{"id":4331,"date":"2019-12-19T09:10:00","date_gmt":"2019-12-19T07:10:00","guid":{"rendered":"https:\/\/it-landgraf.de\/?p=4331"},"modified":"2019-12-19T12:40:41","modified_gmt":"2019-12-19T10:40:41","slug":"basic-principles-of-defective-employment-relationship-applicable-to-an-employment-contract-of-a-managing-director-of-a-gmbh","status":"publish","type":"post","link":"https:\/\/it-landgraf.de\/en\/basic-principles-of-defective-employment-relationship-applicable-to-an-employment-contract-of-a-managing-director-of-a-gmbh\/","title":{"rendered":"BASIC PRINCIPLES OF DEFECTIVE EMPLOYMENT RELATIONSHIP APPLICABLE TO AN EMPLOYMENT CONTRACT OF A MANAGING DIRECTOR OF A GMBH"},"content":{"rendered":"\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-khbqbm-ef60b41b12fb55fa4bdbd00faaca9d76\">\n.avia-section.av-khbqbm-ef60b41b12fb55fa4bdbd00faaca9d76{\nbackground-repeat:no-repeat;\nbackground-image:url(https:\/\/it-landgraf.de\/wp-content\/uploads\/3629.jpg);\nbackground-position:0% 0%;\nbackground-attachment:scroll;\n}\n<\/style>\n<div id='av_section_1'  class='avia-section av-khbqbm-ef60b41b12fb55fa4bdbd00faaca9d76 main_color avia-section-default avia-no-shadow  avia-builder-el-0  el_before_av_section  avia-builder-el-first  hide_on_print avia-full-stretch avia-bg-style-scroll av-minimum-height av-minimum-height-40 av-height-40  container_wrap sidebar_right'  data-section-bg-repeat='stretch' data-av_minimum_height_pc='40' data-av_min_height_opt='40'><div class='container av-section-cont-open' ><main  role=\"main\" itemprop=\"mainContentOfPage\"  class='template-page content  av-content-small alpha units'><div class='post-entry post-entry-type-page post-entry-4331'><div class='entry-content-wrapper clearfix'>\n<\/div><\/div><\/main><!-- close content main element --><\/div><\/div><div id='av_section_2'  class='avia-section av-ifphde-8710a2779fbcdedb3a4a7ab27aab4b22 main_color avia-section-default avia-no-shadow  avia-builder-el-1  el_after_av_section  avia-builder-el-last  avia-bg-style-scroll container_wrap sidebar_right'  ><div class='container av-section-cont-open' ><div class='template-page content  av-content-small alpha units'><div class='post-entry post-entry-type-page post-entry-4331'><div class='entry-content-wrapper clearfix'>\n\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-1oil9e-457f863c825f89eb8da17d6418e1188f\">\n.flex_column.av-1oil9e-457f863c825f89eb8da17d6418e1188f{\nborder-radius:0px 0px 0px 0px;\npadding:0px 0px 0px 0px;\n}\n<\/style>\n<div  class='flex_column av-1oil9e-457f863c825f89eb8da17d6418e1188f av_two_third  avia-builder-el-2  el_before_av_two_third  avia-builder-el-first  first flex_column_div av-zero-column-padding  '     ><style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-2rkmjm-8a436796f1c057a88860ee0b549ea14b\">\n#top .av-special-heading.av-2rkmjm-8a436796f1c057a88860ee0b549ea14b{\npadding-bottom:10px;\n}\nbody .av-special-heading.av-2rkmjm-8a436796f1c057a88860ee0b549ea14b .av-special-heading-tag .heading-char{\nfont-size:25px;\n}\n.av-special-heading.av-2rkmjm-8a436796f1c057a88860ee0b549ea14b .av-subheading{\nfont-size:15px;\n}\n<\/style>\n<div  class='av-special-heading av-2rkmjm-8a436796f1c057a88860ee0b549ea14b av-special-heading-h1 blockquote modern-quote  avia-builder-el-3  avia-builder-el-no-sibling '><div class='av-subheading av-subheading_above'>19. December 2019\n<\/div><h1 class='av-special-heading-tag '  itemprop=\"headline\"  >BASIC PRINCIPLES OF DEFECTIVE EMPLOYMENT RELATIONSHIP APPLICABLE TO AN EMPLOYMENT CONTRACT OF A MANAGING DIRECTOR OF A GMBH<\/h1><div class=\"special-heading-border\"><div class=\"special-heading-inner-border\"><\/div><\/div><\/div><\/div>\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-gahzn6-862efddf9b2f9210d56c835897d0c3ce\">\n.flex_column.av-gahzn6-862efddf9b2f9210d56c835897d0c3ce{\nborder-radius:0px 0px 0px 0px;\npadding:0px 0px 0px 0px;\n}\n<\/style>\n<div  class='flex_column av-gahzn6-862efddf9b2f9210d56c835897d0c3ce av_two_third  avia-builder-el-4  el_after_av_two_third  el_before_av_two_third  first flex_column_div av-zero-column-padding  column-top-margin'     ><section  class='av_textblock_section av-erd1b6-f1ab176cf503a3e30116d92a0576446a '   itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock'  itemprop=\"text\" ><p><strong>Our last newsletter (edition 2019|Q3) had already addressed two Supreme Court decisions concerning the employment of an externally hired managing director of a limited liability company [<em>Gesellschaft mit beschr\u00e4nkter Haftung &#8211; GmbH<\/em>]. This article supplements the thematic complex, because in its ruling of 20 August 2019 (case no. II ZR 121\/16), the Federal Court of Justice [<em>Bundesgerichtshof &#8211; BGH<\/em>] decided what consequences would arise if an employment contract with a managing director of a GmbH was not effectively concluded.<\/strong><!--more--><\/p>\n<\/div><\/section><\/div>\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-c208gy-d55d34cc6ba8a1f55de60e1bd122de59\">\n.flex_column.av-c208gy-d55d34cc6ba8a1f55de60e1bd122de59{\nborder-radius:0px 0px 0px 0px;\npadding:0px 0px 0px 0px;\n}\n<\/style>\n<div  class='flex_column av-c208gy-d55d34cc6ba8a1f55de60e1bd122de59 av_two_third  avia-builder-el-6  el_after_av_two_third  el_before_av_one_third  first flex_column_div av-zero-column-padding  column-top-margin'     ><section  class='av_textblock_section av-b1xd7m-70a76117567e4b0fa2f41a0517ac7dee '   itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock'  itemprop=\"text\" ><h2>I. Introduction and background<\/h2>\n<p>The two rulings which were presented in the last edition of our newsletter (2019|Q3) were primarily concerned with the question of the employee status of the external managing director of a GmbH. A managing director is regularly not classified as an employee under the rules of national law, but his employment relationship is subject to service contract law.<br \/>\nThis differentiation, however, was irrelevant for the BGH in that particular case. In the opinion of the BGH, the employment contract in the present case had not been properly concluded between the company and the managing director, so that the legal consequences of such a situation had to be decided.<\/p>\n<h2>II. Application of the basic principles of the defective employment relationship<\/h2>\n<p>Following its previous jurisdiction on joint-stock companies [<em>Aktiengesellschaft<\/em>] and on limited partnerships [<em>Kommanditgesellschaft<\/em>], the BGH has now also assumed for the employment of a managing director at a GmbH that the principles of a defective employment relationship are to be applied mutatis mutandis. These principles deriving from the jurisdiction on the employment contract imply that for the duration of the employment of the employee the employment relationship has to be treated as if the contract was effectively concluded, while it could be dissolved in the future without good cause at any time.<\/p>\n<h5>Fiction of effectiveness for the past<\/h5>\n<p>Any rights and obligations for the time period of the employment relationship are regarded as \u201cexisting\u201d. This means in particular that the employee may retain the remuneration paid to him and does not have to repay the employer. The jurisdiction takes into account the fact that in most cases the employer cannot return the work performed by the employee. The BGH is now transferring these principles analogously to the employment contract of a managing director of a GmbH, so that no services already exchanged can be reversed if (1) the managing director has already taken up work on the basis of the ineffective employment contract and (2) the contract has been concluded with the knowledge of the body of the company responsible for concluding the contract or of at least one member of that body.<\/p>\n<h5>Right to dissolution at any time in the future<\/h5>\n<p>In addition, the application of the basic principles of the defective employment relationship effects that the employment relationship can be dissolved at any time in the future without good cause. Only in exceptional cases, this right shall not exist if good faith requires the employment contract to be maintained in the future. According to the case-law of the BGH, however, the requirements for such a continuation of the employment contract are very high because the doctrine of a defective employment relationship already leads to a reconciliation of interests between the contracting parties. In the present case, the BGH also transferred this aspect of the principles of the defective employment relationship to the managing director of the GmbH.<br \/>\nThe BGH examined such an exceptional continuation of the employment contract and rejected it in its conclusion despite the fact that prior to the conclusion of the ineffective contract an (effective) employment contract had already existed between the parties (which had been terminated in the meantime) and the managing director was also employed as managing director by other companies within the group. The fact that the managing director was prepared to work in the position until retirement was also irrelevant according to the BGH. Contrary to the managing director&#8217;s view, the time limit contained in the ineffective contract, which at the same time constituted an agreed minimum term, did not provide any enhanced protection of legitimate expectations either. For the BGH, it was rather decisive that only a short time after the conclusion of the ineffective contract its ineffectiveness was debated between the parties. In the opinion of the BGH, it was therefore not possible to build up any particular confidence in the effectiveness of the contract.<\/p>\n<h2>III. Causes for the ineffectiveness of an employment contract<\/h2>\n<p>Various causes are conceivable for the ineffectiveness of an employment contract between a GmbH and a managing director, which is why great care must be taken on both sides when drafting and concluding the contract.<br \/>\nIn the case decided by the BGH, the cause was to be found in the conclusion of the contract. The chairman of the supervisory board had concluded the employment contract with the managing director without involving any other executive body or board member. According to the articles of association, however, the supervisory board was the body responsible for concluding service contracts with managing directors. The BGH considered the transfer of competence from the shareholders&#8217; meeting to the supervisory board to be unproblematic. However, the action of the chairman of the supervisory board alone was not covered by any power of attorney. The supervisory board had not previously made a decision in the form of a resolution regarding the conclusion of the employment contract, so that the necessary internal decision-making process of the supervisory board body was already missing.<br \/>\nAt the same time, however, the chairman of the supervisory board was also authorized to represent the sole shareholder of the company. The BGH, therefore, briefly examined whether the chairman of the supervisory board had passed a shareholders&#8217; resolution by which, on the one hand, he transferred the authority to conclude the employment contract back to the shareholders&#8217; meeting and, on the other hand, decided on the conclusion of the contract with the managing director (so-called punctual piercing of the articles of association). However, the BGH ruled out this possibility already because the chairman of the supervisory board\/shareholder representative had not expressed that he would make a binding decision acting as the supreme corporate body.<br \/>\nThe representation of the company by a person not authorized to do so (as in the case discussed herein) can lead to the invalidity of the employment contract as can violations of a statutory prohibition or the unethical nature of the agreement. The same applies if the employment contract was terminated as a result of a challenge, e.g. due to fraudulent misrepresentation by the managing director.<\/p>\n<h2>IV. Conclusion<\/h2>\n<p>The case shows that, in addition to the content of the employment contract with the managing director, greatest care is required in order to avoid the legal consequences of the defective employment relationship, which have now been transferred to the GmbH by the BGH. This is in particular due to the fact that an invalid employment contract can be terminated with immediate effect for the future. In some cases, the ineffectiveness of the employment contract might be a benefit for the company. However, the opposite may also be the case, giving the company a great interest in the continued employment of the managing director for the agreed term of the employment contract. Liability risks may also arise for the persons acting on the conclusion of an ineffective contract. The same considerations apply from the point of view of the managing director.<br \/>\nHence, legal certainty on the basis of effectively concluded employment contracts for managing directors has to be the top priority and against this background it is advisable to review and, if necessary, \u201crepair\u201d existing employment contracts.<\/p>\n<\/div><\/section><\/div>\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-994z5u-0000f05092cbed98625bf524dc73a422\">\n.flex_column.av-994z5u-0000f05092cbed98625bf524dc73a422{\nborder-radius:0px 0px 0px 0px;\npadding:7px 0px 0px 0px;\n}\n<\/style>\n<div  class='flex_column av-994z5u-0000f05092cbed98625bf524dc73a422 av_one_third  avia-builder-el-8  el_after_av_two_third  avia-builder-el-last  sy-only-desktop hide_on_print flex_column_div  column-top-margin'     ><p><div  class='avia-builder-widget-area clearfix  avia-builder-el-9  el_before_av_textblock  avia-builder-el-first '><section id=\"categories-3\" class=\"widget clearfix widget_categories\"><h3 class=\"widgettitle\">Newsletter issues<\/h3>\n\t\t\t<ul>\n\t\t\t\t\t<li class=\"cat-item cat-item-265\"><a href=\"https:\/\/it-landgraf.de\/en\/category\/2025-q3-en\/\">2025 Q3<\/a>\n<\/li>\n\t<li class=\"cat-item cat-item-267\"><a href=\"https:\/\/it-landgraf.de\/en\/category\/2025-q4-en\/\">2025 Q4<\/a>\n<\/li>\n\t<li class=\"cat-item cat-item-272\"><a href=\"https:\/\/it-landgraf.de\/en\/category\/2026-q1\/\">2026 Q1<\/a>\n<\/li>\n\t<li class=\"cat-item cat-item-263\"><a href=\"https:\/\/it-landgraf.de\/en\/category\/2025-q2-en\/\">2025 Q2<\/a>\n<\/li>\n\t<li class=\"cat-item cat-item-261\"><a href=\"https:\/\/it-landgraf.de\/en\/category\/2025-q1-en\/\">2025 Q1<\/a>\n<\/li>\n\t<li class=\"cat-item cat-item-254\"><a href=\"https:\/\/it-landgraf.de\/en\/category\/2024-q4-en\/\">2024 Q4<\/a>\n<\/li>\n\t<li class=\"cat-item cat-item-250\"><a href=\"https:\/\/it-landgraf.de\/en\/category\/2024-q3-en\/\">2024 Q3<\/a>\n<\/li>\n\t<li 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class=\"cat-item cat-item-128\"><a href=\"https:\/\/it-landgraf.de\/en\/category\/2018-q1-en\/\">2018 Q1<\/a>\n<\/li>\n\t<li class=\"cat-item cat-item-126\"><a href=\"https:\/\/it-landgraf.de\/en\/category\/2017-q4-en\/\">2017 Q4<\/a>\n<\/li>\n\t<li class=\"cat-item cat-item-116\"><a href=\"https:\/\/it-landgraf.de\/en\/category\/2017-q3-en\/\">2017 Q3<\/a>\n<\/li>\n\t<li class=\"cat-item cat-item-114\"><a href=\"https:\/\/it-landgraf.de\/en\/category\/2017-q2-en\/\">2017 Q2<\/a>\n<\/li>\n\t<li class=\"cat-item cat-item-142\"><a href=\"https:\/\/it-landgraf.de\/en\/category\/deals-en\/\">Deal Announcements<\/a>\n<\/li>\n\t<li class=\"cat-item cat-item-58\"><a href=\"https:\/\/it-landgraf.de\/en\/category\/uncategorized\/\">Uncategorized<\/a>\n<\/li>\n\t\t\t<\/ul>\n\n\t\t\t<span class=\"seperator extralight-border\"><\/span><\/section><\/div><br \/>\n<section  class='av_textblock_section av-652jyq-b679ece148b41913f32bda21c81eed75 '   itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock'  itemprop=\"text\" ><h2>More information on this topic<\/h2>\n<ul class=\"sy-list-margin\">\n<li><a href=\"http:\/\/9zh.f5b.myftpupload.com\/en\/taetigkeitsgebiete\/corporate-law\/\">Corporate Law<\/a><\/li>\n<li><a href=\"http:\/\/9zh.f5b.myftpupload.com\/en\/taetigkeitsgebiete\/employment-law\/\">Employment Law<\/a><\/li>\n<\/ul>\n<\/div><\/section><br \/>\n\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-4b9q6q-cc5eda83fd90de56f77b5688b2816248\">\n#top .hr.hr-invisible.av-4b9q6q-cc5eda83fd90de56f77b5688b2816248{\nheight:8px;\n}\n<\/style>\n<div  class='hr av-4b9q6q-cc5eda83fd90de56f77b5688b2816248 hr-invisible  avia-builder-el-11  el_after_av_textblock  el_before_av_textblock '><span class='hr-inner '><span class=\"hr-inner-style\"><\/span><\/span><\/div><br \/>\n<section  class='av_textblock_section av-20cwhe-9216fe4c6eaf67703ebf6b870115117a '   itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock hide_on_print'  itemprop=\"text\" ><h2>Downloads<\/h2>\n<p><a href=\"#\" onclick=\"window.print();return false\">Print<\/a><br \/>\n\n\n\n\t<div class=\"dkpdf-button-container\" style=\" text-align:left \">\n\n\t\t<a class=\"dkpdf-button\" href=\"\/en\/wp-json\/wp\/v2\/posts\/4331?pdf=4331\" target=\"_blank\"><span class=\"dkpdf-button-icon\"><i class=\"fa fa-file-pdf-o\"><\/i><\/span> Download (PDF)<\/a>\n\n\t<\/div>\n\n\n\n\n\n<\/p>\n<\/div><\/section><\/p><\/div><\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='after_section_2'  class='main_color av_default_container_wrap container_wrap sidebar_right'  ><div class='container av-section-cont-open' ><div class='template-page content  av-content-small alpha units'><div class='post-entry post-entry-type-page post-entry-4331'><div class='entry-content-wrapper clearfix'>\n","protected":false},"excerpt":{"rendered":"<p>Our last newsletter (edition 2019|Q3) had already addressed two Supreme Court decisions concerning the employment of an externally hired managing director of a limited liability company [<em>Gesellschaft mit beschr\u00e4nkter Haftung &#8211; GmbH<\/em>]. This article supplements the thematic complex, because in its ruling of 20 August 2019 (case no. II ZR 121\/16), the Federal Court of Justice [<em>Bundesgerichtshof &#8211; BGH<\/em>] decided what consequences would arise if an employment contract with a managing director of a GmbH was not effectively concluded.<\/p>\n","protected":false},"author":26,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"mc4wp_mailchimp_campaign":[],"footnotes":""},"categories":[155,156],"tags":[],"class_list":["post-4331","post","type-post","status-publish","format-standard","hentry","category-2019-q4","category-2019-q4-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/it-landgraf.de\/en\/wp-json\/wp\/v2\/posts\/4331","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/it-landgraf.de\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/it-landgraf.de\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/it-landgraf.de\/en\/wp-json\/wp\/v2\/users\/26"}],"replies":[{"embeddable":true,"href":"https:\/\/it-landgraf.de\/en\/wp-json\/wp\/v2\/comments?post=4331"}],"version-history":[{"count":14,"href":"https:\/\/it-landgraf.de\/en\/wp-json\/wp\/v2\/posts\/4331\/revisions"}],"predecessor-version":[{"id":4460,"href":"https:\/\/it-landgraf.de\/en\/wp-json\/wp\/v2\/posts\/4331\/revisions\/4460"}],"wp:attachment":[{"href":"https:\/\/it-landgraf.de\/en\/wp-json\/wp\/v2\/media?parent=4331"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/it-landgraf.de\/en\/wp-json\/wp\/v2\/categories?post=4331"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/it-landgraf.de\/en\/wp-json\/wp\/v2\/tags?post=4331"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}