Austrian OGH: Executive Board Contracts Terminable Without Notice

Nov 28, 2025 Benn-Ibler Rechtsanwälte

In a notable appellate decision, the Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) addressed the issue of whether an executive board contract could be subject to immediate termination without notice upon the supervisory board’s discovery of possible breaches of duty by the chairman of the executive board.

The case at hand involved the dismissal and termination of the Chief Executive Officer’s contract without prior notice at a public limited company. The CEO did not contest the grounds for his dismissal but instead challenged the timing of the termination. He asserted that the company should have acted sooner, noting that indications of alleged breaches of duty had emerged several weeks before the dismissal was officially communicated.

Consistent with established case law, the OGH underscored that dismissal should occur promptly once the employer becomes aware of all pertinent circumstances justifying the termination. Nevertheless, employers are entitled to a reasonable period for review and deliberation—particularly when uncertainties necessitate external clarification—and this period must reflect the organisational frameworks of legal entities, recognising that decision-making processes, such as those involving supervisory boards, may require substantial time.

The same principle applies to board members: When the supervisory board holds responsibility for dismissal, the timing of when knowledge is obtained must be evaluated at the level of the supervisory board.

In this instance, the supervisory board did not obtain the information necessary to comprehensively evaluate the breaches of duty (management override of control) until 9 January 2024. The following day, a decision was made to dismiss and terminate the contract with immediate effect.

The OGH found that the timing was objectively justified, without any implied waiver of the right of dismissal, and within the allowable review period. While suspension could have been pursued, it was not required to maintain the right of dismissal.

The employment relationship was ended immediately under Section 27 of the Austrian Employment Contract Act (AngG) due to a reason attributed to the plaintiff, which justified the dismissal.

OGH 6 Ob 124/25s (16. 10. 2025)