Fixed-term employment contract

"Unfortunately, we can no longer extend your current employment relationship." That's precisely what temporary employees don't want to hear. What they want instead: a permanent contract with a longer-term perspective. But this news doesn't automatically mean that everything is legally lost. The question is whether the fixed-term employment contract invalid And whether it might not be worthwhile to Permanent employment lawsuit to appeal against the limitation.

Should the fixed-term contract prove to be ineffective, employees could still reach the safe shore – permanent employment – reach. Or they speculate on a severance pay – depending on your interests. In this informative guide, we will show you

• what limitations there are in employment relationships,
• the conditions governing the limitation of employment contracts,
• what typical reasons for invalidity there are for fixed-term contracts and
• how you can assert your claims in the event of an invalid fixed-term contract.

Our goal is to provide you with a brief and concise overview of legal basis to convey and give you your Options for action After reading this article, you should be able to decide what to do if the fixed-term nature of your employment contract is invalid. As employment lawyers, we are experts in employment contracts, Warnings or terminations. Feel free to contact us directly if you need help.

General – Types of fixed-term employment contracts

The legislature wants permanent employment to be the rule. However, it recognizes that there may be legitimate business interests for fixed-term employment. Accordingly, the legislature has not completely prohibited fixed-term contracts in the Part-Time and Fixed-Term Employment Act (TzBfG). However, it has Requirements created which must be fulfilled for a fixed-term contract to be effective.

A characteristic of a fixed-term employment contract is that it ends without the employer having to give notice of termination or conclude a termination agreement.

Fundamentally, the Part-Time and Fixed-Term Employment Act distinguishes two types of fixed-term contracts:

(1) Purpose limitation: The employment relationship ends when the respective fixed-term purpose is fulfilled. Example: An employee returns from parental leave.

(2) Time limitation: The employment relationship ends upon expiration of the term for which it was entered into. Example: The employment relationship begins on January 1, 2023, and ends on December 31, 2023, without the need for notice of termination.

Both fixed-term and temporary employment contracts are subject to legal requirements. If the employer does not comply with these, he risks the Limitation invalid This would lead to a permanent employment relationship. When it comes to the question of whether a fixed-term contract is legally permissible, a fundamental distinction is made between

• Fixed-term contract with objective reason
• Fixed-term contract without objective reason.

Below we will inform you about the ageneral requirements to an effective limitation before we address the specific requirements.

General requirements for fixed-term employment contracts – written form

Any limitation requires the written formThis follows from Section 14 para. 4 TzBfGThe written form means that the requirements of the § 126 German Civil Code must be fulfilled. This means that the employer must draw up a deed for the fixed-term employment and fix the fixed-term employment therein. This deed must then be signed by the employer and the employer in person. signed become.

The written form has a different connecting factor in the case of a time limitation and a purpose limitation:

• Time limit: In this case, the written form must refer to the duration of the fixed-term contract. However, it is not necessary to state the reason for the fixed-term contract.
• Purpose limitation: In the case of a fixed-term contract, however, the written form must clearly state the purpose. The duration of the fixed term must be clearly determinable.

The written form is a essential prerequisite for a valid fixed-term contract. Any errors here will render the fixed-term contract invalid. This has disastrous consequences for the employer, as a permanent employment relationship will then be created by operation of law.

Employers usually comply with the written requirement in employment contract. This is because the fixed-term nature of the employment is normally recorded directly in the employment contract, which is signed by both the employer and the employee.

Fixed-term employment contract with objective reason

The Fixed-term contract with objective reason is a form of fixed-term employment available to employers. As the name suggests, a fixed-term contract is possible if there is an objective reason for it. Some objective reasons are mentioned as examples in Section 14 Paragraph 1 Sentence 2 of the TzBfG, which are:

• Only temporary operational need for work performance
• Fixed-term employment takes place after training or studies and facilitates the transition to subsequent employment
• Temporary employment to represent another employee
• The nature of the work justifies a fixed-term contract
• The fixed-term contract serves to test an employee
• Reasons relating to the employee’s person justify the fixed-term contract
• The fixed term is stipulated by budgetary law and the employee is employed accordingly
• The limitation is based on a court settlement

Other objective reasons for a fixed-term contract are certainly possible. For example, employees could training or further education purposes However, these reasons must be weighed against the explicitly stated factual reasons. equivalent The employer must demonstrate a legitimate interest in choosing a fixed-term employment contract instead of a permanent one.

Federal Labor Court, judgment of 17 June 2020 – 7 AZR 398/18

However, the employer is not required to state the objective reason in the employment contract. This is not a prerequisite for the validity of the contract.

Abuse of law in the fixed-term employment for objective reasons

Especially in the context of fixed-term contracts with objective reasons, the issue of institutional abuse of law plays a major role. Employers sometimes abuse the law on fixed-term contracts based on objective reasons. They impose fixed-term employment contracts with employees multiple times, sometimes for many years.

The repeated and long-term limitation of employment contracts with objective reasons is not per se an abuse of law and ineffective. Provided the employer can demonstrate an objective reason in each individual case. Case law examines the fixed-term contracts for abuse of law if certain Thresholds be exceeded. She has a “Traffic light system”, which it draws on.

Federal Labor Court, judgment of 26 October 2016 – 7 AZR 135/15

If the employer extended more than nine times and the fixed-term employment relationship more than six years This may be an indication of institutional abuse of law. In such cases, employers must state that there was always a factual reason and that the representation was not based on a constant need for labor was based.

Fixed-term employment contract without objective reason

Then there is the fixed-term contract without objective reason.While the fixed-term contract with objective reason is valid until Limits of abuse of law While this is possible, the requirements for fixed-term contracts without objective grounds are stricter. This applies to both the duration of the fixed-term contract and the number of extensions:

• Fixed-term contracts without objective reasons are only permitted for a maximum period of two years.
• During this period, the employment relationship can be extended three times.

After that, a fixed-term contract without objective reason is no longer legally permissible. However, it is certainly possible to switch to a fixed-term contract with objective reason, provided the conditions for such a contract are met.

If the employer exceeds these limits, the fixed-term contract without objective reason is invalid. Legal consequence is that an indefinite employment relationship is established by law.

Previously, the Federal Labor Court used a loophole that allowed employers to renew fixed-term contracts without objective grounds after three years. However, this ruling is outdated. If an employer has employed an employee on a fixed-term contract for two years, the limits of what is permissible have been exhausted.

Prohibition of previous employment in the case of fixed-term employment contracts without objective reasons

The following applies Prohibition of previous employmentThis means that, according to Section 14 (2) Sentence 2 of the TzBfG, a fixed-term contract without objective reason is no longer permissible if a fixed-term or permanent employment relationship with the same employer already existed previously.

Only if previous employment occurred a long time ago, was of a completely different nature, or was only of very short duration, this may be assessed differently from a legal perspective. In such cases, compliance with Section 14 (2) Sentence 2 of the Part-Time and Contractual Employment Act (TzBfG) may be unreasonable for the parties to the employment contract due to the associated restriction on freedom of choice of occupation and contract.

BVerfG, June 6, 2018 – 1 BvL 7/14

The Federal Labor Court has ruled as follows:

• The previous employment dates back a long time if 22 years have passed in the meantime (Federal Labor Court, judgment of 21 August 2019 – 7 AZR 452/17)
• An employment relationship was not of “very short” duration if it lasted for six months (Federal Labor Court, judgment of 12 June 2019 – 7 AZR 477/17)
• In contrast, a six-week employment is of “very short” duration if it is a minor part-time job during school, study or training (Federal Labor Court, 12 June 2019 – 7 AZR 429/17)
• A completely different type of employment relationship exists if the new job requires significantly different knowledge and qualifications (Federal Labor Court, judgment of September 16, 2020 – 7 AZR 552/19). A break in the employment history is required.

Fixed-term employment relationship: Typical reasons for invalidity

When an employee comes to us with a fixed-term contract, we go to TroubleshootingOur service consists of examining whether the fixed-term contract is invalid. We then decide how to proceed. A fixed-term contract can be invalid for numerous reasons. We analyze Therefore, examine the employment contract documents very carefully in order to detect any errors.

It turns out that employers repeatedly make mistakes that lead to the ineffectiveness of fixed-term contracts. Typical mistakesthat we encounter here again and again are:

• Written form not observed: It happens relatively rarely, but occasionally, that employers do not agree to the fixed-term contract in writing.
• No objective reason: Sometimes employers grant fixed-term employment contracts even though there is no legally permissible objective reason. Or, quite often, the reason is merely a pretext that is not legally recognized.
• Maximum duration exceeded: Employees may be contracted for a maximum of two years without objective reason. Some employers exceed this limit.
• Too frequent extension: A three-time extension of the fixed-term contract without objective reason within two years is permissible. No more than that.
• Violation of previous employment ban: If a fixed-term or permanent employment relationship previously existed with the employer, a further fixed-term contract without objective grounds is generally no longer possible.

Other possible errors made by employers regarding fixed-term contracts

These are errors that lead to the invalidity of the fixed-term contract. But they are by no means all errors that can ultimately lead to a permanent employment contract. Here are some examples: two more blunderswhich may prove costly for the employer:

• Contract change upon extension: If the employer extends the fixed-term employment contract and at the same time changes the contractual terms (new working hours, higher salary, etc.), then he has a problem. Because: An extension is only possible with regard to the fixed-term nature of the contract. However, if the content of the fixed-term employment contract is also changed, this would no longer be an "extension." Instead, it would constitute a new employment contract—and thus a violation of the prohibition on prior employment.
• Continued employment after the end of the fixed-term contract: The classic example: The employer continues to employ the employee after the fixed-term contract has expired. While there is no error in the fixed-term contract, the legal consequences are the same. A permanent employment relationship is created.

Invalid fixed-term employment contract – legal consequences

We have seen that there are numerous potential sources of error for employers when it comes to fixed-term contracts. And many of them result in the fixed-term contract being invalid. But which Legal consequences What are the consequences of an invalid fixed-term contract? We've already briefly touched on this.

The invalidity of a fixed-term contract does not invalidate the entire fixed-term employment contract. The adverse legal consequence relates exclusively to the fixed-term agreement itself. The fixed-term contract itself is therefore invalid, which legally means:

This means that, by law, an indefinite employment relationship is deemed to have been established.

As already mentioned, the legislature intends permanent employment to be the norm. Accordingly, the labor law sanction in the event of an invalid fixed-term employment contract is automatically a permanent employment relationship with the employer.

If a fixed-term contract is invalid, the law treats the employee as if the contract had not existed. You can do this in Section 16 sentence 1 TzBfG read where exactly it is:

“If the fixed-term contract is legally invalid, the fixed-term employment contract shall be deemed to have been concluded for an indefinite period.”

The same legal consequences apply if the employer continues to employ the employee after the end of the fixed-term contract without raising an objection. Section 15 (5) TzBfG.

Termination of a permanent employment contract after an invalid fixed-term contract?

Now you might think about the following: The employer could then still terminate the permanent employment contract quit, since he does not want to continue employing the employee after the end of the fixed-term contract.

This would be conceivable, but only if the employee has not Protection against dismissal If the employee has been with the company for more than six months and there are more than ten full-time employees in the company, then the Dismissal Protection ActThe consequence: The employer needs a reason for termination (personal, operational, or behavioral) to terminate the now permanent employment relationship.

However, such a reason will often not exist, so the employee is often in a comfortable legal position. More on this below.

Fixed-term employment contract invalid – your options

If the fixed-term contract is invalid, you have a permanent employment relationship with the employer. You may also have protection against dismissal and socially unfair dismissals. This is excellent for you, but you then have to answer an important question for yourself: What exactly are your interests?

• Do you want to express yourself to your employer invoke your permanent employment contract and continue working there?
• Or are you not seriously interested in a permanent employment contract, but are speculating on a financial compensation in the form of severance pay?

Just between us: Not all employees want to continue their employment relationship on a permanent basis. By offering a fixed-term contract, the employer has signaled that they do not intend to employ the employee permanently. Employees are therefore not exactly welcome. The ineffectiveness of the fixed-term contract may have already led to conflicts and tensions, leading to employees also not wanting to continue working.

This may of course look different if it is a larger company so that the ineffective fixed-term contract is fought out on a factual level and has no impact on the work itself.

However, in our experience, employees often have no increased interest on continuing the employment relationship. Then it's just a matter of legally turning the invalid fixed-term contract to their advantage. In other words, getting the highest possible severance payment.

But be careful: Employees don't have unlimited time for this. You'll learn why in the next section.

Action for permanent employment in the event of an invalid fixed-term employment contract

The most important thing for you comes last: If your fixed-term contract is invalid, that doesn't mean that the legal consequence is automatically the creation of a permanent employment relationship. In other words: While that is certainly the legal consequence, you must then also assert this permanent employment relationship.

You do this by inserting a Permanent employment lawsuit according to Section 17 sentence 1 TzBfG. According to the law, you are only allowed three weeks time after the expiration of the fixed-term contract. As with the deadline for filing a claim for unfair dismissal, there is also a deadline for filing a claim for permanent termination in the event of an invalid fixed-term contract.

It's vitally important that you meet this deadline. If you miss it, you can no longer invoke the invalid time limit. That's it, legally speaking. Then even we can no longer help you.

Will the employment relationship continue after the end of the fixed-term contract, the three-week period begins with the employer's written declaration that the employment relationship has ended due to the fixed-term nature.