Prohibition of Tie-In Clauses in GmbH Managing Director Contracts

Tie-in clauses make the duration of a managing director’s service agreement dependent on their corporate office. Put simply: if the managing director is removed from office, their employment or service relationship is also intended to end. To give the answer on admissibility from the outset: in principle, there is nothing to prevent the use of such clauses, and they should also be used in service agreements. However, mandatory statutory provisions must be observed.
The judgment of the Higher Regional Court of Saarbrücken of 8 May 2013 – 1 U 154/12 – 43 attracted attention. In that decision, the court considered a tie-in clause in managing director service agreements to be permissible. The particular feature of that case, however, was that the managing director had received his remuneration until 31 December 2010, so the court did not have to address whether the tie-in clause violated the mandatory notice rules under Section 622 of the German Civil Code.

Looking at the case law on this topic, it is striking that the courts have not yet discussed this issue satisfactorily. The fact remains, however, that Section 622 of the German Civil Code must also be kept in mind when drafting contracts, especially if the contract is to be used for several managing directors. In that case, the tie-in clause must also be assessed under the content-control standard of Section 307(2) no. 1 of the German Civil Code.

There is, however, an exception to the mandatory notice periods: if there is good cause within the meaning of Section 626 of the German Civil Code, termination without notice is possible. It is therefore essential to distinguish between removal from office for good cause and removal for other reasons.

For practical purposes, this means that a tie-in clause is permissible whenever
1. the reason for removal from office coincides with the reason for termination without notice under Section 626 of the German Civil Code; or
2. in all other cases, reference is made to the ordinary notice period under Section 622 of the German Civil Code.