In-house training: GmbH management within the group
To meet the needs of foreign managing directors, we also offer our seminar “GmbH-Geschäftsführung im Konzern” as an in-house training course titled “GmbH management within the group” in English, supplemented by an additional module on German labor law.
The program provides a practical, decision-relevant overview of the most important legal and governance-related frameworks for managing directors of a German limited liability company (GmbH) operating within a corporate group. Participants gain clarity on corporate governance, managing director employment contracts, the scope and limits of instructions within the corporate group, as well as the managing director’s internal and external liability, including risk management, compliance, and crisis scenarios.
The second part expands the training to include valuable aspects of German labor law, thereby addressing the specific issues with which foreign managing directors should be familiar. Topics range from the legal sources of labor law and the employer’s right to issue instructions, through terminations and special protective provisions, to dealing with poor work performance, compensation in the event of illness, anti-discrimination obligations, data protection in the workplace, and the practical realities of working with the works council and co-determination rights.
A concise format, in-depth legal expertise, and time for questions and answers ensure that participants leave with both a structured understanding and actionable guidelines for their day-to-day management work within a German corporate environment.
PROGRAM
Part A by
Fundamentals, Corporate Governance, Service Contract Provisions, Obligation to follow instructions and its limits, Liability
Fundamentals
a. The organizational structure of a limited liability company
b. Overview of a limited liability company (GmbH) within a corporate group, including one-third participation and co-determination
Corporate governance for managing directors of a German limited liability company
- Position of the managing director
- Appointment and consequences of an invalid appointment, revocation of appointment.
- Legal nature of the managing director’s service agreement in contrast to an employee’s employment contract.
- Company-related duties of a managing director
- Duty to represent the company
- Duty to manage the business, division of responsibilities between several managing directors, effects of the distribution of responsibilities
- Duty to establish an early risk detection system
- Duty to establish a compliance system
- Fiduciary duties / duty of confidentiality / non-competition clause
- Obligations relating to the corporate relationship and membership
- Selected rights and obligations as managing director of a parent company
- Rights of managing directors arising from their position as executive bodies
Overview of provisions in MD service agreements
The obligation to follow instructions and its limits
- General right to issue instructions
- Exercises on the right to issue instructions and its effects
- Limits of the right to issue instructions
- Conflicts of interest with regard to the competitive position of the parent company
Liability of the managing director
- Overview of internal and external liability
- Internal liability pursuant to Section 43 (2) GmbHG
- Business Judgement Rule
- Risk management, avoidance of liability, limitation of liability.
- D&O insurance, insurance upgrade, deductible.
- Dealing with corporate crises, including insolvency, delay in filing for insolvency
Part B by
Overview of German Labour Law
Introduction: Sources and Basics of German Labour Law
- Legal sources (Civil Code (“Bürgerliches Gesetzbuch”/“BGB”), Employment Protection Act (“Kündigungsschutzgesetz”/“KSchG”), Anti-Discrimination (“Allgemeines Gleichbehandlungsgesetz”/“AGG”), Maternity Protection (“Mutterschutzgesetz”/“MuSchG”), etc.);
- Significant influence of EU law (EU directives) and the European Court of Justice
- Collective bargaining agreements (“Tarifverträge”)
- Works agreements (“Betriebsvereinbarungen”)
- Employment contract (“Arbeitsvertrag”) as the foundation of individual relations
Individual Labour Law – Central Aspects for Management
Formation of the Employment Relationship
- Contractual freedom, but strong statutory protections for employees
- Minimum content requirements for contracts (proof of essential terms: “Nachweisgesetz”)
- Terms and conditions subject to strict review (“AGB-Recht”)
- Employer’s right to direct work (“Direktionsrecht”), but within defined limits
Termination / Ending of Employment Relationships
- Different types of termination: ordinary (with notice period: “ordentliche Kündigung”), extraordinary/for cause (dismissal without notice: “außerordentliche Kündigung”), and change notice (“Änderungskündigung”)
- Valid reasons per Employment Protection Act (“KSchG”):
- personal (“personenbedingt”),
- conduct (“verhaltensbedingt”),
- operational (“betriebsbedingt”)
- Special protections:
- works council members (“Betriebsratsmitglieder”) and other employee representatives
- pregnant employees and employees on parental leave
- severely disabled
- employees with specific operational functions (e.g. Data Protection Officers, Immission Control Officer, Occupational Safety Officer)
Dealing with Low Performers
- Distinction: Conduct-Related vs. Capability-Related Dismissal
- Warning (formal disciplinary notice: “Abmahnung”) is typically required before dismissal for low performance
- Strict legal and practical limits: require objective comparison and proof of consistently below-average performance
- No “employment at will” or free substitutability
- Performance Improvement Programes
Continued Remuneration in Case of Illness (“Entgeltfortzahlung im Krankheitsfall”)
- Employees are entitled to continued salary (“Entgeltfortzahlung”) for up to six weeks of illness (per illness episode)
- After six weeks: statutory health insurance pays “sick pay” (“Krankengeld”) at a reduced rate
- Employees must promptly notify employer and get a doctor’s certificate after three days
Maternity Protection and Parental Leave (“Mutterschutz und Elternzeit”)
- Special protection for pregnant employees and new mothers: health and safety, employment bans, and dismissals prohibited
- Dismissal protection during pregnancy and parental leave: termination is only possible in exceptional cases
- Parental leave (“Elternzeit”): up to three years per child, return rights guaranteed
Principle of Equal Treatment / Anti-Discrimination (“Gleichbehandlungsgrundsatz / Diskriminierungsverbot”)
- General Equal Treatment Act (“Allgemeines Gleichbehandlungsgesetz”/“AGG”): prohibits discrimination based on gender, race/ethnicity, religion, age, and more
- Employers responsible for fair treatment—particularly in hiring and employment decisions
- Reversed burden of proof (“Beweislastumkehr”) and significant potential damages if violated
Data Protection in the Employment Context
- Strict requirements under the EU General Data Protection Regulation (GDPR “Datenschutz-Grundverordnung”/“DSGVO”) and the German Federal Data Protection Act (“BDSG”)
- Lawful processing of employee data required—specific purpose, minimum necessary data
- Special issues: employee monitoring (e-mail, CCTV), subject to stringent controls
