Initial Situation and Procedural Course
In October 2025, the Regional Labor Court (LAG) of Cologne had to decide on the far-reaching labor law implications of an employer’s termination following family law disputes (File No. 4 SLa 9725/25; Source: https://urteile.news/LAG-Koeln_4-SLa-9725_Machtmissbrauch-rechtfertigt-hohe-Abfindung~N35466). The central issue was to what extent the power imbalance manifested by a termination between employer and employee can be decisive for determining severance pay according to § 1a KSchG and for the dissolution of the employment relationship. Special attention was given to potential violations of the anti-retaliation provision under § 612a BGB and the principles of good faith (§ 242 BGB).
Abuse of Power and Severance Calculation – The Legal Framework
Anti-Retaliation Provision and Labor Law Protection Mechanisms
The anti-retaliation provision of § 612a BGB prohibits employers from disadvantaging employees in exercising their rights from the employment relationship. If a termination is clearly directed against the assertion of legitimate claims or against behavior in the non-operational area, the sanction mechanisms of dismissal protection law, e.g., nullification of the termination or a court dissolution, regularly come into consideration. The LAG Cologne emphasized that particularly mixtures of private law and labor law disputes – as in the decided case, the assertion of family law claims – must not be used to justify personnel measures.
Employer Termination for Irrelevant Reasons
The decision of the LAG clarifies in which scenarios a termination is seen as an expression of unjustified exercise of power. The employer had enforced separation on the labor law level in connection with a family law dispute. According to the court, this constituted a significant violation of the principle of equal treatment and the duty of loyalty. Terminations motivated in this way not only affect the job security of the affected employee but also impact the court’s decision on the dissolution of the employment relationship and the determination of appropriate severance pay.
Judicial Dissolution and Calculation of Severance Amount
Particularities of Judicial Dissolution according to § 9 KSchG
The judicial dissolution according to § 9 KSchG is an extraordinary instrument of dismissal protection proceedings that can be applied in cases of gross breaches of duty. The LAG Cologne found that a targeted and arbitrary exploitation of the employer’s position of power constitutes a case for application that can justify a dissolution and should be judged strictly in favor of employee protection interests.
Criterion “Abuse of Power” in Severance Amounts
When determining severance pay according to § 10 KSchG, numerous factors are to be considered, including the duration of the employment relationship and the economic situation of the parties. The LAG decision emphasizes that proven abuse of power on the employer’s side also allows for the inclusion of deterrent and compensatory components within the scope of discretion. This leads in individual cases to compensation significantly above the standard severance rate and fulfills both sanction and prevention purposes.
Implications for the Practice of Contract Termination
Effects on Corporate Compliance Culture
The case law underscores the necessity of a strict separation between company-related decision-making reasons and external conflicts. Companies face the challenge of separating actions related to employee conflicts, family disputes, and purely labor law processes. An abusive entanglement can not only have dismissal protection law consequences but also sustainably impair the company’s image and the internal effect on the workforce.
Assessment of the Significance for Investors and Companies
For companies and investors linked by corporate law, this case law gains additional significance. In addition to the mere termination of employment contracts, it can have effects on compliance structures, the liability risk of representative bodies, and workplace fairness principles. The design of separation processes should take into account potential liability and reputation risks.
Outlook and Continued Legal Uncertainty
The judgment of the LAG Cologne underscores that abuse of power in the context of terminating employment relationships is a central criterion for judicial corrections and significant severances. At the same time, uncertainties remain regarding the scope of the anti-retaliation provision and the assessment of atypical and mixed-motive termination reasons. It remains to be seen how the development of law at the level of regional labor courts and the Federal Labor Court will progress.
For companies, investors, or executives facing issues of dismissal protection, separation management, or compliance, it is advisable to seek professional legal advice in labor law, such as from MTR Legal Attorneys, to properly assess and adequately prevent risks. More information can be found here: Legal Advice in Labor Law.
