Kanzlei fuer Arbeitsrecht Schweier
Preventive legal advice for members of the management board / managing directors

In view of the noticeable accelerating changes in the higher levels of hierarchy, preventive employment law advice gains increasing importance for this target group. The request for legal certainty of agreements to be concluded shall be complied with. Furthermore, knowledge of the different possibilities of structuring agreements can strengthen the negotiating position.

Structuring of agreements

Already when contractual relationships are in the offing, an examination of the contract structure should show “crucial points” and ensure possibilities for a solution in the future. The risk of later disputes can be minimized by using clear wording. In particular, provisions on payment of variable compensation (e.g. turnover-dependent) are quite often unclear in practice (How is the amount determined? Which factors are decisive? When is payment due?).

Even among provisions on the term of the contract and on possibilities of termination unclear stipulations can be found time and again. It has to be noted that members of the managing board / managing directors are not protected against dismissal. Agreeing on a fixed minimum term or on a rather generously calculated notice period can be considered in order to compensate this disadvantage at least to some extent.

Termination of the contractual relationship

In particular as far as termination of service contracts with members of the management board and managing directors is concerned, notice of termination is mostly not given unexpectedly in practice but the parties generally negotiate on the fact of termination of the contractual relationship and on the modalities of termination.

The negotiating position of the member of the management board / managing director should be determined and worked out early in this situation. Thus e.g. the following questions should be considered:
  • Can the member of the management board / managing director leave the company already prior to the envisioned termination date (in particular if he/she has found a new position)?
  • Can a severance pay for the loss of employment be negotiated?
  • Will the member of the management board / managing director be released from his/her service duties? If so, will other earnings be set off against his/her remuneration?
  • How is a variable compensation to be calculated for the remaining term of the contract?


Preventive legal advice can provide for an increase of security for members of the management board and managing directors. Possibilities of strengthening the negotiating position can be examined and the scope for shaping agreements to pursue the individual interests can be determined.