The dismissal of a statutory director is sometimes a complex process that involves aspects of both employment law and company law.

A statutory director occupies a special position within the company. He or she is responsible for managing the company and thus bears ultimate responsibility for its policy and day-to-day affairs. At the same time, the statutory director often has an employment contract with the organisation. This dual role means that both company law and employment law may apply in the case of dismissal. This requires an integrated approach to ensure that the dismissal is legally valid and effective.

A statutory director can be suspended or dismissed at any time by the body that was authorised to appoint him, which in practice is usually the General Meeting of Shareholders (AGM). The dismissal decision must comply with specific legal and statutory requirements in order to be legally valid. These include convening the AGM in good time, correctly placing the dismissal on the agenda and providing relevant information to the shareholders. Under company law, the dismissal decision must also be taken and recorded in the correct manner.

Although the dismissal decision under company law generally leads to termination of the employment relationship, there are important consequences under employment law that must be taken into account. Transition payment and fair compensation: the statutory director may be entitled to a transition payment in connection with the termination of the employment contract. In the event of serious culpable conduct on the part of the employer (e.g. dismissal on unreasonable grounds), a claim for fair compensation may also be made. Notice period: despite the immediate effect of dismissal under company law, there may be a notice period under the employment contract or the law that must be observed. Hearing both sides: care must be taken. The director must be given the opportunity to present his or her side of the story, which contributes to a fair and transparent process. This also applies, of course, to the decision under company law to dismiss the director.

It is essential to proceed with care. This means keeping records: carefully document the reasons for the dismissal. A well-structured file is important if the director challenges the dismissal. It also requires clear and acceptable communication; hold open and respectful discussions with the director and ensure that all parties involved, including employees and stakeholders (works council!), are provided with clear information. Of course, clear contractual agreements are also necessary. Analyse the employment contract and any additional agreements, such as non-competition and confidentiality clauses, and take the consequences of these into account. Statutory directors in particular are subject to complicating factors such as share and certificate ownership or option rights and the like. In larger international companies, it is often the case that these types of interests and remuneration are provided by a different group company than the formal employer. This often requires special attention, including from a tax perspective.