Being pulled over a barrel for a little donkey / Rescission of an employment contract due to fraudulent misrepresentation

Under what circumstances are employers allowed to rescind an employment contract on the grounds of fraudulent misrepresentation? The Higher Labour Court (Landesarbeitsgericht, LAG) Schleswig-Holstein answered that question on November 19, 2013 (docket number 1 Sa 50/13). A married-couple that had made a fortune in the lottery several years ago had started to market children’s books the wife had written about a little donkey. The plaintiff contacted the couple, offering to do the marketing for them. Claiming untruthfully to know the purchasing directors of two big department store chains and to be well connected amongst publishers, he was able to negotiate ridiculously good terms in his employment contract (inter alia a monthly salary of € 20,000 and a compensation of € 250,000 in case of early termination irrespective of the cause). According to the judges, it was obvious that the couple only agreed to the contract because of the false information. Thus, the rescission of the fraud’s employment contract was lawful.