Notice Periods May Be Tied to Years of Service

In a judgment dated September 18, 2014, the Federal Labour Court (Bundesarbeitsgericht, BAG) ruled that seniority-related notice periods are not discriminatory on grounds of age (docket number: 6 AZR 636/13). This judgment settles a long-term bone of contention with regard to the impact of equal treatment law on dismissal protection provisions.

Sec. 622 of the German Civil Code (Bürgerliches Gesetzbuch, BGB) provides for statutory notice periods depending on the time of service. The statutory minimum notice periods for terminations are:
• During the first 2 years of service, 4 weeks effective to the 15th or to the end of a calendar month;
• After 2 years of service, 1 month effective to the end of a calendar month;
• After 5 years of service, 2 months effective to the end of a calendar month;
• After 8 years of service, 3 months effective to the end of a calendar month;
• After 10 years of service, 4 months effective to the end of a calendar month;
• After 12 years of service, 5 months effective to the end of a calendar month;
• After 15 years of service, 6 months effective to the end of a calendar month;
• After 20 years of service, 7 months effective to the end of a calendar month.

In the case at hand, the employee had been working for the employer for three years when the employer issued a notice of termination. While the employee did not challenge the validity of the termination as such, she argued that seniority-based notice periods were unlawful age discrimination under the Equal Treatment Directive 2000/78/EC. Since more senior employees are typically older than employees with less seniority, she held that young employees – such as herself – were indirectly discriminated against because of their age. As a consequence, she claimed that the longest notice period provided for by the law, i.e. 7 months, applied to all terminations, regardless of the employee’s seniority.

Both the courts of first and second instance denied the employee’s claim. The Federal Labour Court confirmed these decisions. While it held that seniority-related notice periods did in fact put younger employees at a disadvantage, this was justified in order to grant more senior, older employees better dismissal protection. In order to achieve this aim, the Federal Labour Court found that longer notice periods for more senior employees were appropriate and necessary within the meaning of the Equal Treatment Directive.