A managing director’s entitlement to severance pay depends on the grounds for dismissal.
For instance, if a managing director is dismissed on disciplinary grounds, no severance pay will be due.
If a managing director is dismissed by a decision of the general meeting of shareholders or the board of directors (as specified in the company’s charter) in the absence of any culpable action by the managing director, then the managing director is entitled to severance pay at the rate set in the employment agreement, but not lower than three times the average monthly earnings of the managing director.
If a managing director is dismissed due to the company liquidation, he/she will be entitled to severance pay of one month’s average salary on the dismissal date. Furthermore, if the managing director does not find a new job within the second month after dismissal, he/she may apply to the employer for one more month’s average salary. Finally, the employer will have to pay the managing director one more month’s average salary for the third month of unemployment if the managing director has applied to the employment service within the first two weeks after dismissal, but failed to obtain a job.