Frank Neumark, KPMG Frankfurt
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1. Severance payment clause void
In a decision dated 3 July 2000 (ZIP 2000, 1442) the Federal Court of Justice (FCJ) held that a clause in the employment agreement of the general manager of a limited liability company (GmbH) giving him two years' salary as a severance payment in the event of his discharge during the first 10 years of employment was void under § 134 BGB (German Civil Code).
Under § 134 BGB, legal transactions that violate a statutory prohibition are void unless the violated statute otherwise provides. The court stated that a severance payment that was owing by its terms even in the event of termination of the employment contract by the employer "for important cause" (aus wichtigem Grund – alt. translation "for good reason") pursuant to § 626 BGB impermissibly restricted the right of termination for important cause, which § 626 BGB grants to
