The Promotion Trap: How Companies Quietly Push Out Executives Without Paying Severance
Published on 08/12/2026 at 14:23 | Redaktion boerse-global.de
When a senior manager is told they're being promoted to managing director, the natural reaction is to celebrate. Employment lawyers suggest the opposite might be warranted — because that so-called career milestone could be the first step toward an exit with no payout at all.
An analysis published in August 2026 by Handelsblatt examined the tactics companies use to ease executives out of their roles while sidestepping the hefty severance packages that formal redundancies typically trigger. These "creeping dismissals," as they're known, often arrive disguised as routine corporate changes. On the surface, they look like progression. Legally, they can strip away the very protections that keep a manager employed.
The Double-Edged Sword of a Board Seat
The most deceptive warning sign is elevation to the position of Geschäftsführer — the managing director role that carries board-level responsibility. While the title sounds like the pinnacle of a career, accepting it can mean surrendering statutory dismissal protection. Once an executive becomes an organ of the company, their employment relationship typically transforms into a free service contract. They can be let go at any time, and claims to bonuses or severance may evaporate overnight.
A specialist employment lawyer points out that this type of promotion can be deployed deliberately to grease the wheels for a future separation. The shift from protected employee to unprotected officer is quiet, but its consequences are anything but.
Another red flag emerges when a second person is suddenly installed at the top. The introduction of a dual leadership structure — a Doppelspitze — often signals a gradual erosion of authority rather than a genuine sharing of power. Experts advise executives in this situation to meticulously record every decision, every meeting, every allocation of responsibility. If a dispute later lands in court, that paper trail becomes the evidence that proves a de facto demotion or the stripping of competencies.
When your authority and responsibilities are being quietly stripped away, documentation becomes your strongest defence. The same principle applies across the workplace: a clear record of duties and risks protects you if a dispute ever escalates. A free Risk Assessment Toolkit provides 41 ready-to-use templates and checklists to help you document workplace hazards systematically, so nothing is left to memory or hearsay. Download the free Risk Assessment Toolkit
The Mid-50s Transfer and the Project Trap
Executives over the age of 55 should be especially alert to offers of overseas assignments. According to the analysis, these postings frequently serve one purpose: freeing up the home-country position for a permanent replacement. Unless a return guarantee is contractually binding and set out in writing, there's a real danger that the executive comes back to find no adequate role waiting. The result is a de facto release — no redundancy process, no compensation.
Short-notice assignments to lead special projects carry similar risks. What gets pitched as a prestigious opportunity often functions as a way to sever the manager from their established hierarchy and the operational core of the business. Once the project concludes, the executive can find themselves without a defined area of responsibility. That ambiguity makes it far easier for the employer to justify a redundancy dismissal — or to pressure the manager into signing a termination agreement.
Protecting Yourself Before It's Too Late
Legal experts recommend a set of defensive measures for managers who suspect they're being maneuvered out. In the case of a promotion to managing director, the key is to avoid cancelling the original employment contract. Instead, it should be placed in a dormant state — ruhend gestellt — so that the original dismissal protection can be revived if the board later removes the executive from their post.
Documentation is another pillar of self-defence. Keeping a consistent record of responsibilities and achievements creates leverage in any future negotiation. For those being sent abroad or shifted into project roles, demanding written return guarantees is essential to securing their professional future.
Just as executives need to document every decision to protect their position, employers have a legal duty to document workplace risks. Failing to keep proper health and safety records can leave a company exposed to costly fines and liability. Over 37,000 UK businesses use a free Health & Safety Toolkit with ready-to-use risk assessments and checklists covering key regulations like the Health & Safety at Work Act 1974 and COSHH. Get the free Health & Safety Toolkit
A representative from Die Führungskräfte (DFK), the professional association for managers, urges executives to scrutinise any change to their job profile rather than accepting it at face value. At the first hint of marginalisation, seeking legal counsel early can preserve negotiating power — and potentially the size of any eventual severance package.
