1. Introduction
When asserting grounds for dismissal, the principle of immediacy applies. This means that an employer must announce the dismissal immediately after becoming aware of grounds for dismissal. The rationale behind this rule is that an employer who does not announce the dismissal immediately suggests to the employee concerned that continued employment would not be unreasonable and that the employer will refrain from asserting the dismissal. However, according to established case law of the Supreme Court, this principle must not be ‘overstretched’. This means that the employer must be granted a reasonable period of consideration between becoming aware of the reason for dismissal and pronouncing it in order to inform themselves about the legal situation and to be able to sufficiently clarify any doubtful facts. In the case of legal entities (e.g. AG, GmbH), a longer period is granted due to the hierarchical structures.
2. Facts of the case
The plaintiff was the chairperson of the board of directors of the defendant public limited company (Aktiengesellschaft).
On 12 December 2023, the supervisory board (AR) first became aware of inconsistencies in the expense reports, which is why an auditor was immediately commissioned.
The auditor submitted an interim report on 14 December 2023. The chairman of the supervisory board confronted the plaintiff with this report and pointed out that although there were not yet sufficient grounds for dismissal, the supervisory board would take a closer look at the matter.
In the following weeks, the relationship between the members of the executive board was reviewed. In the course of this, the supervisory board learned on 8 January 2024 that the other members of the management board no longer considered it possible to continue working with the plaintiff.
The following day, 9 January 2024, the supervisory board received further information from the auditor regarding violations of internal control mechanisms in connection with an invoice paid at the plaintiff's instigation.
On 10 January 2024, the supervisory board dismissed the plaintiff from his position as chairman of the executive board by resolution and terminated his executive board contract with immediateeffect.
The plaintiff then sought payment on the grounds that the termination of the executive board contract without notice had not been effected immediately and was therefore invalid.
3. Findings of the Supreme Court
In the proceedings before the Supreme Court, the only issue in dispute was whether the termination of the management contract took effect immediately.
The Supreme Court confirmed the legal opinion of the Court of Appeal, according to which the termination of the management contract was effected without delay, as the facts relevant to the decision were not established until 9 January 2024. In doing so, it referred in particular to established case law on the immediacy of dismissals (see point 1).
The plaintiff argued that the defendant should have imposed a suspension after first becoming aware of the inconsistencies, which would have prevented the employee from assuming that the employer would waive its right to assert dismissal. The Supreme Court clarified that while it is true that suspension is one way of preventing the employer from waiving their right to dismiss an employee, this does not mean that every dismissal after several weeks without suspension is invalid. Furthermore, the plaintiff should not have assumed that there would be no waiver because the chairman of the supervisory board made it clear in a conversation with the plaintiff on 14 December 2023 that the matter would be investigated further.
4. Practical takeaway
The deadline for compliance with the ‘immediacy’ requirement does not begin when the initial suspicion arises, but only when sufficient facts relevant to the assessment are available!
If this is the case, it is important to act quickly and communicate clearly.
Documentation is key: it must be clear when the company or the supervisory board knew what.
Suspension is generally a sensible measure, but not absolutely necessary as long as there is open and clear communication with the person concerned.