Is the managing director of a GmbH personally liable for the minimum wage?

An employee was not receiving the statutory minimum wage from his company. Because the company was bankrupt, he wanted to hold the managers personally accountable.

This article is part of the special topic: Restructuring, protective shield or insolvency?

The personal liability of managing directors with their private assets occurs repeatedly in practice. Errors in corporate management can have such consequences. In a recent case before the Federal Labor Court, the issue was the minimum wage that the company failed to pay its employees.

The case

A company failed to pay an employee the statutory minimum wage . The company went bankrupt. Because he had no prospect of success against the insolvent GmbH (limited liability company), the employee took legal action against the two managing directors personally , demanding approximately €1.600 in damages.

The judgment

The Federal Labor Court (BAG) ruled in favor of the managing directors, stating they do not have to pay damages to the employee . The judges in Erfurt based their decision on the limited liability under Section 13 Paragraph 2 of the German Limited Liability Companies Act (GmbHG): Managing directors are only required to settle liabilities with the company's assets.

Although the two violated their duty of proper management under Section 43 Paragraph 1 of the German Limited Liability Companies Act (GmbHG) , as they failed to ensure that the company fulfilled its legal obligations, this duty exists only towards the company itself , according to the Federal Labor Court (BAG). A breach of this duty gives rise to claims for damages only against the company, not against the company's creditors .

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No special grounds for liability

The managing directors committed an administrative offense under Section 21 Paragraph 1 Number 9 of the Minimum Wage Act (MiLoG) by failing to pay the minimum wage , the court declared. According to Section 823 Paragraph 2 of the German Civil Code (BGB) , anyone who negligently or intentionally violates a law intended to protect another person is liable for damages . However, the Federal Labor Court (BAG) ruled that the Minimum Wage Act (MiLoG) is not such a protective law.

The judges justified their opinion by stating that otherwise, managing directors would be liable to the company's employees even for slight negligence . This would undermine the GmbH's liability system in numerous cases . The employees would then have an additional debtor besides the GmbH as their employer. However, this is not provided for by law.

practical tip

"This decision shows that managing directors repeatedly – ​​and sometimes justifiably – find themselves in the crosshairs," explains lawyer Maximilian Wittig . "Because ultimately, only one person bears full responsibility : the managing director. They are therefore obligated to themselves and the company to ensure the necessary protection . They must limit their personal liability to the company . Furthermore, and very importantly, they must be aware of all potential risks within the company and mitigate them through appropriate processes."

Federal Labour Court, Judgment of 30 March 2023, Case No. 8 AZR 199/22

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