Abuse of power by the managing director: EUR 68,153.80 in compensation

The case before the Cologne Regional Labour Court

Anyone who challenges a dismissal in court and wins keeps their job. For some employees, that is not good news, because after everything that has happened they cannot go back to the workplace. For this situation the law provides the application for judicial termination: the court ends the employment relationship and awards the employee compensation. The Cologne Regional Labour Court (LAG Köln) decided such a case in its judgment of 9 July 2025 (4 SLa 97/25) and set the compensation at 68,153.80 euros. The reason was the conduct of a managing director who had abused his position of power towards an employee.

The employee had brought a claim against her dismissal. According to the courts' findings, the managing director had made sexist, humiliating and arbitrary remarks about her. The two had been in a private relationship. Annoyed at the way it had developed, he threatened her with sanctions under employment law. Since May 2024 the employee has suffered from post-traumatic stress disorder, which in the court's view stems from this degrading treatment.

Application for judicial termination: compensation instead of return

The law provides for compensation only in exceptional cases. If a dismissal is invalid, the employment relationship continues and the employee returns to their job. A payment in return for leaving the business anyway is normally made only if both sides agree to it.

One exception is the application for judicial termination. With it, the employee asks the court to end the employment relationship despite the invalid dismissal, in return for compensation. The requirement is unreasonableness, that is, that after everything that has happened the employee can no longer be expected to continue working for this employer. A tense relationship alone is not enough. The court examines the specific circumstances and then also sets the amount of the compensation. The employer's consent is not required.

Two instances, one assessment

At first instance, the Bonn Labour Court terminated the employment relationship and set compensation of 70,000 euros. The employer appealed. The 4th Chamber of the Cologne Regional Labour Court dismissed the appeal for the most part. The chamber confirmed that the employee could not reasonably be expected to continue the employment relationship because of the managing director's remarks. Only in the calculation did the Regional Labour Court depart slightly, setting the compensation at 68,153.80 euros. According to the court's announcement, no appeal lies against the judgment.

Why the compensation was so high

The Regional Labour Court itself describes the amount of the compensation as exceptional and justifies it by the particular circumstances of the case. It gives three reasons. First, the dismissal was manifestly socially unjustified, so there was clearly no ground that could have justified it under the Protection Against Dismissal Act. Second, the managing director degraded the employee to such an extent that she has suffered from post-traumatic stress disorder since May 2024. Third, in the court's view, he deliberately brought about the grounds for the termination by abusing his position of power.

The law sets out only in broad terms how courts are to assess compensation. It fixes an upper limit based on monthly earnings and otherwise leaves the amount to the court's discretion. Factors such as age, length of service and the conduct of both sides play a role. The Cologne judgment shows how much weight the employer's conduct can carry: anyone who creates the grounds for termination themselves, and deliberately, ends up paying more.

What the judgment means for employees

For employees who feel humiliated or put under pressure at work, the decision has a clear message. Anyone who, after winning an unfair dismissal claim, cannot return to a business in which the managing director has degraded them will receive compensation through an application for judicial termination. The employer cannot prevent this by withholding consent.

The judgment also shows that courts take the employer's conduct seriously when setting the amount of compensation. An employee does not have to put up with sexist and humiliating remarks. Health consequences such as post-traumatic stress disorder are factored into the assessment. And a managing director who uses his position to threaten an employee with sanctions under employment law out of annoyance about a private relationship is abusing his power. The court expressly held this intent against the employer.

What matters in the proceedings

An application for judicial termination presupposes an unfair dismissal claim. For such a claim there is a three-week time limit from receipt of the dismissal. Anyone who misses this deadline generally also loses the option of having the employment relationship terminated in return for compensation. The application itself can still be made during the proceedings, including on appeal.

The court decides on unreasonableness on the basis of the specific incidents. It therefore makes sense to record remarks and threats with the date and exact wording and to name witnesses where there are any. Health consequences should be documented medically. In the Cologne case, the court based its assessment on the managing director's remarks, the threatened sanctions and the illness existing since May 2024. The more precisely such circumstances are evidenced, the better unreasonableness can be established. That also affects the amount of the compensation.