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The sweet sorrow of parting – 3 year long termination notice period puts employee at disadvantage

German employment law allows the parties to an employment contract to agree a specific notice period in derogation from the statutory standard period as set out in § 622 para. 1 German Civil Code (Bürgerliches Gesetzbuch, BGB), as long as the notice period for an employee does not exceed the notice period for the employer. However, the German Federal Labour Court (Bundesarbeitsgericht, BAG) recently ruled (26 October 2017; docket number: 6 AZR 158/16) that significantly extending the termination notice period for an employee by general terms and conditions might not be in good faith and therefore lead to an unreasonable disadvantage, even if the notice period for the employer is extended in the same way.

In the case at hand the Defendant had been employed by the Plaintiff since 2009 and worked 45 hours per week for a monthly gross income of €1,400. In 2012, the parties agreed upon an extended notice period of three years to the end of a month for both parties as well as a wage increase to €2,400 or €2,800 in case of monthly net proceeds of €20,000. They also stipulated that the income should not be raised again before 30 May 2015. After a colleague discovered that the Plaintiff had installed a programme capable of monitoring work behaviour on the employees’ computers, the Defendant gave notice on 27 December 2014 effective to 31 January 2015. The Plaintiff requested to ascertain that the employment relationship with the Defendant continued to exist until 31 December 2017.

The Federal Labour Court rejected the Plaintiff’s request as it held the general terms and conditions to be void due to putting the Defendant at an unreasonable disadvantage against good faith. Even if a pre-formulated notice period that significantly exceeds the statutory standard period meets the legal requirements of § 622 para. 6 Civil Code and § 15 para. 4 Part-Time and Fixed-Term Employment Act (Teilzeit- und Befristungsgesetz, TzBfG), it might inadequately interfere with the freedom of occupation guaranteed by the German constitution, which has to be assessed by taking into account all circumstances of the individual case. The court held the arrangement to be unbalanced with regard to these principles even though both notice periods – for the employee and the employer – were extended. The disadvantage resulting from the agreement for the Defendant could not be balanced out by the intended raise, especially as the agreement itself prevented any other raise as it froze the remuneration level on a long-term basis.