On November 20, 2025, the Higher Regional Court of Frankfurt am Main (Ref. 5 U 15/24) ruled that the extraordinary termination of a managing director without notice due to improper favoritism is effective. Simply approving an unjustified higher classification of works council members and the associated allowance grants constitutes a breach of duty, even if the managing director is not responsible for this specific area. The primary concern here is the infringement of monitoring and control obligations as outlined in Section 43 of the Limited Liability Companies Act. The ruling underscores the stringent standards of care that managing directors are expected to uphold, along with the repercussions of breaching these standards, even in instances where there is no explicit departmental accountability.

• The Higher Regional Court of Frankfurt am Main (Oberlandesgericht – OLG) recently held that termination of a managing director without notice is effective if the director granted inadmissible salary benefits to works council members outside the department.
• The managing director’s claims to bonuses and remuneration are valid until termination takes effect.

The employee had worked as a managing director of a municipal public transportation company since 2014. Within the multi-member management team, responsibilities were divided by department. The employee was not formally responsible for personnel matters. In the fall of 2021, the city received several reports, some of which...

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