Article
Self-OrganizationLegal Aspects of Holacracy in Germany: An Orientation
Implementing Holacracy within German labor and corporate law. Not legal advice—for orientation before consulting your attorney.
Important Notice: This article does not constitute legal advice and does not replace consultation with an attorney specializing in labor and corporate law. The content serves solely as initial orientation. Legal frameworks may change; this article reflects the status as of January 2026. For specific implementation questions, please consult a specialized attorney.
Holacracy operates within a legal system designed for hierarchical structures. German labor and corporate law assumes clear chains of command and defined responsibilities. The question is: How does self-organization relate to this framework?
The good news: According to the prevailing view in legal literature, Holacracy is fundamentally implementable within the German legal framework [1], [2]. However, this requires conscious design to avoid implementation mistakes.
The Labor Law Context
The Right to Give Instructions under § 106 GewO
German labor law is based on the employer’s right to give instructions. The complete wording of § 106 sentence 1 of the Trade Regulation Act (Gewerbeordnung, GewO) states:
“The employer may, at their reasonable discretion, specify the content, location, and time of work performance more precisely, insofar as these working conditions are not determined by the employment contract, provisions of a works agreement, an applicable collective agreement, or statutory provisions.” — § 106 GewO
Legality of Self-Organization
Crucial for the legality of Holacracy is the following legal classification:
§ 106 sentence 1 GewO establishes a right, not an obligation. The employer may waive the exercise of substantive instruction rights without endangering the employment relationship.
This is also confirmed by the case law of the Federal Labor Court (Bundesarbeitsgericht):
BAG January 25, 2007, Case No. 5 AZB 49/06: According to case law, the factual waiver of the right to give instructions does not lead to the loss of employee status, provided the contract is expressly designated as an “employment contract.”
Legal literature also sees no fundamental contradiction:
“Labor law and agile work methods are not mutually exclusive. With the right agreements, flexible, independent, and highly self-responsible work arrangements are entirely possible.” [1]
Employee Status and § 611a BGB
Supplementing § 106 GewO, § 611a paragraph 1 sentence 2 of the German Civil Code (BGB) defines:
“An employee is bound by instructions if they cannot essentially freely organize their activities and determine their working hours.”
With Holacracy, temporal and spatial instruction-bound work typically remains—only the substantive right to give instructions is exercised differently structurally. According to prevailing opinion, this supports the continuation of the employment relationship.
Corporate Law Aspects
Managing Director Liability under § 43 GmbHG
In a GmbH (German limited liability company), the managing director remains legally responsible regardless of the internal organizational structure:
§ 43 paragraph 1 GmbHG:
“Managing directors shall apply the care of a prudent businessperson in the affairs of the company.” — § 43 GmbHG
§ 43 paragraph 2 GmbHG:
“Managing directors who violate their duties shall be jointly and severally liable to the company for the resulting damage.”
Consequences for Holacracy
| Aspect | Legal Situation under § 43 GmbHG |
|---|---|
| Overall responsibility | Principle of overall responsibility under § 43 paragraph 2 GmbHG remains |
| Delegation | Possible, but monitoring duty remains |
| Organizational fault | Liability can arise from unclear structures |
| Burden of proof | Managing director must prove proper management |
| Limitation period | 5 years under § 43 paragraph 4 GmbHG |
Other Relevant GmbHG Provisions
- § 6 paragraph 2 GmbHG: Managing director must be a natural person with full legal capacity
- § 30 paragraph 1 GmbHG: Capital maintenance—managing director responsible
- § 11 paragraph 2 GmbHG: Liability for actions before registration
Practical Consequence
Holacracy does not change the legal liability structure—it only changes how things are organized internally. The managing director remains responsible for:
- Proper bookkeeping
- Tax obligations (§ 34, § 69 AO)
- Duty to file for insolvency (§ 15a InsO)
- Commercial register representation
Works Constitution Law Aspects
Co-Determination under § 87 BetrVG
If a works council exists, its co-determination rights must be observed:
§ 87 paragraph 1 BetrVG lists 14 co-determination matters, including:
- No. 1: Questions of order in the establishment and employee conduct
- No. 2: Beginning and end of daily working hours
- No. 6: Introduction of technical monitoring devices
- No. 13: Principles for implementing group work
“Group work within the meaning of this provision exists when, within the framework of operational workflow, a group of employees essentially independently performs an overall task assigned to them.” — § 87 paragraph 1 No. 13 BetrVG
Operational Changes under § 111 BetrVG
When fundamentally introducing Holacracy, § 111 BetrVG may become relevant:
§ 111 sentence 3 No. 4 BetrVG: The following also counts as an operational change:
“fundamental changes in the organization, purpose, or facilities of the establishment”
In this case, reconciliation of interests and possibly a social compensation plan would need to be negotiated.
Information Duty under § 90 BetrVG
Regardless of § 111 BetrVG, there is a duty under § 90 paragraph 1 No. 3 BetrVG to inform the works council about:
“planning of work procedures and workflows”
Criminal and Tax Law Aspects
Managing Director Liability Outside the GmbHG
| Legal Area | Provision | Risk |
|---|---|---|
| Criminal law | § 266a StGB | Withholding wages (social security contributions) |
| Criminal law | § 283 StGB | Bankruptcy in case of over-indebtedness |
| Insolvency law | § 15a InsO | Delayed insolvency filing |
| Tax law | § 34, § 69 AO | Liability for company tax debts |
These duties cannot be delegated to roles—they remain with the statutory body.
Practical Examples from Literature
Documentation in Practice
Legal literature recommends the following documentation steps (not legal advice—coordination with attorney required):
- Shareholders’ resolution: Authorization to introduce new organizational forms
- Rules of procedure: Definition of decision boundaries
- Employment contract amendment: Clarification of organizational structure
- Role register: Documentation of authorities and accountabilities
Companies with Holacracy in Germany
According to press reports, the following companies in German-speaking regions work with Holacracy or similar models [3]:
- Mercedes-Benz.io GmbH
- Hypoport network (Europace, Dr. Klein, Smart InsurTech)
- Blinkist
- Soulbottles
- mymuesli
SI Labs Perspective
From our practice with Holacracy in a German GmbH:
- Legal support: We sought legal advice when introducing Holacracy
- Documentation: Clear documentation of all structures has proven valuable
- Pragmatism: Perfect legal solutions don’t exist—good practice matters more
- Ongoing attention: Legal questions arise when situations develop
Sources
[1] Günther, Jens, and Philipp Böglmüller. “Agile Arbeit – Chancen und Risiken.” Neue Zeitschrift für Arbeitsrecht (NZA) (2019): 273. [Legal journal article | Labor law | German case law]
[2] Krause, Rüdiger. Agile Arbeit und Betriebsverfassung. HSI-Schriftenreihe Band 37. Düsseldorf: Hans-Böckler-Stiftung, 2020. URL: boeckler.de/fpdf/HBS-007926/p_hsi_schriften_37.pdf [Academic publication | University of Göttingen | Works constitution law]
[3] Velinov, Emil, Zoran Todorović, and Janez Damij. “How Mercedes-Benz Addresses Digital Transformation Using Holacracy.” Journal of Organizational Change Management 34, no. 5 (2021): 1125-1150. DOI: 10.1108/jocm-12-2020-0395 [Case study | Corporate context | Citations: 23]
Additional Legal Articles (For Further Reading)
- Litschen/Yacoubi, NZA 2017, 484 (Scrum Master, agile leaders)
- Günther/Böglmüller, NZA 2015, 1025 (Industry 4.0)
- Hoffmann-Remy, DB 2018, 2757 (Agile network organizations)
- Koch, BB 2017, 387 (Agile network organizations)
- Wallisch, NZA-Beil. 2018, 81 (Departure from hierarchical structures)
Legal Texts (As of January 2026)
- § 106 GewO – Employer’s right to give instructions
- § 611a BGB – Employee
- § 43 GmbHG – Managing director liability
- § 87 BetrVG – Co-determination rights
- § 111 BetrVG – Operational changes
Case Law
- BAG January 25, 2007, Case No. 5 AZB 49/06 (Employee status when waiving instruction rights)
Research Methodology
This article synthesizes findings from German labor law journals (NZA, DB, BB), relevant legal texts, and one case study. The original US law focus has been replaced with German legal sources.
Limitations:
- Specific German case law on Holacracy (by name) does not exist to our knowledge
- Literature primarily addresses “agile work methods” generally, not Holacracy specifically
- Tax and criminal law aspects are only touched upon—specialist legal advice is mandatory here
Disclosure
SI Labs practices Holacracy in a German GmbH. This article is based on our practice and research in labor law literature.
It does not constitute legal advice. For specific implementation questions, please consult a specialist attorney for labor law and/or corporate law. The authors assume no liability for decisions made based on this article.