The planned amendment to the law was aimed at restricting the fixed-term nature of employment contracts without a justifying reason and so-called chain fixed-term contracts, i.e. the long-term stringing together of several fixed-term employment contracts. The changes were to come into force as early as January 1, 2022. In this respect, employers would have had to prepare themselves for considerable tightening of fixed-term employment contracts. In the last session week of the Bundestag, however, the bill is not on the plenary agenda and will therefore not be passed in this legislative period. Whether the new government will take up the issue again remains to be seen. Nevertheless, employers should be careful when concluding fixed-term employment contracts.
Fixed-term contracts without material reason for a maximum of 2 years
According to the draft bill, the permissible period for a fixed term without a justifying reason should be limited to 18 months. Up to this total duration, only one extension would be possible. Now, however, the current regulation remains in place - at least for the time being: fixed-term employment contracts can be concluded for a maximum period of two years without the need for a justifying reason. Within this period, a contract originally limited for a shorter period may also be extended up to three times.
- However, it must be ensured that the fixed term is agreed in writing, i.e. both parties to the contract must sign the original employment contract before it commences. If, for example, only digital signatures are exchanged, the time limitation is invalid and the contract is deemed to be unlimited from the beginning if the employee asserts this in court within three weeks of the agreed end of the time limit at the latest.
- In addition, the employee must not have previously been employed by the same employer. While this was interpreted generously for a long time, in that employment relationships dating back more than three years were no longer taken into account, the Federal Constitutional Court ruled in 2018 that prior employment is only not to be taken into account if it dates back a very long time or was of a completely different nature or of very short duration. In this respect, the BAG considers 22 years to be a sufficiently very long period. In order to also avoid the risk of an invalid fixed term here, it should be carefully checked in each case that the alleged new employee was not yet employed by the same company.
- Care must also be taken if a fixed-term contract is to be extended within the 2-year period. An effective extension may only postpone the end date of the. Changes to other content of the contract should therefore not be made at the same time.
No fixed maximum duration for fixed-term contracts with a material reason
According to the draft bill, fixed-term contracts with a material reason were only to be possible for up to five years. The only exceptions to this were the grounds justifying a limited term agreement under Section 14 (1) sentence 2 no. 4 (fixed-term contracts due to the nature of the work) and no. 7 (fixed-term contracts based on a court settlement) of the TzBfG. In addition, periods during which the employee had already been employed by the employer as a temporary worker or had previously been employed on a fixed-term basis should be counted towards this duration if they do not date back more than three years.
There is still no such rigid maximum limit for fixed-term contracts. However, a chain of numerous fixed term agreements over a period of years can render the fixed term agreement void in the context of an abuse control pursuant to Section 242 of the German Civil Code, even if there is a recognized justifying reason for the fixed term. BAG case law considers such a check to be necessary in particular if the total duration of the fixed-term employment relationship exceeds eight years or if more than twelve extensions of the fixed-term employment contract have been agreed or if the total duration of the fixed-term employment relationship exceeds six years and more than nine contract extensions have been agreed. If there is a constant need for replacements in the company, which is why an employee who has already been employed for many years could actually be hired on a permanent basis, this may also be an abuse of rights and a renewed fixed term may therefore be invalid.
No citation requirement
The draft bill also provided for the requirement to state in the written employment contract whether it is a fixed-term contract is based on justifying grounds or not. If it had been stated incorrectly that it was a fixed-term contract not relying on a justifying reason, an employer would thus no longer have been able to invoke an actually existing justifying reason if, for example, it subsequently turned out that the employment without a justifying reason was no longer permissible due to a previous employment. Since there is still no such citation requirement, it is advisable to generally not state in the employment contract whether the calendar-based fixed-term employment is with or without a factual reason.
Even if nothing changes in the fixed-term contract rules for the time being, there are many pitfalls in this area that need to be navigated. Please do not hesitate to contact us before concluding a fixed-term contract.