is to be considered a new or existing client needs to be carried out based on the goods in relation to which the commercial agent was responsible for mediating. The CJEU ruled that the fact that contact had already been established with this business partner could be taken into account for the purposes of determining the extent of the payment for compensation.

Lawyers who are experienced in the field of commercial law can advise on drafting agreements as well as in relation to contentious issues in the field of commercial agency law.

https://www.grprainer.com/en/legal-advice/commercial-law/commercial-agency-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en

Politics Law Society

GRP Rainer Rechtsanwälte: Assessing obligation to make social security payments in the case of managing directors

GRP Rainer Rechtsanwälte: Assessing obligation to make social security payments in the case of managing directors

GRP Rainer Rechtsanwälte: Assessing obligation to make social security payments in the case of managing directors

Whether a managing director is obliged to make social security contributions depends on various factors. GRP Rainer Rechtsanwälte has carried out an assessment of the obligation to make social security payments.

Whether a managing director is obligated to make contributions to social security depends on whether he is self-employed or classed as an employee. We at the law firm GRP Rainer Rechtsanwälte note that this is not based merely on the employment contract but also the factual circumstances as they relate to the managing director“s job. Things can prove to be particularly problematic if no social security contributions are made on behalf of the managing director despite there being an obligation to do so, with this potentially resulting in subsequent demands from the relevant social security agencies. To prevent this kind of legal dispute and the potential consequences associated with it, it is a good idea to look into whether there is an obligation to make social security contributions in a given case beforehand.

In principle, managing directors who are employees are required to pay social security contributions. This is the case if the managing director works for a third-party company and is subject to the directions of the employer, e.g. in relation to working hours, the place of work or even the type of work. These conditions are usually met in the case of external managing directors.

The situation is often different in the case of managing directors who are also shareholders in the respective GmbH. Notwithstanding this, it still needs to be clarified in these instances whether the managing director is in fact self-employed and whether he does not have to make social security contributions. Typical indications of self-employment include, e.g. if the managing director is free to determine how as well as how long and where he works. Similarly, a stake in the GmbH and assuming personal entrepreneurial risks point to self-employment.

In practice, it is not always possible to define the criteria without any problems. For instance, the employer may be able to give the managing director instructions, but this right is severely limited. Moreover, the extent of any financial interest in the company might indicate whether the relationship can be characterized as self-employment or employment.

That is why it is not simply the managing director“s employment contract that needs to be considered for the purposes of classifying the relationship. The factual circumstances need to be taken into account as well.

Lawyers who are experienced in the field of company law can advise managing directors and companies in relation to social security obligations.

https://www.grprainer.com/en/legal-advice/company-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en

Politics Law Society

Trademark law – Pear too strong a reminder of an apple

Trademark law – Pear too strong a reminder of an apple

Trademark law - Pear too strong a reminder of an apple

One cannot compare apples and pears, at least not according to the equivalent German expression for comparing apples and oranges. However, as demonstrated by a decision of the European Union Intellectual Property Office (EUIPO), things may look rather different in the field of trademark law.

Trademarks are of great importance to businesses. They create brand recognition among consumers and help to distinguish a company“s products and services from those of competitors. However, it is not possible to have every sign or symbol registered and protected as a trademark. GRP Rainer Rechtsanwälte notes that in order for a sign or symbol to be capable of being registered as a trademark, it needs to be sufficiently distinctive such that it can be clearly distinguished from the products of other providers. On the other hand, the sign or symbol cannot infringe any existing trademark rights. That is why it needs to be carefully assessed whether the necessary conditions are met before registering a sign or symbol.

The fact that the devil is often in the detail here is clear from a recent decision of the EUIPO. It is generally safe to assume that apples and pears are sufficiently distinguishable from each other such that there is no risk of one being mistaken for the other. Notwithstanding this, the EUIPO, the body responsible for registering European Union trademarks, took a different view in the context of a dispute between two IT firms. The company bringing the action has featured an apple in its logo for many years, whereas the other company wished to register a pear as its logo. The EUIPO rejected the application for registration.

In justifying its decision it noted that while these were two different fruits, their silhouettes bore a significant resemblance to each other in terms of their smooth, sleek and round design. The „figurative aspects“ of the pear were said to be strongly reminiscent of the logo featuring the apple. The EUIPO went on to say that a remote visual and design-related similarity between the logos was itself sufficient to justify rejecting the application to register as a trademark. It further argued that the pear would give rise to an association with the more well-known apple logo in the minds of consumers and thus allow the relevant company to unfairly profit from the latter“s popularity and success.

Lawyers who are experienced in the field of trademark law can advise on registering trademarks as well as in the event that trademarks rights become infringed.

https://www.grprainer.com/en/legal-advice/intellectual-property-law-and-trademark-law/trademark-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en

Politics Law Society

Properly preparing a will

Properly preparing a will

Properly preparing a will

There are clear rules in Germany determining who will inherit. In the absence of a will or contract of inheritance, the rules of intestate succession apply. In that case, the first to inherit are the spouse or civil partner and one“s own children.

A lot of people put off thinking about what they want to happen with their estate after their death and in so doing forgo preparing a will or contract of inheritance. This means that the rules of intestate succession automatically apply. The first to inherit under these circumstances are the spouse or civil partner as well as the children and, as the case may be, the grandchildren if one“s children have already passed away. If there is no partner or children, the estate goes to one“s relatives in accordance with the degree of kinship, i.e. in the first instance to the testator“s parents or siblings.

GRP Rainer Rechtsanwälte notes that if the rules of intestate succession do not correspond with the testator“s wishes, he can draft a will or contract of inheritance and personally designate his heirs in due consideration of the relevant legal provisions, such as those pertaining to the compulsory portion. Notwithstanding this, there are other reasons why preparing a will might be a good idea, e.g. in order to make optimal use of tax allowances or prevent disputes from arising among the heirs.

Particularly in cases involving communities of heirs, it is not uncommon for things to come to disagreements. While the cash assets can be distributed easily pursuant to proportional rights to the inheritance, disputes frequently break out concerning what is to become of any property, jewellery or other valuables. One of the heirs might prefer to sell the property, whereas the other would rather make personal use of it. The testator is able to set out in a will which heir is to receive which part of the estate. To this end, it is necessary to include as detailed an itemized list as possible in the will.

Couples without a marriage certificate should also give thought to drafting a will in good time. If one of the partners dies, the other is not entitled to anything under the rules of intestate succession and will thus be left empty-handed. This has a particularly dramatic impact if, for instance, the couple acquired real estate together and a portion then goes to the legal heirs.

It is therefore advisable in many cases to concern oneself with preparing a will or contract of inheritance at an early stage. In doing so, the testamentary dispositions can be implemented in a way that most closely matches the wishes of the testator and is optimal from a tax perspective. Lawyers who are experienced in the field of succession law can advise accordingly.

https://www.grprainer.com/en/legal-advice/private-clients/law-of-succession/last-will-and-testament.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en

Politics Law Society

OLG Hamburg on misleading advertising – No fees means no fees

OLG Hamburg on misleading advertising – No fees means no fees

OLG Hamburg on misleading advertising - No fees means no fees

If something is promoted as being free, then it should in fact be free. Otherwise, this kind of advertising might be misleading and violate competition law, as demonstrated by a ruling of the Oberlandesgericht (OLG) Hamburg [Higher Regional Court of Hamburg].

A bank had made an offer that sounded tempting, advertising that no cash withdrawal fees would be incurred when withdrawing money anywhere in the world with its credit card. The bank advertised in promotional letters that no withdrawal fees would be incurred for withdrawing money from any cash machine either at home or abroad, i.e. „0 cash withdrawal fees worldwide“. However, the offer had a catch: there was a charge for using the card outside of the Eurozone, with this only being explained on the back of the promotional letter.

The Bundesverband der Verbraucherzentralen, Federation of German Consumer Organisations, (VZBV) considered this kind of advertising misleading and requested an injunction. The Hanseatische Oberlandesgericht Hamburg [Hanseatic Higher Regional Court of Hamburg] ruled in favour of the consumer watchdog in its judgment of April 12, 2017 (Az.: 5 U 38/14). The OLG held that provisions pertaining to the incursion of fees and the extent of any charges for withdrawing cash at home and abroad were of central importance to consumers and thus an essential feature of the service. It went on to say that consumers would assume with this kind of promotional letter that no fee would be incurred at home or abroad when withdrawing with the credit card in question. Moreover, consumers would not typically make a distinction here between a cash withdrawal fee and a fee for using the card abroad. Instead, they would assume that no charges would be incurred when withdrawing cash anywhere in the world.

The Court ruled that the explanation on the back of the promotional letter stating that a fee would be incurred for using the card abroad when withdrawing outside of the Eurozone did not suffice to clear up this misdirection. To this end, it was said that a clear notice ought to have been included on the front regarding charges for using the card abroad. The Court also noted that the misleading information was liable to induce consumers to take a transactional decision that they would not have taken otherwise.

Violations of competition law may be met with severe penalties. GRP Rainer Rechtsanwälte notes that these can lead to injunction suits and damages claims. To avoid these outcomes, lawyers who are versed in the field of industrial property rights can advise on issues relating to competition law as well as assist in enforcing or fending off claims.

https://www.grprainer.com/en/legal-advice/intellectual-property-law-and-trademark-law/advertising.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en

Politics Law Society

Making timely arrangements for business succession

Making timely arrangements for business succession

Making timely arrangements for business succession

The demographic trend poses a serious challenge to medium-sized businesses, particularly in relation to the unavoidable issue of making arrangements for business succession.

A study from the year 2015 conducted by KfW, the Kreditanstalt für Wiederaufbau (Reconstruction Loan Corporation), shows that around 1.3 million owners of mid-sized businesses were 55 or older at that point in time, with this trend set to continue in the coming years. The problem is compounded by the fact that the baby boomer generation is slowly but surely reaching retirement age, only to be succeeded by age groups with a lower birth rate. The resulting gap is not only reflected among professionals but also at the management level, which does not make it any easier to find a suitable replacement for company director.

The issue of business succession ought therefore to be near the top of the agenda among a large proportion of owner-managed family businesses. Even if the company owner has not yet given thought to retirement, arrangements for business succession should be made in good time. This is not only critical for the future of the business but also the present. This much is clear from the KfW study, according to which the type of planned business succession also has a significant impact on the willingness to invest. If the intention is for the company to be carried on by a family member, the willingness to invest is considerably higher than in the case of an external successor. However, this might mean the brakes being put on important innovations and the business becoming less competitive.

That is why we at the law firm GRP Rainer Rechtsanwälte consider timely planning for business succession to be of elementary important. Particularly in the case of family-run businesses, it frequently comes down to preserving one“s life“s work and positioning the company for the future. For this reason, there is often a desire for the successor at the helm of the company to come from within the family or be some sort of relation. However, this does not always prove possible for various reasons. In that case, a successor may be sought from within the company, or externally sourced and prepared for the position. Business succession often involves establishing new structures and responsibilities within the company.

All in all, business succession represents a complex challenge in relation to which aspects of taxation and succession law ought to be taken into account. To ensure that the transition is as smooth as possible, lawyers who are versed in the field of company law can be consulted.

https://www.grprainer.com/en/legal-advice/company-law/business-succession.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en

Politics Law Society

LAG Schleswig-Holstein – Dismissal with immediate effect for causing serious offence justified

LAG Schleswig-Holstein – Dismissal with immediate effect for causing serious offence justified

LAG Schleswig-Holstein - Dismissal with immediate effect for causing serious offence justified

Anyone who causes serious offence to his employer or a colleague should anticipate the possibility of being dismissed with immediate effect, as demonstrated by a ruling of the Landesarbeitsgericht (LAG) Schleswig-Holstein [Regional Labour Court of Schleswig-Holstein] from January 24, 2017 (Az.: 3 Sa 244/16).

There needs to be good cause justifying exceptional notice of an employment relationship“s termination with immediate effect. Seriously offending one“s superiors or colleagues can constitute good cause. This is something that a 62-year-old craftsman who had worked at a family business for more than 23 years had to learn.

His many years of employment at the company did not give him carte blanche to do as he pleased. He first of all managed to get himself into an argument with the father of the managing directors and former boss, and seriously offended one of the managing directors the next morning. That evening, the managing directors dismissed him from work for three days.

The period of reflection did not do any good. The employee would not listen to reason and refused to apologize. He subsequently received notice of both exceptional and, in the alternative, ordinary dismissal. Furthermore, nothing came of the 62-year-old“s action for wrongful dismissal. His argument that his statements were covered by freedom of expression and that he had acted in the heat of the moment after having been provoked beforehand did not convince the Landesarbeitsgericht Schleswig-Holstein.

The LAG held that causing serious offence is not covered by the right to freedom of expression. Moreover, the Court took the view that the behaviour of the managing director and his father did not amount to provocation. That being said, what carried particular weight with the LAG was that the insults had not in fact been dished out in the heat of the moment; the conflict with the father and the dispute with the managing director were separated by 16 hours. The Court ruled that one could not speak of an impulsive act given such a long interval. It went on to say that a prior formal warning had not been necessary, as the plaintiff had refused to apologize and later failed to acknowledge that his actions had been wrong. As such, it was unreasonable to expect the employer as a small family business to continue the employment relationship, even until the end of the notice period.

Notwithstanding this, GRP Rainer Rechtsanwälte notes that whether exceptional notice of dismissal has been issued effectively is always a decision that is made on a case-by-case basis and requires careful consideration and weighing up of the parties“ respective interests. Lawyers who are experienced in the field of employment law can advise employers on matters pertaining to dismissal as well as in relation to other legal issues.

https://www.grprainer.com/en/legal-advice/employment-law.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en

Politics Law Society

OLG Karlsruhe: Pre-formulated tie-in clause in employment contract for managing director

OLG Karlsruhe: Pre-formulated tie-in clause in employment contract for managing director

OLG Karlsruhe: Pre-formulated tie-in clause in employment contract for managing director

According to a ruling of the Oberlandesgericht (OLG) Karlsruhe [Higher Regional Court of Karlsruhe], clauses in an employment contract for a managing director stating that removing the managing director simultaneously terminates the employment contract may be invalid.

In the case of a GmbH managing director, a distinction needs to be made between two different legal relationships. On the one hand, the managing director is appointed by the general meeting of the shareholders and assumes the status of an executive body. On the other hand, he also has an employment relationship with the company. What this means in practice is that both legal relationships have to be brought to an end separately, i.e. the managing director needs to be removed from his position by the general meeting of the shareholders and the employment relationship must be terminated. GRP Rainer Rechtsanwälte notes that this can give rise to a situation whereby the managing director has already been removed from his post and no longer acts on behalf of the company but nonetheless continues to benefit from certain entitlements arising from the employment relationship, e.g. continued payment of wages.

To avoid this situation, employment contracts for managing directors often include so-called „Kopplungsklauseln“ (tie-in clauses) stating that the employment relationship ends in the moment that the managing director is removed from his position. Notwithstanding this, these clauses may be invalid according to a ruling of the OLG Karlsruhe from October 25, 2016 (Az.: 8 U 122/15). This is certainly the case if the clauses were pre-formulated by the company and not the product of a distinct agreement between the company and the managing director.

The Court held that these kinds of clauses are to be viewed as general terms and conditions, and are invalid because they fail to take into account the minimum notice periods. The OLG went on to say that an agreed notice period of less than four weeks is invalid. It also ruled that these tie-in clauses cannot be interpreted restrictively as meaning that following removal of the managing director from his post the employment relationship ends upon expiry of the statutory minimum notice period.

These kinds of pre-formulated tie-in clauses can be find in numerous employment contracts for managing directors. This can result in problems for companies, as the employment relationship with the managing director does not then come to an end once he is removed from his position. The ruling shows that employment contracts for managing directors ought to be prepared with the utmost care and, as the case may be, re-examined with a view to invalid clauses. In these cases, the relevant pre-formulated clauses should be replaced with individual agreements. Lawyers who are experienced in the field of company law can advise businesses and managing directors on issues in relation to the drafting of contracts.

http://www.grprainer.com/en/legal-advice/company-law/managing-director.html

GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

Kontakt
GRP Rainer LLP
Michael Rainer
Augustinerstraße 10
50667 Cologne
+49 221-27 22 75-0
+49 221-27 22 75-24
info@grprainer.com
http://www.grprainer.com/en