Effective dismissal of a GmbH managing director for improperly unlawful favoritism towards council members

Higher Regional Court of Frankfurt am Main, November 20, 2025 – 5 U 15/24

According to the Higher Regional Court of Frankfurt am Main, the extraordinary dismissal of a managing director who approved an unjustified higher classification and an equally unjustified allowance for works council members and the representative for severely disabled employees is effective.

Facts

The defendant operates public transport in Wiesbaden.

The plaintiff had been employed by the company since 1994 and had served as managing director since 2014, overseeing quality management, commissioning, accounting and sales, technical operations and planning, as well as data protection. At times, the plaintiff was also responsible for human resources.

The plaintiff was no longer responsible for human resources, but had approved allowances and higher classifications for works council members.

During an internal investigation into irregularities in management, these very allowances and higher classifications of works council members came to light, whereupon the plaintiff was dismissed without notice for cause.

Decision

The Higher Regional Court of Frankfurt am Main ruled that the termination was effective and that, in particular, there was good cause in that the plaintiff had participated in the unlawful favoring of works council members and the representative for severely disabled employees in accordance with § 78 (2) BetrVG (in conjunction with § 179 (2) SGB IX) and, in any case, had violated his monitoring and control duties as managing director.

The defendant bore the burden of proof for unlawful preferential treatment. However, it had fulfilled this burden by submitting several legally binding labor court decisions containing substantiated arguments regarding the unlawfulness of individual promotions and the granting of allowances.

In the opinion of the Higher Regional Court, the plaintiff then failed to refute this, as he did not present any objective reasons to justify these measures.

In the opinion of the Higher Regional Court, it was also irrelevant that the plaintiff was no longer responsible for human resources, as he was obliged to control and supervise the co-managing director responsible for this area on an ad hoc basis.

Finally, in view of the plaintiff's long service with the company, the dismissal was proportionate given the seriousness of the breaches of duty.

Although the Higher Regional Court considered the dismissal to be valid, the plaintiff was not acting in bad faith by asserting his bonus claims in court. He was entitled to these despite his breaches of duty.

Practical tip

Even where a business distribution plan exists for multi-member bodies, each member remains responsible for monitoring and supervising co-managing directors or board members as required. This applies in particular to the control of higher groupings and the granting of allowances for elected representatives.

A breach of this duty – provided it is properly documented – may then also justify extraordinary termination.

In addition, the decision, like other recent case law on the remuneration of works council members, shows that companies must closely monitor the salary development of committee members and, if necessary, initiate labor court proceedings on issues relating to the correct classification of these committee members in order to avoid their own (criminal and disciplinary) risks.