Dismissal for cause: Compliance officer liable for errors in handling whistleblower reports

A recent ruling by the Offenbach Labor Court (ruling of November 25, 2025 – 1 Ca 136/25) clarifies the responsibilities of executives when handling whistleblower reports. The court ruled that a general counsel’s culpable breach of monitoring and oversight duties may justify termination for cause. The case underscores that compliance responsibility is not a mere formality, but a core obligation, the disregard of which can have serious consequences under labor law.

The facts: Inadequate investigation and downplaying of the issue

The plaintiff served as general counsel and a member of key management bodies at an international corporation. Following the receipt of a whistleblower report regarding irregularities at a subsidiary, an investigative team was formed under his leadership.

However, the investigation revealed significant shortcomings:

• Procedural error: Contrary to internal procedural rules, the internal audit department was not involved.
• Conflict of interest: The team also included employees who were implicated in the report itself.
• Delay: The final report was not submitted until eleven months later.
• Miscommunication: The communication with the whistleblower downplayed the issue, and some of the allegations were dismissed.

Particularly controversial were the “Operating Principles” for the legal department developed by the plaintiff himself, which advised against keeping written records. After an outside law firm investigated the matter, the company terminated the general counsel’s employment without notice, or alternatively, with notice.

The ruling: Extraordinary termination invalid; ordinary termination justified

The Offenbach Labor Court ruled that the termination for cause was invalid. The court found that the required two-week notice period (Section 626(2) of the German Civil Code) had not been observed. The company was already aware of the material breaches of duty from the delayed internal final report, not merely from the report by the external law firm.

However, the court considered the ordinary termination, which was granted as an alternative, to be socially justified. The reasoning:

1. Special Responsibilities: As General Counsel, the plaintiff bore overarching responsibility for legal affairs and compliance throughout the entire group. This special position of trust, which was also reflected in his title and compensation, gave rise to enhanced fiduciary duties.
2. Serious breach of duty: He culpably failed to fulfill his duties of supervision, oversight, and damage prevention over an extended period by failing to prevent the improper handling of the whistleblower report.
3. No need for a prior warning: Given the seriousness of the breaches of duty and the plaintiff’s prominent position, a prior warning was unnecessary. It was no longer reasonable to expect a smooth working relationship in the future.

Practical Tip: Compliance is an indispensable management responsibility

The decision by the Offenbach Labor Court sends a clear message:

• Management’s Responsibility: Especially in compliance-related roles, such as that of General Counsel, executives cannot simply defer to the formal responsibilities of other departments. They are subject to their own duty of oversight and control.
• Seriousness in implementation: Whistleblower systems are not mere window dressing. Companies must ensure that these processes do not merely exist on paper, but are also implemented seriously and consistently. Superficial or inadequate investigations will not be accepted by the courts.
• Risk of personal liability: A culpable breach of these obligations poses a significant risk under labor law, which can result in the loss of one’s job.

For companies and executives, this means critically reviewing their own compliance processes and actively ensuring compliance. Failure to do so could result not only in financial losses and reputational risks, but also in personal consequences for those responsible.

Our expertise for your whistleblower system

The legally compliant implementation and management of a whistleblower system, as well as the internal investigation of misconduct, is a complex process that requires legal expertise. As the ruling by the Offenbach Labor Court clearly demonstrates, mistakes can not only be costly for the company but also have serious personal consequences for management and the employees responsible.

As a law firm specializing in commercial and tax criminal law, ROSTALSKI provides comprehensive support for all matters related to whistleblowing:

• Implementation and Optimization: We help you establish a legally compliant internal reporting channel that meets the strict requirements of the Whistleblower Protection Act (HinSchG) and current case law.
• Ongoing support as an external reporting center: We act as your outsourced, independent ombudsman, receive reports, and ensure that they are handled professionally, in compliance with the law, and confidentially.
• Consulting for internal investigations: We lead or assist with internal investigations to clarify the facts and provide a solid foundation for your decisions.
• Defense and Prevention: We provide proactive advice to help minimize liability risks and defend your company and its executives should regulatory investigations arise.

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