Holder of Prokura and General Counsel – Still Not a Senior Executive?
Update Employment Law August 2026
ArbG Essen, Judgment of April 15, 2026 – 3 Ca 2984/25
General Counsel, holders of Prokura (commercial power of attorney), and senior executives at the highest level are often quickly treated in practice as managerial employees (leitende Angestellte). The Essen Labor Court demonstrates that it is not titles, hierarchy, or Prokura that are decisive, but rather the actual authority and the specific scope of duties. For dismissal practice, this decision is therefore relevant far beyond the individual case.
Facts
The plaintiff had been employed by an international chemical corporation since 2010. Since 2021, he had been positioned as “General Counsel” at “Level 1,” directly below the management board. He held a general Prokura and headed the legal department. In Germany, however, only eight employees were assigned to him.
In December 2025, the employer terminated the employment relationship for operational reasons – without first consulting the works council. The employer considered the plaintiff to be a senior executive (leitender Angestellter) within the meaning of § 5(3) of the BetrVG (Works Constitution Act) due to his prominent position, his Prokura, and his purported authority over personnel and decision-making. In support of the dismissal, the employer further cited a planned merger of the Legal and Compliance departments.
The plaintiff filed an unfair dismissal claim and demanded continued employment. The employer alternatively requested that the employment relationship be dissolved in exchange for severance pay pursuant to § 14(2) sentence 2 of the KSchG (Dismissal Protection Act).
Decision
The Essen Labor Court granted the unfair dismissal claim. Despite the general Prokura and the classification at “Level 1,” the plaintiff was not a senior executive within the meaning of § 5(3) BetrVG. Ultimately, the court rejected all three statutory criteria.
1. Authority to Hire and Dismiss
Under § 5(3) sentence 2 no. 1 BetrVG, what matters is an independent authority to hire and dismiss. Here, the plaintiff’s personnel responsibility in Germany extended to only eight employees – a subordinate group of individuals relative to the total headcount. In addition, the employees reporting to the plaintiff (predominantly in-house counsel) were highly qualified but did not have broad entrepreneurial decision-making authority. Moreover, at least since 2024, the plaintiff was required to obtain approval from the management board or the CFO for all hiring and dismissal decisions. In the court’s view, this was not merely a budgetary control mechanism. An independent authority therefore did not exist.
2. Prokura (Commercial Power of Attorney)
Under § 5(3) sentence 2 no. 2 BetrVG, Prokura alone is not sufficient. What is decisive is not the formal power of representation in external dealings, but rather the entrepreneurial tasks associated with the Prokura. The plaintiff, however, performed “only” a staff function without revenue responsibility. His work was primarily advisory and distinctly not decision-making in nature. He therefore did not perform entrepreneurial management tasks; the Prokura was not of sufficient significance in relation to the employer.
3. Outstanding Position
Under § 5(3) sentence 2 no. 3 BetrVG, the functional title is likewise not determinative; what matters is the specific scope of duties and the actual decision-making authority. The legal department did not generate revenue and was not a core business area of the chemical corporation. The plaintiff advised the management board but did not have decision-making authority; his recommendations were not binding. Participation of entrepreneurial relevance therefore did not constitute the focus of his activity. Accordingly, the Labor Court also held that the catch-all criterion was not met.
In the absence of senior executive status, consultation of the works council would have been required, meaning the dismissal was already invalid pursuant to § 102(1) sentence 3 BetrVG. Consequently, the dissolution request was not only inadmissible but also unfounded.
Practical Tip
The Essen Labor Court examines the requirements of § 5(3) BetrVG in a virtually textbook manner, thereby illustrating the high threshold for classification as a senior executive (leitender Angestellter). The 3rd Chamber closely follows the purpose and spirit of the provision. The status is intended to apply only to those who genuinely stand in a conflict of interest with the works council and who, as a representative of the employer, independently make entrepreneurial (personnel) decisions. In practice, however, the classification is often made hastily – a high hierarchical level, the granting of Prokura, or an impressive title tempt one to assume the status without scrutinizing the actual authority in the internal relationship. In case of doubt, the works council should always be consulted as a precautionary measure. Otherwise, the dismissal risks being invalid under § 102(1) sentence 3 BetrVG.
