As the new year begins, it is a good time to look at key developments in German labor and employment law in 2019 and look ahead in 2020. With respect to 2019, corporate legal and human resources departments should be aware of new court rulings addressing fixed-term employment contracts, working time recording, the notorious two-week deadline for instant dismissals, and enhanced flexibility in drafting bonus clauses for board members.
In the coming year, there are several issues to be aware of, including a new minimum wage and anticipated changes concerning immigration law and whistleblower protections. Moreover, the German "Grand Coalition" still has a few reforms on the labor and employment law agenda.
KEY GERMAN LABOR & EMPLOYMENT LAW DEVELOPMENTS OF 2019
Fixed-Term Employment Contracts
So far, the German grand coalition's plans to reform the law governing fixed-term employment has made no progress, and there is still no draft law. The coalition's specific proposals for change, announced in 2018, were that a maximum of 2.5% of the workforce must have fixed-term contracts with no justifying reason. Such contracts will be allowed for a maximum period of 18 months, instead of the previous 24 months, and only one possible extension would be permissible within this period.
Nevertheless, the labor courts must still evaluate cases concerning fixed-term contracts. According to the Federal Constitutional Court, there are only a few exceptions to the well-established rule that a time restriction on employment contracts with no justifying reason for the fixed term is ineffective if there has been an employment relationship between the parties "before." For example, such a time restriction may be effective in the case of previous employment very long ago or of a completely different nature than the present employment, or if there was a pre-employment of very short duration. In interpreting these exceptions, the Federal Labor Court ("BAG") (12.6.2019 - 7 AZR 429/17) held that a time limit in a contract for an employee who had worked for the employer in question almost nine years earlier was ineffective, reasoning that the previous employment was not "very long ago." Even previous employment 15 years earlier has been held insufficient to meet the "very long ago" standard. (April 17, 2019 - 7 AZR 323/17). In contrast, a time gap of 22 years was sufficient to justify a time limitation, according to the BAG, because such a long time gap presents no risk of the undesired chain limitations (21.08.2019 - 7 AZR 452/17).
In light of these decisions, employers should carefully consider whether, when, for how long, and in what function an employee has worked for the company previously before entering into a temporary employment contract with that employee. If the pre-employment was only a...