German Court Clarifies Termination Notice Authority Requirements
Germany's Federal Labor Court ruled that a termination notice can be rejected if it is signed by individual corporate body members without proof of their authority to represent the company alone. The case involved a GmbH managing director whose termination was signed by two of three supervisory board members without attached authorization. A rejection within one week is generally considered prompt.
The dispute involved a GmbH managing director whose employment contract was governed by company articles. Those articles assigned a three-member supervisory board the power to appoint and dismiss managing directors and to make or end their employment agreements. The board unanimously voted to remove him and terminate his contract.
A notice dated August 11, 2023, carried only two signatures, including the chair's, and lacked proof that those members could act alone. The director received it August 14 and rejected it August 18. The rejection came four days after receipt. The company later issued a precautionary dismissal without notice in a December 7, 2023, electronic filing. The Federal Labor Court's May 7, 2026, ruling (2 AZR 130/25) upheld invalidity.
The ruling may affect German companies, managing directors, supervisory boards, and employment lawyers. It could encourage recipients of termination notices to check signatory authority and reject promptly. Companies may need clearer documentation or delegation when board members sign individually. This may reduce uncertainty in dismissal procedures, though it could also create timing risks for employers and employees.