Third-party managing directors are generally not taken into account when calculating the size of the company
The Protection against Dismissal Act provides essential protection for employees to defend themselves against socially unjustified dismissals. However, the Dismissal Protection Act does not apply to all companies and employment relationships. In addition to the employee status of the person concerned, the size of the company is also decisive for the question of whether the Dismissal Protection Act applies. The company in question must have at least 10 employees.
In a decision dated 27.04.21 - 2 AZR 540/20, the Federal Court of Justice now had to deal with the question of whether external managing directors are also counted when determining the required number of employees.
Significantly lower protection against dismissal without the Dismissal Protection Act
The protection against dismissal for employees who are not covered by the Dismissal Protection Act is considerably less extensive and is essentially limited to the exclusion of arbitrary dismissals. Therefore, the main issue in the proceedings in question was whether the Dismissal Protection Act was applicable.
The warehouse employee in question worked for a limited liability company with a total of 8.5 employees (6 full-time and 3 part-time or marginally employed). The company also had two external managing directors. These were not included in the number of employees by either the Munich Labor Court or the Regional Labor Court.
As the Dismissal Protection Act was not applicable in the opinion of these courts, the action was unsuccessful in each case.
BAG upholds decisions of the lower courts
The BAG has now supported these decisions in the present decision (decision can be read here: Federal Labor Court). The highest federal judges disagreed with the reasoning of the regional labor court that the external managing directors were not to be counted because they were not to be counted as executive employees pursuant to Section 14 KSchG. In the end, however, it confirmed this result.
External managing directors of a GmbH regularly work on the basis of a service contract and are not bound by instructions like an employee. Although the company also has the right to issue instructions to external managing directors, this is considerably less extensive than is the case for employees. In particular, external managing directors are not bound by these instructions in the same way as employees. Such an obligation to follow instructions would only come into consideration in extremely exceptional cases.
Therefore, external managing directors are generally not counted when determining the required number of employees pursuant to Section 23 KSchG. This is not contradicted by the fact that external managing directors are also employees subject to compulsory insurance in accordance with Section 7 SGB V, as the terms employee and employee are not identical.
As the required number of employees is therefore not reached, the KSchG is not applicable in this case. The dismissal of the warehouse employee was therefore effective.
Always have notices of termination checked by a lawyer
It is often not easy to determine whether the Dismissal Protection Act is applicable in an individual case or whether a dismissal is also invalid outside of the Dismissal Protection Act. In addition, when assessing the legality of dismissals under the Dismissal Protection Act, it is also important to take a close look at the relevant case law. Dismissals often turn out to be invalid or lucrative severance payments can at least be achieved in settlement proceedings. You should therefore not simply accept a dismissal, but have your case reviewed by a competent lawyer.
