GER: BAG - Minimum-Wage Liability of GmbH Managers

Sept 15, 2023 Benn-Ibler Rechtsanwälte

According to the German Federal Labour Court (Bundesarbeitsgericht, hereinafter BAG), managing directors are not liable if an employee is not paid their statutory minimum wage. The penalty provisions of the German Minimum Wage Act (Mindestlohngesetz, hereinafter MiLoG) do not constitute a protective law in favour of the employees of a GmbH in their relationship with the managing directors of the company. However, the possibility of having to pay a fine under MiLoG remains unaffected.

An employee brought a personal action for damages against the directors of an insolvent GmbH for non-payment of his minimum wage. The plaintiff took the view that the directors were personally liable to him under Section 823(2) of the German Civil Code (Bürgerliches Gesetzbuch, BGB).

The lower courts had dismissed the former employee’s claim for damages against the directors. The BAG shares this view. The penalty provisions of the MiLoG do not constitute protective legislation against the managing director in relation to the company's employees. The defendant directors are therefore not personally liable to the former employee for failure to pay the minimum wage.

Shareholders’ duties are limited to those pertaining to the company. The managing directors are not personally liable in relation to third parties. Rather, the external liability for the liabilities of the company is limited to the assets of the company. The existing duty to manage affairs properly exists only vis-à-vis the company and not vis-à-vis external third parties. Only if there were a special reason for liability could this be otherwise. According to the judges, there is no such reason for non-payment of the minimum wage.

Adopting the offence of imposing a fine as a protective law would mean that this group of persons could be held liable for damages in the amount of the statutory minimum wage by a company’s employees even if the offence of imposing a fine was only (slightly) negligent. This, in turn, would mean that, in a large number of cases, the employees would have another debtor in addition to the GmbH as their contractual employer with the managing director with regard to the payment of the minimum wage.

BAG 8 AZR 120/22 (30 March 2023)