Under certain circumstances, a managing director of a limited liability company (GmbH) can also be classified as an employee under labor law. This is often overlooked, which is surprising given the significant practical consequences.
Requirements for employee status
This raises the question of under what conditions a managing director can be classified as an employee. In its established case law, the Federal Court of Justice classifies managing directors as employers, thereby categorically ruling out employee status.
The Federal Labor Court (BAG), on the other hand, is of the opinion that the managing director of a limited liability company (GmbH) can also be classified as an employee. In doing so, the BAG conducts a case-by-case review. The decisive criterion here is whether the managing director performs work that is subject to instructions and is therefore equivalent to that of an employee. If the managing director is bound by instructions like a "normal" employee, this may result in employee status. However, the mere designation as a "managing director contract" or "managing director service contract" does not necessarily imply employee status.
Clauses that restrict the managing director's freedom to organize his or her activities and working hours argue in favor of the managing director's employee status. Examples of this are formulations according to which the managing director
- "be available at all times" or
- "to represent the interests of the limited liability company at all times" or
- "be present at the company during business hours."
The same applies to clauses that equate the managing director with employees in terms of social security law. This is done, for example, by using the phrase "like any employee."
In addition, remuneration in accordance with a collective agreement may also indicate an employee status. For example, the Federal Labor Court (BAG) considers remuneration in accordance with the collective agreement for the public sector (TVöD) to be an indication of the existence of an employment relationship.
Another key criterion for classification as an employee is the actual performance of the contract and simultaneous shareholder status. In particular, managing directors who are not also shareholders (so-called external managing directors) should be considered for classification as employees.
Consequences of employee status
If a managing director qualifies as an employee under labor law, this can lead to the following consequences, for example:
- Entitlement to statutory minimum leave in accordance with the Federal Leave Act (BUrlG)
- Application of the Working Hours Act
- Protection against discrimination on the basis of gender, age, origin, or similar personal characteristics in accordance with the General Equal Treatment Act (AGG)
- Jurisdiction of the labor courts
- Applicability of special protection against dismissal and employment prohibitions under the Maternity Protection Act
- Consideration in determining the thresholds for mass redundancies within the meaning of Section 17 KSchG
Conclusion
Even a managing director of a limited liability company (GmbH) can be an employee in exceptional cases. Such an exception may exist in particular if the actual and legal role of the managing director is similar to that of a regular employee. This question is of practical importance because employee status significantly improves the managing director's position under labor law. From the managing director's point of view, it is therefore advisable to carefully examine their own legal status and, if necessary, seek legal advice. Employers, on the other hand, should check whether it is possible to draft a contract that prevents classification as an employee in order not to unnecessarily weaken their legal position, for example in the event of termination.
The statements represent initial information that was current for the law applicable in Germany at the time of initial publication. The legal situation may have changed since then. Furthermore, the information provided cannot replace individual advice on a specific matter. Please contact us for this purpose.