Tag Archive: employment contract

Penalty clause unenforceable where non-compete obligation is invalid

If a post-contractual non-compete obligation is invalid and therefore non-binding, a penalty clause intended to protect this clause is unenforceable (judgment of the Solingen labour court dated 20 June 2017, docket number 3 Ca 153/17). The employee worked for a travel agent and had mainly sold cruises. The employee’s contract included a post-contractual non-compete obligation …

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Employee’s request for fixed-term employment narrowly interpreted

Entering into a valid fixed-term contract can be a bit of a challenge under German law. Under the Fixed Term and Part-Time Employment Act (TzBfG), one of the reasons which may be used to justify a fixed-term contract is that there are reasons relating to the circumstances of the particular employee. A recent case decided …

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Ramadan – Impact on the employment relationship?

Ramadan is a challenge for both employers and employees alike, e.g. if employees do not perform as usual because of their daily fasting. The ever-changing period of the fasting month falls between 27 May and 24 June this year. For a month Muslims abstain from eating food between five o’clock in the morning and nine …

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Non-compete clauses – No Compensation for Abstention – Severability Clause

Non-compete provisions valid for the period after an employment relationship has ended are invalid unless the agreement provides for a compensation payment of 50% of the employee’s former salary during the entire duration of the post-contractual non-compete obligation. This decision by the German Federal Employment Court (docket no. 10 AZR 448/15, dated March 22, 2017) …

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Dismissal Protection Act not applicable to managing directors despite employee status

While recent EU law developments on the potential employee status of managing directors (cf. ECJ, June 9, 2015, docket no. C-229/14 – Balkaya) and decisions of the German Federal Labour Court regarding the procedural issue of giving managing directors access to the Labour Courts under certain circumstances have somewhat blurred the dividing lines between managing …

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Exclusion Clauses: “Textual Form” to be Sufficient

Many employees are not adequately informed as to what a requirement for notification in “written form” encompasses. With regard to exclusion clauses, this lack of information can lead to an inability to exercise certain rights. Generally, exclusion clauses in employment contracts include provisions under which claims arising from the employment contract become void if they are …

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Multiple fixed-term employment contracts of university scientists and the academic precariat

Multiple fixed-term employment contracts of university scientists may be lawful, as recently confirmed and specified by the German Federal Labour Court (Bundesarbeitsgericht, BAG) in its decision of 8 June 2016 (docket number 7 AZR 259/14). The Court did not find an abuse of legal right. The practice of multiple or repeat fixed-term employment (Kettenbefristung) may …

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Repayment of costs of continuing training

The Higher Labour Court (Landesarbeitsgericht, LAG) Rheinland-Pfalz decided on 3 March 2015 (docket no. 8 Sa 561/14) that a repayment clause for costs of continuing training in an employment contract is void if it only provides for an annual reduction of the repayment obligation. In this case,  the employee was obliged to participate in a …

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Circus artists: Employees or independent contractors?

The Federal Labour Court (Bundesarbeitsgericht, BAG) ruled on 11 August 2015 (docket number 9 AZR 98/14) that where an activity agreed by contract may typically be performed in an employment relationship as well as by an independent contractor, the decision of the parties regarding the type of contract has to be considered as part of the necessary overall balance …

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Financial compensation entitlement for post-contractual non-compete based on standard saving clause

In German law, a post-contractual non-competition agreement with an employee is only effective if it provides the employee with appropriate financial compensation. The financial compensation must amount to at least 50% of the previous income. If no such compensation is provided, the post-contractual non-competition clause is, by force of law, invalid.   Nevertheless, the Hamm …

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