Background

According to § 622 para. 5 sentence 3 German Civil Code, it is possible in a contract of employment to agree to deviate from the statutory notice periods, provided these are “longer” than those (minimum) notice periods provided in § 622 para. 2 BGB. For this, a so-called favourability comparison must be carried out in order to determine whether in comparison with the statutory rule, a “longer” contractual notice period has been agreed. The majority of the higher employment courts have taken the view up until now that the contractual rule is already to be considered more favourable and therefore applicable if it offers for a longer period within a calendar year better protection through longer notice periods than the statutory notice period.

The case law of the Federal Employment Court

In a decision dated 29.01.2015 (case no.: 2 AZR 280/14) the Federal Employment Court rejected this widely held view and tightened up the requirements for the favourability comparison for the benefit of the statutory notice periods: Accordingly, an individual contractual agreement does not immediately prevail as being more favourable than the statutory rule if it provides better protection for the longer period within a year. Instead, contractual notice periods which differ from the statutory notice periods are only considered to be more favourable if they without exception (meaning in a fictitious examination for each individual month of a calendar year) lead to a later expiry of the notice period. If it turns out that the contractual notice period is not consistently longer, then the statutory rule will be applicable. In the case in question before the Federal Employment Court, the employer had agreed with the employee (who had been employed for over twenty years when notice was served) a notice period of six months expiring on June 30th or December 31st and consequently served notice of termination in December effective June 30th of the following year. The employee claimed – successfully – that his relationship of employment expired on July 31st (= 7 months following the declaration of dismissal, see § 622 para. 2 clause 7 BGB). According to the previous case law of the lower courts the employer would have prevailed (meaning the relationship of employment would have already ended on June 30th), because the contractual notice period would have operated more favourably in eight out of twelve months of the year, in two months the same and in just two months (declaration of dismissal in June or December) less favourably than the statutory requirement. The Federal Employment Court based its view on the fact that the notice periods set out in § 622 para. 2 German Civil Code constitute minimum notice periods which should be available without exception. Furthermore the rule contained no indications for an average consideration to be made across the entire calendar year. Therefore the individually agreed notice periods pursuant to § 622 para. 5 sentence 3 German Civil Code must be “always longer” and not “mostly longer”.

Summary

The decision leads to stricter requirements for the validity of deviating contractual notice periods if they are to prevail against statutory notice periods. It will then only apply if the contractual notice period is more favourable than the statutory rule in “twelve months out of twelve”. The Federal Employment Court also acknowledged that the contractual rule should in any event be accepted as more favourable as long as the employee does not (yet) reach the (later colliding) level of § 622 para. 2 German Civil Code. The Court does not accept the objection that the parties to the contract had wanted to create an “overall package” with at first longer notice periods and then shorter notice periods than those provided under statute. The only consolation for the employer is the welcome clarification from the Federal Court of Employment that a process of “cherry-picking” on the part of the employee which had been observed in the past every now and then – namely invoking the longer statutory notice period as well as the more favourable contractual end date (e.g. quarter, half year, or year end) – is not permissible because an overall comparison must always be carried out (also an ensemble or group comparison).

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