The issue of executive severance for managers is complex, as the legal dispute between Fredi Bobic and Hertha BSC shows. At its core, it concerns the question many executives face: what rights does a senior employee have when the employer withdraws trust and terminates the contract early? The case demonstrates how quickly a sporting decision can turn into a legal marathon – and why a strategic approach is essential when dealing with a dismissal. For anyone currently in a similar situation, a close look at the mechanisms behind the scenes is worthwhile.
Fredi Bobic served as managing director at Hertha BSC when the club parted ways with him in 2022. The separation was not mutual; it led to a legal battle that lasted months. Bobic contested his dismissal and demanded a severance payment that, according to public reports, should reach into the millions. The dispute was finally heard before a labor court – a typical scenario that, in varied form, plays out in many companies.
What makes this case notable is the combination of high compensation, long‑term contractual ties, and the question of whether the dismissal was even valid. Such constellations are not isolated. Companies repeatedly separate from executives, and repeatedly the issue becomes whether the dismissal holds up legally or whether a severance must be paid. The Bobic case therefore serves as a good illustration of the legal foundations.
executive severance: key considerations
When discussing executive severance, it is essential to review the contractual terms first. Understanding the nuances of executive severance helps managers set realistic expectations during negotiations.
Executives often enjoy a distinct status that influences their dismissal protection. While regular employees are covered by the Dismissal Protection Act (KSchG), managing directors and senior staff frequently fall under separate rules. In particular, anyone acting as a corporate officer or managing director is not always subject to the general dismissal protection. Instead, the service contract governs the conditions of termination.
At Hertha BSC, Bobic acted as managing director, meaning his contract could not be judged solely by employment‑law rules. The contractual provisions played a central role. For executives, therefore, the employment contract is the most important document when it comes to dismissal and severance. It often contains special provisions on notice periods, garden leave and severance claims that deviate from the statutory baseline.
Another point is the social justification of a dismissal. Whereas ordinary employees must be shown by the employer that the termination is due to operational, personal or behavioral reasons, executives are often measured by different standards. For managing directors, a dismissal can sometimes be effected without such grounds if the contract permits it. Nevertheless, the question remains whether a severance is owed – and that is where the real dispute begins.
Negotiation strategies and legal basis
A common starting point for negotiations is half a gross monthly salary per year of service, but this figure serves only as a reference and does not guarantee a payment.
The final amount depends on factors such as length of service, salary level, position and the relative bargaining power of the parties. In practice, outcomes often vary widely, especially when bonuses, profit‑sharing and long‑term contracts are involved.
For executives, filing a dismissal‑protection lawsuit signals to the employer that you are prepared to defend your rights. This step frequently leads to an improved settlement offer. The Bobic case illustrates that persistence can, in some instances, result in a higher severance – though success is not guaranteed and some proceedings end in defeat.
How courts decide on dismissal and severance disputes
If the parties cannot reach an agreement, the labor court examines first whether the dismissal was valid. Only afterwards is the possible amount of a severance discussed. Judges often propose a settlement that satisfies both sides, aiming to conclude the dispute without a final ruling.
The prospects of success for a dismissal‑protection lawsuit depend heavily on the circumstances. For executives, the legal situation is often more complex because the dismissal protection does not apply automatically. What matters is whether the individual qualifies as an employee under the Dismissal Protection Act. Managing directors who are also shareholders may be treated differently from salaried managers; the case law draws a clear distinction.
In the Bobic dispute, the matter was ultimately settled – a common outcome. The exact terms were not disclosed publicly, but it is reasonable to assume that Bobic received a severance amount below his original demand. Such settlements are typical because they give both parties planning certainty. For employees, a settlement is often the most pragmatic route, even if it does not yield the maximum possible amount.
What employees can learn from the case: securing your rights
The Bobic versus Hertha BSC affair highlights the importance of seeking legal advice early. Anyone who receives a dismissal should not sign immediately but analyze the situation calmly. A dismissal‑protection lawsuit must be filed at the labor court within three weeks of receiving the notice – this deadline is crucial and is often missed.
For executives, an additional step is to scrutinize the contract carefully. Often it contains provisions that entitle you to a severance, even if the employer initially denies them. Likewise, the question of whether a garden‑leave arrangement is effective can influence your negotiating position. Being released from duties often provides more time to prepare for negotiations – at the same time, you forgo the salary for the work performed.
Another consideration is the tax treatment of the severance. Severance payments are subject to income tax, but under certain conditions they can be taxed at a reduced rate. The so‑called fifth‑rule may substantially lower the tax burden when the severance is paid as a lump sum. However, this rule is subject to conditions that must be examined case by case. A tax adviser or an employment‑law attorney can help avoid mistakes.
Legal pitfalls in contract terminations in professional sport
Professional sport is a special field of work that exhibits many legal peculiarities. Contracts in professional football are frequently linked to sporting performance, and remuneration consists of base salary, bonuses and performance‑related payments. Upon separation, the discussion therefore extends beyond the base salary to include proportional bonus entitlements.
A recurring point of contention is whether a dismissal motivated by sporting failure can be justified as a personal‑related termination. When a coach or managing director is let go because the team’s results are poor, the issue arises as to whether this constitutes a behavioral or personal ground. Jurisprudence is inconsistent here, which can prolong proceedings.
In the Bobic situation, the added complication was that the club was experiencing a sporting crisis and external pressure was high. Such circumstances can strengthen the employer’s bargaining position, but they do not automatically lead to a lower severance. What matters is what the contract stipulates and how the parties assess the situation. For executives in sport, the contract must therefore contain clear rules for the event of a separation.
Conclusion: the value of legal protection and professional advice
The Bobic versus Hertha BSC case is a lesson for all executives confronted with dismissal and severance issues. It shows that a legal dispute is not only emotional but also financial. Anyone who wants to obtain a severance for executives must be prepared to enforce their rights consistently and to seek professional support.
For most employees, the first step is to consult a lawyer specializing in employment law. Such an attorney can assess the chances of success, file the lawsuit in time and conduct the negotiations.
However, lawyer and court fees can be an obstacle, especially when income disappears during the proceedings. Here a litigation funder such as RechtStark can step in by covering the procedure’s costs and, in case of success, receiving a share of the awarded severance.
In the end, the takeaway is clear: a dismissal is not the end, but often the start of a negotiation. Ultimately, securing a fair executive severance package often hinges on timely legal action and informed negotiation.
Those who know the legal framework and act strategically can, in many instances, achieve a better outcome than by mere hesitation. The Bobic case demonstrates that even high‑profile disputes often end in a settlement – and that it is worthwhile to stand up for one’s rights.
Note: This article is for general information purposes only and does not replace individual legal advice. For a free initial assessment of whether litigation funding may be an option for your case, you can contact RechtStark.