Who is authorized to give notice in a company organized in a matrix structure? – A comparative analysis regarding French and German law

I. Introduction

The employer and the employee can terminate the employment relationship giving notice. This applies in France as well as Germany. So far, so simple.

But who is the “employer” in the case of a legal entity? Can the HR (Human Resources) department of a parent company dismiss an employee of a subsidiary? What about the HR department of a same-level affiliate? And if they can, can these principles be applied to corporations and companies organized in matrix structures?

This article provides an insight into the question of the right of termination on the employer’s side regarding matrix structures and shows the differences between French and German labour law.

II. Legal background

For a start, the legal background of both countries will be laid out to provide an overview of the system, identifying possible similarities and differences.

1. France

In France, the employer as the contracting party to the employment contract is entitled to terminate.[1]

If this involves a legal entity, it is represented by its legal representatives (dirigeants de droit). In the case of civil companies[2], this is the manager appointed by the partners.[3] The principle of legal representation also applies to commercial companies[4], so that the SARL is represented by the general manager[5] and the SA by the (president-) general director[6].

In case of an employment contract between an employee and a company[7], the employer’s right of termination is exercised in principle by its legal representatives (as shown above). If a separate department within the company is to be involved in the proceedings of termination – such as Human Resources (HR), then a delegation of power (délégation de pouvoir)  is required. The delegation of power was established in 1902 by the French Supreme Court and is therefore not regulated by statute law.[8] It is not to be confused with the power of attorney (mandat) according to art. 1984 ff. French Civil Code (C. civ.) or the delegation of signature power (délégation de signature).

Whereas the delegation of power transfers the power entirely onto the person to which the power is delegated (délégataire) allowing him/her to act in his/her own name,[9] the power of attorney only allows the agent (mandataire) to act on behalf of and for the account of the principal (mandateur).[10] The same goes for the delegation of signature power. In this case, the person to which the power is delegated appears as an agent for the delegating individual and not as a representative of the company.[11] The delegating person merely instructs the agent to sign on his or her behalf legal deeds that fall within the scope of his or her personal powers.[12] In contrast to that, in case of the delegation of powers, the company itself becomes legally obligated.[13]

The delegation of power in principle even includes the transfer of criminal liability.[14] Nevertheless pursuant to civil law, the employer having delegated his power (délégateur) remains liable towards third parties for mistakes of his employee.[15] On the other hand, employees who acted within the limits of their delegated mission are generally exempt from their civil liability.[16]

The delegation of power is valid if the following conditions are met:

• The delegating person is the legal representative of the legal entity in which the (in the future terminated) employee is employed.
• The person delegated to belongs to the company[17] and is hierarchically subordinated to the delegating person[18].
• The person delegated to is in a position to exercise the power delegated to him/her, is provided with sufficient authority as well as the necessary means and disposes of sufficient competence.[19] This includes autonomy, experience and training, hierarchical power, as well as human, material and financial resources.[20]
• The delegation must be certain and unambiguous.[21]

A specific form for the delegation of power is not a requirement for its validity.[22] It can be implied or oral,[23] even though for reasons of proof it is recommended in writing. In this respect, it is recognized that a chief human resources officer, CHRO (directeur des resources humaines, DRH), given the core duties of this role, does not need a specific form to terminate employment contracts of the (implicitly) delegating company.[24]

2.   Germany

In Germany, too, the employer is entitled to terminate the contract as the contractual party of an employment contract.[25]

Legal entities are represented by their legal representatives (gesetzliche Vertreter). For a company with limited liability (GmbH), this is the general manager[26]; for a stock company (AG) the board of directors[27]. The principle of legal representation also applies to unincorporated entities as well as private and commercial (limited) partnerships.[28]

Outside of the legal representation, the pivotal point of the right to terminate an employment contract are § 174 German Civil Code (BGB) stating:

“A unilateral legal act carried out by an authorized agent for another party is invalid if the authorized agent does not present a power of attorney and the other party immediately rejects the legal act for this reason. Rejection is excluded if the principal had informed the other party of the authorization.”

and § 180 German Civil Code (BGB) stating:

“In the case of a unilateral legal act, representation without power of attorney is not permitted. However, if the party, towards whom such a legal act was to be performed, did not object to the power of attorney claimed by the agent when the legal act was performed or if he agreed that the agent should act without power of attorney, the provisions concerning contracts shall apply accordingly. The same applies if a unilateral legal act is performed in relation to an agent without power of attorney with his consent.”

Both legal rules concern the contractual authorization (rechtsgeschäftliche Bevollmächtigung) according to §§ 164 ff. German Civil Code (BGB) in distinction to the legal representation. However, whereas § 180 German Civil Code (BGB) concerns the actual power (Vertretungsmacht) itself, § 174 German Civil Code (BGB) concerns the formal presentation of the authorization of power towards the third party (in case of the termination the employee).

It is an inherent principle of both legal norms that a unilateral legal act (e.g. termination notice) is only invalid if the other party rejects the termination, whether for the reason of a lack of power of attorney itself or for the reason of a lack of presentation of the deed of power of attorney. The rejection must be expressed without any undue delay, otherwise it is itself void and the termination is consequently valid. The rejection is no longer without undue delay after a period of more than a week without the presence of special circumstances in the individual case.[29]

If the employer (as principal: Vertretener) wants to involve an HR department (as agent: Vertreter) for the proceedings of the termination or the declaration of the termination itself, he has to give it power of attorney. This can also be done by implication or orally. Nevertheless, to fulfil the obligation of § 174 German Civil Code (BGB) and not take the risk that the termination will be rejected, written power of attorney is advised.

Both rules provide for one essential exception: a notification of the third party (the employee). If the employee is informed by the principal of the authorization of the agent, the employee cannot reject the termination.[30] A notification is also deemed to have been made if sufficient power of representation has been publicly disclosed, particularly in a register,[31] e.g. an authorized officer (Prokurist)[32]. In these cases, a notification about the authorization and the person of the agent by the principal is deemed unnecessary due to the public nature of these registers.[33] In addition, the German Federal Labour Court has ruled that an employer is also deemed to have provided notice if he has appointed certain employees – e.g. by appointing them as general representatives or heads of the HR department (CHRO) – to positions that are usually associated with the right to terminate and has made this known within the company.[34]

In most cases, the employer has given power of attorney to the person that terminates the employment contract with the employee. The rejection will therefore more often be based on § 174 German Civil Code (BGB) arguing the absence of the formal deed of power of attorney.

III. Matrix structures

In the following, the principles outlined above will be explained on the basis of a few practical examples.

1.  Several operating units

If a company maintains several operating units[35], for example two shops in one or different cities or one logistics centre and one sales shop, however, both operating units belong to the same company as a legal entity. As the employment contract is concluded between the legal entity and the employee, the right to terminate the contract arises with the company which is, in general, represented by its legal representatives.

In France, the legal representative may delegate the power to terminate contracts – meeting the conditions shown under II.1. – to an HR department localized on the level of the operating units or an HR department localized on the level of the company.

This also applies to Germany, though not constituting a delegation of power, but a contractual authorization. The fact whether or not both operating units constitute one single establishment (Betrieb) under § 23 German Protection Against Dismissal Act (KSchG) does not affect who has the right to terminate.[36]

2.   Several subsidiaries

If a company is to have subsidiaries[37], the employment contract is concluded between the employee and the subsidiary itself as a legal entity.

    According to French law, a delegation of power is possible. Though the right to delegate arises with the legal representatives of the subsidiary and not those of the parent company. The increasing importance of matrix structures raises the question of whether the legal representatives of the subsidiary can now delegate power to HR departments within the parent company or even affiliates[38]. The answer to this question depends on whether the persons to be delegated to can be regarded as “belonging to the company” in the sense of the conditions shown under II.1. The French Supreme Court has ruled on this topic, stating that persons of the parent company are not deemed “external” to the company. [39] Subsequently, the question arose as to whether the power could be delegated to persons belonging to the affiliate. Having already affirmed the possibility of doing so in 2021,[40] the French Supreme Court ultimately decided the question in 2023 in the affirmative.[41] Nonetheless, the other conditions for a delegation of power need to be met; particularly having the sufficient authority as well as disposing of the necessary means. The court tends to pay more attention to this when it comes to a delegation of power between affiliates.

In Germany, a contractual authorization is possible without the restriction to persons “belonging to the company”. Persons or (HR) departments from affiliates may therefore be easily authorized by the contractual employer.[42] Particularly in (international) corporate groups, the principles of sufficient notifying of the employees (see also IV.) need to be kept in mind to avoid the risk of rejection.[43]

3.  Shared operating unit / joint venture

In the case of an operating unit jointly run by two companies, the principle remains that the right of termination lies with the contractual employer. This right can be delegated within a group according to the principles described under III.2.

Consequently, in France, if two companies are not part of the same corporate group, a delegation of power is invalid and not possible.

While in Germany, the operating unit may constitute a joint operation under § 1 para. 1, 2 German Works Constitution Act (BetrVG),[44] the right to terminate initially still arises with the contractual employer who is free to authorize persons or HR departments within the other company. In this case, too, the process of notifying the employees needs to be kept in mind.

IV. Comparative synopsis

It can be concluded that in both countries, Germany and France, the right to terminate an employment contract always arises with the contractual employer. Other than in France, there is no differentiation between a delegation of power and a power of attorney in Germany.

As a result of the second condition for a delegation of power, in France, a delegation of power is invalid to persons who do not belong to the company and are therefore considered “externals”. This also goes for accounting firms[45] as well as law firms and lawyers of the employer. The Court of Appeal of Versailles even ruled that solely the expedition of the termination letter via the lawyer would result in its invalidity.[46] The same applies to the power of attorney (mandat).[47]

In Germany, the employer is free to give power to attorney to anyone he pleases including his lawyers and persons that do not belong to the company.

Both, in France and Germany, HR departments are regularly involved in the proceedings of termination. While in Germany, there is a particular interest in notifying the employees about the specific persons occupying the termination-related positions to avoid the risk of the rejection of the termination letter according to § 174 German Civil Code (BGB), this does not apply to France. Even having notified the employees, for instance by a posted notice in the company or an email to the company mailing list, it is still not unlikely that dismissed employees will challenge their proper notification. They may argue that on the day of notification, they were sick, in paid leave, not included in the mailing list or entered into the company after the date of the notification. Given that the employer bears the burden of proof that he has duly notified the respective employee, it is recommended that the notification is carried out in writing.

In conclusion, it can be stated that despite some similarities as well as similar developments in Germany and France (e.g. implicit termination authorization according to function of certain persons [CHRO]), the system of termination authorization already differs in principle. Whereas in France, the person delegated to (e.g. the HR department) acts instead[48] of the legal representative who is then, in general, required not to intervene in the actions taken by the person delegated to, otherwise the delegation of power is invalid,[49] the employer as principal may act alongside the authorized agent (e.g. HR) in Germany. However, in both countries, particular attention has to be paid to the diligent (preferably written) issuance of the delegation of power respectively the contractual authorization; in France, furthermore, to the “company affiliation” of the person delegated to.

By Caroline Froger-Michon in collaboration with Henry Lambertz

[1] Art. L. 1231-1 (1), L. 1232-3 and L. 1232-6 French Labour Code (C. trav.).

[2] Such as SCPI, SCCV, SCP, SCM, SCEA, SEL.

[3] Gérant, cf. art. 1846 (1) and (5) French Civil Code (C. civ.).

[4] Such as SNC, SCS, SCA, SAS.

[5] Gérant, cf. art. L. 223-18 French Commercial Code (C. com.).

[6] (Président-) directeur général, cf. art. L. 225-47, L. 225-51, L. 225-51-1, L. 225-56 (1) subpara. 2 French Commercial Code (C. com.) respectively président du directoire, cf. art. L. 225-58 (1) and (2) French Commercial Code (C. com.).

[7] Company understood as independent legal entity e.g. SARL (FR) or GmbH (DE).

[8] Larcena/Elineau, Délégation de pouvoirs – Pratique des délégations de pouvoirs : règles et évolutions récentes de cet outil de répartition des pouvoirs et responsabilités, D^r sociétés 2012, étude 4.

[9] Dalmasso/Bourcereau, Société – Mandats de gestion et délégations de pouvoirs, une nécessaire distinction, JCP E 2010, 1590, no. 17.

[10] Henrion, Délégation de pouvoirs – Déléguer le pouvoir de l'employeur, JCP S 2016, 1216, 1.

[11] Navis – Mémento Sociétés commerciales 2025, no. 13540.

[12] ibid.

[13] ibid.

[14] Navis – Mémento CSE et autres représentants du personnel 2024-2025, no. 30050, 30068; Dalmasso/Bourcereau, Société – Mandats de gestion et délégations de pouvoirs, une nécessaire distinction, JCP E 2010, 1590, no. 16.

[15] Art. 1242 (5) French Civil Code (C. civ.).

[16] Cass. ass. plén., 25.02.2000, n° 97-17.378, RJS 6/00 no. 630.

[17] Cass. soc., 20.11.2014, n° 13-22.581, via Navis.

[18] Cass. crim., 24.09.1998, n° 5302, RJDA 1/99 no. 48; Henrion, Délégation de pouvoirs – Déléguer le pouvoir de l'employeur, JCP S 2016, 1216, 2. B. II° a); Larcena/Elineau, Délégation de pouvoirs – Pratique des délégations de pouvoirs : règles et évolutions récentes de cet outil de répartition des pouvoirs et responsabilités, D^r sociétés 2012, étude 4 no. 2, 3, 10.

[19] Cass. soc., 25.11.2020, n° 19-18.681, RJS 2/21 no. 94; Cass. crim., 08.12.2009, n° 09-82.183, RJS 3/10 no. 302; Cass. crim., 23.11.2004, n° 04-81.601, RJS 3/05 no. 330.

[20] Navis – Mémento CSE et autres représentants du personnel 2024-2025, no. 30060.

[21] Cass. crim., 02.02.1993, n° 92-80.672, RJDA 12/93 no. 1036; CA Versailles, 24.09.2009, n° 08/02615 via Lexis; Henrion, Délégation de pouvoirs – Déléguer le pouvoir de l'employeur, JCP S 2016, 1216, 2. B. III° a).

[22] Cass. soc., 13.06.2018, n° 16-23.701, RJS 8-9/18 no. 533; Cass. ch. mixte, 19.11.2010, n° 10-10.095, RJS 1/11 no. 26.

[23] Cass. ch. mixte, 19.11.2010, n° 10-10.095, RJS 1/11 no. 26; Navis – Série NB – Licenciement – Division II Procédure de licenciement pour motif personnel, no. 17960 ff.

[24] Cass. ch. mixte, 19.11.2010, n° 10-10.095, RJS 1/11 no. 26; Cass. soc., 06.03.2012, n° 10-24.367, RJS 5/12 no. 408; Cass. soc., 07.06.2011, n° 10-19.780, RJS 12/11 no. 927. However, this does not apply for associations or in cases where special formalities have been laid down (e.g. in by-laws), cf. Cass. soc., 14.06.2023, n° 21-23.461, RJS 10/23 no. 498.

[25] § 620 (2) German Civil Code (BGB).

[26] Geschäftsführer, cf. § 35 (1) 1 German Limited Liability Companies Act (GmbHG).

[27] Vorstand, cf. § 78 (1) 1 German Stock Corporation Act (AktG).

[28] Such as GbR, oHG, KG, KGaA, PartG (mbB).

[29] BAG, 05.12.2019, 2 AZR 147/19, NZA 2020, 505 no. 48; BAG, 13.12.2012, 6 AZR 608/11, BeckRS 2013, 67590 no.67.

[30] § 174 sentence 2 German Civil Code (BGB).

[31] BAG, 25.09.2014, 2 AZR 567/13, NZA 2015, 159 no. 21.

[32] Subject to obligatory registration according to § 53 (1) 1 German Commercial Code (HGB).

[33] BAG, 25.09.2014, 2 AZR 567/13, NZA 2015, 159 no. 21; BAG, 14.04.2011, 6 AZR 727/09, NZA 2011, 683 no. 27; Beck’scher Online-Kommentar zum BGB/Schäfer, BGB § 174 no. 12; Münchener Kommentar zum BGB/Schubert, BGB § 174 no. 34.

[34] BAG, 14.04.2011, 6 AZR 727/09, NZA 2011, 683 no. 25; Beck’scher Online-Kommentar zum BGB/Schäfer, BGB § 174 no. 12; Münchener Kommentar zum BGB/Schubert, BGB § 174 no. 29.

[35] Operating unit understood as location/outlet/establishment/branch of the company not constituting an independent legal entity.

[36] Conversely however, the fact who has the right to terminate, especially when organized in a joint management, influences the qualification of “establishment”; cf. BAG, 02.03.2017, 2 AZR 427/16, NZA 2017, 859 no. 15; Erfurter Kommentar/Kiel, KSchG § 23 no. 3-5.

[37] Subsidiaries understood as independent legal entities e.g. SARL (FR) or GmbH (DE) whose shares are owned by the parent company by 100 %.

[38] Affiliate (entreprise sœur/Schwestergesellschaft) understood as another subsidiary of the corporate group constituting an independent legal entity e.g. SARL (FR) or GmbH (DE) whose shares are owned by the parent company by 100 %.

[39] Cass. soc., 13.06.2018, n° 16-23.701, RJS 8-9/18 no. 533; Cass. soc., 19.01.2005, n° 02-45.675, via Navis.

[40] Cass. soc., 20.10.2021, n° 20-11.485, RJS, 2/22 no. 63.

[41] Cass. soc., 28.06.2023, n° 21-18.142, RJS 10/23 no. 509.

[42] Schaub, Arbeitsrechtshandbuch/Koch, § 187 no. 8.

[43] OLG Köln, 13.08.2015, 18 U 153/14, BeckRS 2016, 8158 regarding the termination of an employee working in Germany for the subsidiary of a holding company in the USA where HR was located.

[44] Erfurter Kommentar/Kiel, KSchG § 23 no. 5; Schaub, Arbeitsrechtshandbuch/Koch, § 187 no. 8.

[45] Cass. soc., 26.04.2017, n° 15-25.204, RJS 7/17 no. 476; Cass. soc., 07.12.2011, n° 10-30.222, RJS 2/12 no. 124; Cass. soc., 26.03.2002, n° 99-43.155, RJS 6/02 no. 667, 669.

[46] CA Versailles, 21.02.2012, n° 11/00826 , via Lexis.

[47] Cass. soc., 28.06.2023, n° 21-18.142, RJS 8-9/23 no. 509; Cass. soc., 26.04.2017, n° 15-25.204, RJS 7/17 no. 476; Dalloz comments to art. 1984 French Civil Code (C. civ.) no. 21.

[48] Dalmasso/Bourcereau, Société – Mandats de gestion et délégations de pouvoirs, une nécessaire distinction, JCP E 2010, 1590, no. 17, 21.

[49] Cass. crim., 07.06.2011, n° 10-84.283, RJS 12/11 no. 1025; Navis – Mémento CSE et autres représentants du personnel 2024-2025, no. 30060, 30068.