Managing Director

Post-contractual non-compete obligation must not cover all activities for a competitor

In an indicative ruling dated August 02, 2018, the Higher Regional Court Munich (docket number 7 U 2107/18) has found that a post-contractual restraint which prohibited a managing director from working for a competitor in any way was invalid due to the lack of legitimate interests of the company. The managing director was therefore able to legitimately claim the invalidity of the non-compete obligation in the form of a preliminary injunction. The indicative ruling is …

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Compensation (severance pay) of director’s pension benefits

By judgment of 23.05.2017 (II ZR 6/16) the Federal Supreme Court (Bundesgerichtshof) has ruled that the prohibition against compensating for pension benefits according to Section 3 German Occupational Pension Act (Betriebsrentengesetz) may be derogated from by mutual consent and, as a result, ongoing pension benefits of a director can be paid out (severance pay). In the present case, the admissibility of the compensation for an ongoing pension, which in principle according to Section 3 German …

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Competencies of Labour Courts for Managing Director Service Contracts

The regional labour court of Cologne held in an order of 6 October 2017 (docket number 9 Ta 151/17) that the labour court is not competent to hear claims of managing directors, if there are no special circumstances that account for an employment relationship being established. The parties concluded a managing director service contract on 21 July 2015. The first payment was stipulated for the 30 September 2015. The plaintiff claimed to have started with …

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