BAG: Board needs full approval for termination

German Federal Labor Court rules that a managing director’s termination is invalid if not signed by all board members. The case (2 AZR 130/25) clarifies that individual board members cannot act alone without proper authorization, even if they hold leadership positions.

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Termination invalid without full board

The Federal Labor Court (BAG) ruled on May 7, 2026 (case 2 AZR 130/25) that a managing director’s termination is invalid if not properly authorized by the full board. This means if you receive a termination letter signed by only some board members, you may still have a valid employment relationship.

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Why the court decided this way

The company’s bylaws required the entire supervisory board to approve terminations. The court found that individual board members - even the chairperson - cannot act alone without explicit authorization. This protects employees from unclear authority situations where it’s not obvious who can legally terminate contracts.

What happened in this case

A managing director received a termination letter signed by just two of three board members. The company argued he knew about the board’s structure and should have accepted the termination. The director immediately rejected the termination, claiming it wasn’t properly authorized. The court agreed, finding the company failed to prove the signing members had authority to act alone.