Oral termination of a management employment contract

The Regional Labour Court (LArbG) Kiel has decided that a management employment contract can also be terminated by verbal agreement if no deviating provision has been made in the contract itself.

Whether such an agreement had been reached between the company and the managing director could result from a large number of indications of the court’s conviction. If one party asserts such an agreement and the transfer of the managing director to another company, the fact that both parties have actually acted in accordance with this assertion for months may allow the conclusion that the agreement has actually come about, according to the Regional Labour Court.

The plaintiff was managing director of the defendant. The current managing director and sole shareholder of the defendant ran another company with the plaintiff. Both were managing partners there. In April 2011, the defendant reported the plaintiff to the relevant social security institutions with effect from the end of February 2011. The plaintiff received pay slips from the other company from April 2011 to 2012. By resolution of the shareholders’ meeting of the defendants, the plaintiff was dismissed as managing director on December 1, 2011. The plaintiff was married to the godchild of the current managing director. The married couple separated at the end of 2011. As part of the resulting family law dispute, the plaintiff stated that he had been employed by the defendant until February 28, 2011 and by the other company from February 2011. Under March 20, 2012, the parties reached a written agreement, including the other company, which resulted, among other things, in the termination of the contractual relationship between the parties on February 28 or March 31, 2011. The plaintiff, who is in a witness protection program because of alleged threats by the current managing director, alleges that he was forced to sign under threat of violence and has challenged his consent. The defendant alleges that the parties had already agreed in January 2011 that the plaintiff would move from the defendant to the other company after February 2011 and take up his duties there. The operative business was also located there. The authenticity of a written working instruction issued by the defendant to the plaintiff on 12.01.2012, which is only available as a copy, is disputed between the parties.

The ArbG Lübeck had dismissed the action.

LArbG Kiel has dismissed the action for payment of (default of acceptance) remuneration in the amount of Euro 187,500 for January 2012 to March 2017.

In the opinion of the Regional Labour Court, contrary to the plaintiff’s assertion, the managing director’s employment contract was terminated by mutual agreement with effect from 28 February 2011 and leads to the social security deregistration accepted without further ado by the plaintiff, the statements of the other company issued to the plaintiff and submitted by him before the family court itself as well as his details in the form for determining the pension adjustment and in proceedings for child support. The Regional Labour Court had doubts as to the authenticity of the written instruction of 12.01.2012. Any work still performed by the plaintiff for the defendant could also have been carried out on the basis of company law. Since there was no employment relationship between the parties, the mutually agreed termination of the management employment contract did not require written form. The employment contract only provides for written form for – unilateral – terminations.

The state labor court has not allowed the appeal. The judgement has meanwhile become final.

31.08.2018