German High Courts Reinforce Workplace Safeguards in Rulings on Parental Leave, Founder Equity, and Dismissal Procedures
20.06.2026 - 02:32:30 | boerse-global.de
A string of recent court decisions in Germany has strengthened protections for employees and placed tighter constraints on employers, spanning parental leave scheduling, founder share forfeiture, and procedural requirements for dismissals.
The Federal Labor Court (BAG) ruled on 18 June 2026 (case 2 AZR 213/25) that the special dismissal protection under Section 18(1) of the Federal Parental Allowance and Parental Leave Act (BEEG) applies to each individual segment of split parental leave. Even when an employee consolidates multiple time blocks into a single application, the protection attaches before every separate period. The case involved a worker employed since July 2024 who had applied for four parental leave intervals stretching into 2027. His employer issued a dismissal in October 2024, before the second block was set to start in November. The court found the termination invalid because the responsible state authority had not granted its consent. The justices emphasised that the protection starts no earlier than eight weeks before a given leave segment begins, and that the law makes no exception during the waiting period under the Protection Against Unfair Dismissal Act (KSchG).
Meanwhile, the Berlin Court of Appeal (Kammergericht) upheld so-called vesting clauses for founders of startups. In a notice of decision issued on 12 August 2024 (case 2 U 94/21), the court backed a provision that caused a founder who was dismissed during the first year of a three-year vesting schedule to lose all shares. The panel found that tying the founder to the company constituted a sufficient substantive justification, particularly given the need to secure an investment of 1.373 million euros. The ruling aligns with precedent from the Federal Court of Justice (BGH), which requires such clauses to have a legitimate business reason. The judgment left open the question of what constitutes an appropriate severance payment for so-called good leavers or bad leavers.
Formal errors continue to be a frequent reason for invalidating dismissals. The BAG decided on 1 April 2026 that a missing or prematurely filed mass layoff notification under Section 17 KSchG renders a termination permanently void. The correct sequence is mandatory: consultation with the works council first, then notification to the Federal Employment Agency, and only afterwards the actual dismissals. The Bremen State Labor Court added on 3 April 2024 (case 3 Sa 64/23) that this strict rule also applies during the six-month waiting period of the KSchG. A termination issued without the prior approval of the staff council is automatically ineffective.
For executives facing dismissal, the labour market is becoming more volatile. The number of unemployed managers rose by 14 percent in 2025 to 49,000. Experts advise a strategic approach: secure legal counsel, assess severance offers realistically, and resist pressure in mutual termination agreements. A common benchmark is one month’s gross salary per year of service, and a response window of seven to 14 days is considered reasonable.
In a separate matter concerning corporate governance, the BGH clarified on 8 January 2019 (case II ZR 364/18) that the stock-corporation protection provision in Section 179a of the Aktiengesetz does not apply analogously to a limited liability company (GmbH). GmbH shareholders already possess extensive co-determination rights, so a missing shareholder resolution when transferring the entire company’s assets does not by itself invalidate the transaction — unless there is evidence of abuse of authority by the managing director.
