When Fixed-Term Employment In Germany Is Actually Indefinite: Understanding Recent Labor Court Decisions

Author:Dr. Markus Kappenhagen, Georg Mikes and Friederike Steininger
Profession:Jones Day
 
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In Short

The Situation: The German Federal Labor Court had to decide on the question whether a seemingly fixed-term employment is actually an indefinite employment. Prior to the latest hire, the same employee was already employed for a term of one and a half years until about eight years ago.

The Result: The Federal Labor Court held that in the circumstances at hand the employment is deemed to be indefinite. Even eight years between two employment relationships do not automatically permit a fixed term upon conclusion of the second employment agreement.

Looking Ahead: In the absence of specific justification for fixed-term employment, it remains questionable under which circumstances a re-hire may be performed on a fixed-term basis in a valid way. Apparently, their demands are high.

The German legislature prefers "indefinite" employment relationships, but the Part-Time and Fixed-Term Employment Act ("TzBfG") nevertheless permits two types of fixed-term employment: (i) if there is a specific justification for the fixed-term, such as if work is only needed for a limited time period or to temporarily replace another employee; or (ii) if there is no specific justification, but other requirements are met. In the latter situation, the maximum term of employment is two years and there must not have been any employment relationship in place between the same parties before. Otherwise, even an employment relationship providing for a "fixed term" will be considered indefinite.

Naturally, this begs the question of how far back in history there must not have been a relationship between the same employer and employee. The TzBfG remains silent on this and case law has been inconsistent in interpreting this provision of the law. Some opinions claimed that a fixed term employment without specific justification would not be permissible if there was any previous employment, ever, between the employer and employee. In 2011, the Federal Labor Court (Bundesarbeitsgericht) held that a time gap of "more than three years" would suffice to permit a new fixed-term employment without specific justification. However, this opinion was overturned as unconstitutional by the Federal Constitutional Court (Bundesverfassungsgericht). On June 6, 2018, the Federal Constitutional Court held that the requirements of the TzBfG are constitutional themselves, and that the labor courts are not permitted to overturn the legislature's intention to avoid excessive use of fixed-term...

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