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Beware of invalid temporal limits of work contracts

The agreement on a time limit for the employment contract is a practice frequently used in Germany, in order to escape the restrictions on the right to protection. Caution is, however, required, since a fixed term is only permitted under special statutory conditions.

On the one hand, it is necessary to examine whether there is a material reason for the limitation or if the special conditions for an unconditional limitation, which are strictly limited, are fulfilled. Fixed-term employment contracts can be concluded without a specific reason for up to 2 years provided no previous employment existed with the same employer in the last 3 years.  The fixed term may be for more than 2 years, if there is a specific reason for the fixed term. A typical reason is temporary replacement of another employee (eg during parental leave or long term illness). In addition, a fixed term agreement must generally be in writing (sec. 14 (4) German Act on Part-Time Work and Fixed-Term Employment (“Teilzeit- und Befristungsgesetzt – TzBfG). Otherwise, it is ineffective and there is automatically an indefinite employment relationship (sec. 16 German Act on Part-Time Work and Fixed-Term Employment).

If such a case has occurred, in particular because the fixed term agreement has been made only by word of mouth and the employee has already begun work, the question arises whether the creation of an indefinite employment relationship can still be prevented.

Here, four configurations are conceivable, briefly as follows:

  • Written confirmation of a verbally agreed time limit under material reasons

This is not possible, since the creation of an indefinite contract is expressly provided for by the law and thus a subsequent curing of this error cannot occur.

  • Written confirmation of a verbally agreed unconditional time limit

This applies accordingly. Moreover, the prohibition of prior employment would also preclude a retrospective limitation.

  • Replacement of the originally verbally agreed time limit under material reasons by a new written time limit under other material reasons

Such a retrospective termination of a contract is always possible provided that both the employee and the employer agree. This has also been confirmed by the Federal Labour Court of Germany in a recent judgment (docket number 7 AZR 223/15). A unilateral agreement, on the other hand, is not permitted.

  • Replacement of the verbally agreed unconditional time limit by a written time limit under other material reasons

Here too, the above applies. The existence of a material reason for the fixed term and the consent of employer and employee are crucial.

We see, therefore, that caution should always be exercised in order to avoid involuntary permanent employment.