Fixed term in labor law

Labor law for employers and employees

Fixed term in labor law

BAUMFALK law firm in Kerpen-Horrem, Cologne and Witten

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The actual purpose of fixed-term employment relationships is to give employers flexible options for responding to economic problems relating to the employment relationship. In this respect, the employee has the advantage of finding it easier to change or start a new employment relationship. Basically, a fixed term is an agreement that something is to be terminated on a certain date or a certain event without Cancellation should end. From a Cancellation may only be waived if this has been agreed in an individual contract or is stipulated in the applicable collective bargaining agreement. The extraordinary Cancellation of the employment relationship by both parties is possible in any case unaffected by the time limit.

A time limit in the Labor law A fixed-term employment relationship is deemed to exist if the duration of the employment relationship is sufficiently defined in terms of the calendar or if there is a fixed term on material grounds. A fixed term can therefore result from the type, purpose or nature of the work performance. It is not questionable, however, that there is always a certain degree of uncertainty for the employee as to whether and when things will continue for the employee within the company. Often, this uncertainty is coupled with enormous pressure to perform, as securing the future may be at risk.

It should be noted that the time limit may not be issued informally. It must be in writing and can also be issued in accordance with Section 14 I of the Part-Time and Fixed-term Employment Act if the fixed-term seems to be justified by a factual reason. However, the enumeration from § 14 I TzBfG only be assigned an exemplary character. § 14 I TzBfG is therefore only to be mentioned as a "catalog of examples". The reasons listed in nos. 1 - 8 of the first paragraph of Section 14 TzBfG therefore provide a point of orientation regarding the underlying valuations. With this paragraph, the legislator has so far only enumerated reasons recognized by case law. 

Therefore, other reasons for a time limit that do not appear there may nevertheless have an effect, if the reasons underlying the valuation measures of the § 14 TzBfG and are equivalent in weighting to the factual reasons already mentioned. It is therefore important whether the employer has a reason recognized by the valid legal system not to take an employee into the permanent employment relationship, but to offer only a temporary contract. The normal employment relationship is and remains the permanent employment relationship.

Reasons for a time limit

However, factual reasons for a time limit may include:

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  • The employee's labor is needed only temporarily and not for the long term.
  • After graduation or even a completed apprenticeship, a time limit is possible.
  • The employee is only assigned to substitute for another employee.
  • The nature of the employment performed justifies a time limit in itself; e.g., project work.
  • A probationary employment relationship (trial) - in this case, an employment relationship can be limited by up to two years without objective reason.
  • However, the reasons for the time limit may also lie in the person himself.
  • The position is compensated from budgetary funds, which provide for temporary employment under budgetary law.
  • The time limit is based on a court settlement.

However, a fixed term can also be successfully determined by calendar if there is no objective reason for it. This would be the case in the following cases:

  • The maximum term of employment is two years. Up to this duration, the employer may limit the employee's term of employment up to three times.
  • If a company has just been established, a calendar-based limitation of the employment relationship is permissible for a total period of up to four years.
  • The employee is at least 58 years old at the start of his employment. However, only if there is no close factual connection to a previous permanent employment contract with the same employee.

For the above reasons, an employment relationship between an employee and an employer can be limited in time. The fixed-term employment relationship ends with the expiry of the agreed calendar period (calendar fixed-term) or with the achievement of a certain agreed purpose (purpose fixed-term). In both cases, there is no need to Cancellation of the employer or the employee. The employment relationship ends automatically in both cases. From time to time, however, it is possible that the employee simply continues to go to work and wants to do so. If the work is continued without any objection from the employer, an unlimited employment relationship is established. The employee is therefore permanently employed by the company.

It reflects a similar situation if the two parties, employee and employer, have only agreed a fixed-term employment contract verbally. It is important that the employee has actually started work. The reason for this is that the fixed term must be in writing (mostly in an employment contract itself). If this is not the case and the necessary written form was not observed, this can only be cured (i.e. made "correct") if the fixed term was subsequently issued in writing. However, employees who also enjoy special protection against dismissal, such as expectant mothers or disabled persons, do not enjoy increased protection against dismissal under the TzBfG (Part-Time Fixed-Term Employment Act). 

Therefore, according to § 14 TzBfG The same principle of an objective reason applies equally to all fixed-term employment contracts, without any distinction being made between persons with and without special protection against dismissal. Therefore, an objective reason is also required for the fixed-term employment of a senior executive. Under the old law, a senior executive was also sometimes considered to have a severance payment in the event of leaving the company as an objective reason for a fixed term. This is no longer acceptable under current law. Severance pay alone is not a material reason for a fixed term; rather, severance pay is fair compensation for a fixed term without a material reason.

The factual reasons are only as stated, subject to § 14 TzBfG permissible. This included fixed-term employment in the case of first-time employment in the first two years, the establishment of a new company in the first four years from establishment and the fixed-term employment of an older person, even from the age of 52, if he or she was previously unemployed for at least four months within the meaning of Section 138 I No. 1 SGB III, received transfer short-time allowance or participated in a publicly funded employment measure under SGB II or III. Under these conditions, a total fixed term of 5 years with multiple extensions is also permissible.

If there is a fixed term for a specific purpose with regard to the employee, it is the case in foreseeable cases that an exact end date is not apparent. For example, a fixed term is for a project that has a certain goal. In this case, the employer must grant the employee a sufficient period of time for the work to end so that the employee can adjust to the end of the employment relationship and look for a new job. This period is referred to as the "minimum notice period". Basically, employers also have the option of merely advancing a factual reason for a fixed term in order to prepare for later eventualities. An advance reason for a fixed term is deemed to exist if the duration of the fixed term significantly exceeds the time frame resulting from the reason for the fixed term. 

As an example, the time limit for testing is often used, which seems more than questionable for a job with very simple and easy requirements, or a very long probationary period is considered to be agreed. The factual reason for the fixed-term employment relationship also has a specific point in time at which it must be present. The point in time is therefore unambiguously this at the conclusion of the contract between the employee and the employer. The circumstances for the time limit must therefore already exist or occur in the very near future. If the reason for the fixed term ceases to exist later, for whatever reason, this does not call into question the validity of the fixed term.

However, if the fixed term is shorter than is actually evident from the factual reason, this is basically irrelevant with a fair view of the employee. This measure to make the fixed term shorter is then an entrepreneurial free decision of the employer. The employer is also subject to a forecasting principle. This means that for all factual reasons within the meaning of the § 14 TzBfG - apart from a few exceptions such as § 14 I No. 8 TzBfG - must make a forecast with regard to the discontinuation of the employee's need for employment. The prognosis depends on the reason for the fixed term itself. 

A good example of this is the § 14 I No. 1 TzBfG (fixed-term employment if the operational need for the work performance is only temporary). In this case, the employer must make it clear with a very sufficient degree of probability that there is no longer any need for the employee to continue working after the fixed term.

The time of the conclusion of the contract is also decisive for this prognosis. Thus, German courts also only have to review the circumstances at this point in time from an objective perspective. Reasons that only arose later, after conclusion of the contract, have no influence on the validity of the time limit; this serves the burden of presentation and proof. In general, the general rules of the burden of proof also apply here. Thus, the burden of proof must be borne by the party who wishes to derive the more favorable legal consequence for himself. Since the unlimited employment relationship is the normal case, as mentioned above, the employer generally has the burden of proof for the existence of a factual reason.

If an employee wishes to defend himself or herself against a fixed term, he or she can do so by filing an action for a declaratory judgment. In this case, it is established that the employment relationship has not been terminated due to the fixed term (the so-called action for a fixed term). If the employment relationship is continued after the agreed end, the period begins with the receipt of the employer's written declaration that the employment relationship has been terminated due to the fixed term.

It should be noted, however, that the statutory provisions under the TzBfG may not be deviated from by an individual agreement between the employer and the employee.

Is it possible to convert a permanent employment relationship into a fixed-term employment relationship? This is possible according to § 14 I TzBfG However, here, too, a factual reason is required for the subsequent limitation of a previously unlimited employment relationship. The § 14 I TzBfG However, the same applies if the term of a contract concluded in accordance with the § 14 II TzBfG The term of a fixed-term employment relationship without a factual basis should be shortened subsequently. Therefore, if the fixed term is shortened, a factual reason is again required, even if none was previously required for the actual fixed term.

It is also often problematic that the employer acts inconsistently with his promises. For example, the employer may promise the employee that he or she will continue to employ him or her after the expiration of the fixed term. The employer is also bound to this according to general principles. However, the promise must be made by a person who was authorized to hire an employee. It must be objectively recognizable that the employer wishes to commit to the employee. This includes not only statements but also implied actions by the employer. 

However, the mere prospect of being taken on does not give the employee a full entitlement to this. However, it is important that the employer has created an objective trust in the employee during his employment that he will be taken on. This would be, for example, the probation within the fixed term. However, the employer must also confirm this probation, preferably in writing.

Meanwhile, however, the employee may not act inconsistently by applying to other employers. Then his possible claim is forfeited through reliance. In case of doubt, the employer is also liable for damages if he creates this trust and then disappoints the employee without cause. The liability for damages then relates to the fact that the employee may have turned down other possible job offers. Since the relationship of trust with the employer would create a more favorable situation for the employee, the employee also bears the burden of proof for the relationship of trust. It should be noted that the claim for continued employment is best derived from the employer's conduct and its implied offer of employment than from a disappointed trust between the two parties.

The employee's claim for equal treatment to be continued in employment for an unlimited period after his fixed term has not yet been conclusively clarified. The Federal Labor Court has therefore rejected the claim for the reason that the employer is basically free in his decision to grant preferences or not. Only because the employer has so far continued to employ employees from a fixed-term contract is therefore so far unproblematically irrelevant for the individual case. The employer is just as free to conclude contracts as the employee himself. It is thereby justified thus not obligated to further employ each employee. If the employee wants to substantiate such a claim, he must be able to prove that he was clearly disadvantaged compared to other employees under similar or rather the same conditions.

Fixed-term chains

Possible chains of time limits

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According to general and widespread opinion, fixed-term chains are not a nice thing and the employee often thinks that they cannot be effective at all. However, there is no general ban on these multiple fixed-term contracts. So then it is possible to link fixed terms with a factual reason to each other or to attach them to a fixed term without a factual reason. It is important for this measure of the employer that a real factual reason actually exists for each fixed term. It is not permissible, on the other hand, to create a fixed term outside of the § 14 paragraph 2, 2 a or to string together 3 fixed-term employment contracts without object. 

However, the question arises as to whether it is possible for the employer, if a factual reason exists on a permanent basis, to use this in order to further limit the employment relationship between himself and his employee on a permanent basis by means of the same reason. In this context, it is primarily irrelevant whether the same or only a similar factual reason exists.

In very many cases, this can be an indication that the above-mentioned prognosis of the employer is incorrect and that there is a wrong assessment of this. Especially the reason of substitution for another employee could be a factual reason that employers like to misuse. However, it is problematic that in the event of a judicial review of the employment relationship, often only the last fixed-term contract is subjected to a fixed-term review. As is often the case, this is a case-by-case examination by the court and therefore each case must always be considered individually. The basic justification for this is that employees and employers should only ever have the last contract for their further relationship with each other. Consequently, the past is therefore literally "passé" and thus no longer relevant.

Thus, after the expiration of a fixed-term employment relationship, the employee should always be sure to negotiate with the employer to convert the fixed-term employment relationship into a permanent employment relationship. If this is not possible after discussions with the employer, the employee only has the chance after § 17 TzBfG to appeal to the labor court. In this way, the employee can assert that the fixed-term employment relationship is legally invalid. However, this must be done within a period of three weeks after the agreed end of the fixed-term employment contract. This is followed by an action at the labor court for a declaration that the employment relationship has not been terminated or limited in time. 

Since the relationship between the two parties often suffers in a court dispute with the employer, a conciliatory ending does not always seem to be the result. After all, the employer wants something different than the court may then decide in the end. Consequently, it is not always the case that both parties continue to get along and a severance package for the end of employment seems to be a good way to go. Court-enforced continued employment is therefore not always too tempting.

Furthermore, there are also exceptions, whereby not only the last contract of the employer and employee is examined. This is, among other things, that the new contract is not a separate one, but only an appendix to the old one. This would be the case with annex contracts. Here, the contract is only concluded in order to adapt the previous concluded employment contract in its term. In this case, however, it is necessary that both contracting parties are of the opinion that the previous contract should be the legal basis for the further legal relationship. 

An example of an annex contract would be the previous fixed-term contract due to the replacement of a colleague who is ill. However, the colleague remains ill and the fixed term or the contract is extended. It can also be different if the contract was concluded under a proviso that an already unlimited employment relationship was not concluded beforehand. Or even if the employee, before signing the new contract, has filed a lawsuit under § 17 TzBfG and this is also known to the labor court.

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