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For a foreign client, taking legal action in Europe is a complex issue. Each European country has its own national laws, court structures and unique legal history. Fundamental differences exist in the nature of the various national legal systems. Few countries follow a common law system. Most states have adopted a civil law jurisdiction based on codification, where statutes are the primary source of law and precedents are less important. Courts decide disputes based on a learned interpretation of relevant statutes. By contrast, common law jurisdictions use cases as a primary source of law and there is a strong adherence to the doctrine of precedent.

Procedural law also differs drastically from common law jurisdictions. Most civil law jurisdictions do not use a (pre trial) discovery procedure. Some operate by an inquisitorial procedure (which means the judges actively inquire the facts they deem relevant for a fair court ruling), other jurisdictions use an adversarial procedure (meaning the parties must provide the court with the facts of the case).

On top of the 27 different national jurisdictions within the European Union, EU laws and EU courts add an additional layer of complexity. In certain areas of law national courts must refer legal issues to EU courts to be decided on aEuropean level, so an EU wide consistent interpretation is guaranteed.

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Germany Trade and Invest is the foreign trade and inward investment agency of the Federal Republic of Germany. Its mission is to promote Germany as top location for industrial and technological investments and to identify investors for the German market. The organization advises and supports foreign companies seeking to expand into the German market and assists German companies looking to enter foreign markets.

The website www.gtai.com provides comprehensive information about Germany. Particularly helpful is the “Investment Guide to Germany” with details on:

* Coming to Germany
* Establishing a Company
* Financing a Business
* Incentives
* Employees and Social Security
* The Tax System
* The Legal Framework
* Living in Germany

For more information on the business, legal and tax framework in Germany visit here

An easy to use new online tool helps clients and foreign lawyers find a qualified trial lawyer in Germany or Austria. Within seconds the users of this website receive a list of litigation law firms in virtually every city of Germany or Austria, free of any charge. Just type the ZIP code of the area you need a lawyer in and browse the respective websites until you identify a law firm / litigator that you feel comfortable with. The domains are:

www.terminsvertreter.com (for Germany)
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Guidelines for the Formation of a German Limited Liability Company (GmbH)

Required Documents and Appointment of its First Managing Director

The minimum share capital for a GmbH is 25,000 Euros. The formation of a German “Gesellschaft mit beschränkter Haftung” (GmbH) requires the establishment of Articles of Association before a German notary. The notarisation and the appointment of the first director (Geschäftsführer) are recorded in a Memorandum of Incorporation (MoI), to which the Articles of Association (AoA) are attached. Then, an application for registration of the company in the Commercial Register (Handelsregister) must be made to the Local Court (Amtsgericht), where the company’s registered office is located. The company becomes effective only once it has been registered, which usually takes about one to three weeks. In the period between notarial formation and registration in the Commercial Register, business activities may already be undertaken in the name of the company. However, during this phase (after formation but before registration) the individuals acting in the name of the company are personally liable. …

In case the founder does not wish to appear before a German notary in person, a German legal counsel may act under power of attorney on the (future) shareholders behalf. Such power of attorney must be signed for and on behalf of the grantor (the person or company wishing to establish the German GmbH) before a notary public. The signature and the signatory’s authority to sign on behalf of the grantor must then be certified by a notary public. The notary public’s signature must then be authenticated by Apostille in order to evidence the legalisation of the notary’s signature for use of the notarised document abroad. This procedure is based on the convention abolishing the requirement of legalisation for foreign public documents signed in The Hague on 05 October 1961. The three documents (Power of Attorney, Certificate of Notary Public and Apostille) should be inseparably bound together by e.g. ribbon and seal of the notary.

Furthermore, a Secretary’s Certificate must be completed and signed by the Company Secretary of the founding company in order to evidence the existence of the founding company (also a copy of the company’s certificate of incorporation should be attached), that it is entitled to subscribe to shares in a German GmbH and that the signatory of the Power of Attorney is entitled to sign the Power of Attorney on behalf of the founding company. The Secretary’s Certificate must also be sworn to and subscribed before a notary public, whose signature must be authenticated by Apostille. Again, these documents (Secretary’s Certificate, Notary’s Certification and Apostille) must be inseparably bound together.

The Memorandum of Incorporation (the formation document) is then signed by the German legal counsel on behalf of the founding person or company under the Power of Attorney. Articles of Association (Satzung) of the GmbH must be attached to the MoI. A basic version (in German and English language) is published here for easy reference.

Furthermore, the founding process requires a notarial instruction letter from a German notary to be addressed to the GmbH’s first director (who is appointed in the Memorandum of Incorporation). German law requires that the (first) director is advised in notarial form of certain legal provisions pursuant to which persons who have been convicted of certain bankruptcy crimes or who have been forbidden by administrative action to exercise certain trades are barred from acting as director of a German GmbH.

Finally, the newly founded GmbH must apply to the Commercial Register for registration of the incorporation of the GmbH, the appointment of its first director and a list of shareholders of the GmbH. The application includes a section in which the newly appointed director must give a specimen of his/her signature for deposit with the Commercial Register. This document must be signed by the newly appointed director personally in the presence of a notary public. It may not be signed by anyone else under power of attorney because it contains certain assurances to be given by the director personally regarding his/her eligibility to be a director of a German GmbH. The notary public should then attach a separate sheet on which he certifies that the director’s signature has been made in his presence.

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For further information and assistance please contact Graf & Partners LLP, Munich, Germany, www.grafpartner.com, attention of Mr. Bernhard Schmeilzl, Master of Laws (Leicester), mail@grafpartner.com

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Additional material on German law and the German legal system is available here

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The salary of German employees is subject to income tax and social security deductions. Employees pay income tax according to their individual tax rate (depending on their annual income). The tax is deducted directly from the salary which means that the employer is responsible for its actual payment. Germany has a linear progressive income tax rate starting at 15% and ending with the maximum tax rate of currently 42%. Compulsory social security (also deducted directly from the pay check) is borne equally by employer and employee. Social security includes health and unemployment insurance as well as state pension.

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Consiglio Nationale Forense

Ordine degli Avvocati di Roma

Consiglio Dell’Ordine degli Avvocati e die Procuratori Legali di Napoli

Ordine degli Avvocati e Procuratori di Milano

Organismo Unitario dell’Avvocatura Italiana

Ordine degli Avvocati Bari

Consiglio degli Avvocati di Genova

Tiroler Rechtsanwaltskammer

.1. General protection against dismissal (Kündigungsschutz)

While the special protection against dismissal deals with the restrictions to dismissal from which only specific employees benefit (e.g. members of a works council, pregnant women), the general protection against dismissal applies to all employees who fall under the scope of the Act on the Protection against Dismissal (Kündigungsschutzgesetz). Basically, this Act applies to enterprises that employ more than ten employees. The protection against dismissal does not touch the termination of employment for other reasons than dismissal (e.g. contract of consolation, expiry of the agreed period in case of an employment contract of limited duration).

The general protection against dismissal applies only where the employment relationship of the employee involved has already existed for more than six months without interruption in the same enterprise or company at the moment of dismissal. In the course of the first six months (so called “Probezeit” or “test phase”) an ordinary dismissal by the employer is basically possible without need to give a reason. The act on the protection against dismissal applies only to enterprises that regularly employ more than five employees not including the apprentices.

Dismissal is only socially justified if it is caused by reasons that

- lie in the person of the employee or
- lie in the behavior of the employee or
- are urgent operational requirements which hinder the employee’s continued employment in this enterprise.

a) Dismissals founded on the person

Reason which lie in the person of the employee and which may socially justify dismissal are objectively existing ones, for which the employee need not to be held responsible. Most frequently sickness of the employee is the cause for dismissals founded on the person. Great demands are to be made on the social justification of a dismissal on the grounds of sickness. The Federal Labor Court declared dismissals due to sickness compatible with the Act on the Protection against Dismissal only in two cases. So far as it is clear at the moment of dismissal that the sickness will not be curable in the foreseeable future and if this entails unreasonable consequences for the employer (permanent sickness) or as it is a sickness with a risk of frequent new phases of sickness, i.e. if the employee was extremely frequently absent from work in the past and it can be assumed that his state of health will not improve in the future so that the employer has to reckon with the employee’s frequent absence due to sickness. In this case, too, a further prerequisite is that the former and future periods of sickness entail an unreasonable operational or economic burden for the employer.

b) Dismissal founded on the person’s behavior

Reasons for dismissal that lie in the person of the employee are above all the violations of contract. A fault of the employee is not always decisive although a fault is as a rule required. Behavior need not be directed against the employer. Also in the case of a quarrel with colleagues a dismissal may be justified.

A clear written warning of the employer in due time is as a rule required before an ordinary dismissal on the grounds of behavior. Where no warning has been pronounced prior to giving notice of dismissal the latter is ineffective, unless there exist particular circumstances due to which a warning could be considered dispensable. Especially in the so-called “sphere of confidence” a dismissal is basically permissible without a prior warning.

The reasons for a dismissal on the grounds of the behavior must be considerable to a certain degree. What is required is a thorough balancing of the interests of the employee and of the employer taking into consideration all circumstances of the individual case (e.g. length of job, situation on the job market, former behavior of the employee). In each individual case the question has to be asked whether the reasons put forward to support the dismissal seem to be equitable and appropriate in a sensible assessment, such as carried out by a calm and corrected unprejudiced employer and taking into consideration the interests of both the employee and the employer.

c) Dismissal on account of operational reasons

In the legal proceedings on the effectiveness of a dismissal on account of operational reasons the court fully reviews all internal and external reasons for dismissal put forward by the employer. The court evaluates whether such reasons really exist and whether they have such a high relevance in the operational sphere that further employment of the dismissed employee no longer required. According to the Federal Labor Court the employer carries the burden of proof that the dismissal due to the abolition of the former job is conditioned by urgent operational requirements without employment of this employee somewhere else within the company being possible or reasonable. When choosing from several employees, each of whom might have been dismissed due to urgent operational reasons the employer has to take into case consideration social reasons. Where the employer has not sufficiently taken into consideration social criteria (e.g. age, number of children etc.) the dismissal is socially unjustified. This means that, although urgent operational reasons exist, the employer may not dismiss this specific employee.

2. Particular protection against dismissal of specific groups of employees

The legislator has provided for protection against dismissal exceeding the general protection against dismissal for a specific group of employees because they require a particular protection. These are

- members of the works council or other functionaries according to the Works Constitution Act,
- persons performing a military service,
- disabled persons,
- pregnant women, mothers and persons in child raising leaf,
- apprentices

Reasons relating to job market policy but also to protect the individual employee there exists a protection against a mass dismissal in companies with more than 20 employees.

3. Dissolution of employment relationship against severance pay

The purpose of the Act on the Protection against Dismissal is in the first place to protect the employee’s job in the case of an ineffective dismissal. However, since the parties are often on bad terms and a sensible cooperation is no longer possible in the cause of legal proceedings concerning the termination of employment the legislator gave the judges the opportunity to terminate the employment relationship by a judgement against severance pay by the employer. If the notice of dismissal given by the employer is ineffective and he requests a dissolution against severance pay and there a facts due to which a further co-operation that serves the business purpose cannot reasonably be expected the court will terminate the contract against severance pay. The amount of the severance pay may be as high as 12 monthly wages. In fact the standards are so high, that it is very rare that a court terminates the contract against a severance pay.

But as the parties are free to terminate the employment relationship against severance pay they can form voluntarily a termination contract at any time. We make the experience that most of the cases are solved by a termination contract. The amounts of the severance pay is due to the risks of the parties in their legal proceedings. As a main rule 1 to 0.5 of a monthly pay is paid for every year of the duration of the employment.

4. Payment of wages in the case of ineffective dismissal

If the Labor Court decided that the employment relationship was not dissolved by the employer’s notice and if it did not dissolve the employment relationship against severance pay the employer has to pay the agreed wage for the period from the moment the employee left the company until he entered again. The employee must not offer the job performance he owes. However, the employer must allow to be credited to his claim for payment of wages the amount he earned or might have earned elsewhere had he not omitted with malicious intention to accept a reasonable work.

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For information on the German Political & Legal System also see here

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