Repeated fixed-term contracts may be against European law

The European Court of Justice has ruled that long-term employment of teachers under fixed-term employment contracts may violate EU law (judgment dated 26 November 2014, docket number C-22/13, C-61/13, C-62/13, C-63/13, C-418/13).

The case was referred to the European Court of Justice from Italy. Under Italian law, vacant posts for teachers and administrative staff in the Italian public school system may be filled with temporary staff on an annual basis. The plaintiffs were teachers and administrators and hired as temporary replacements by State schools. While they worked for various periods, all plaintiffs were never employed for less than 45 months over a 5 year period. The plaintiffs sought legal recourse against their temporary, fixed-term contracts, arguing that their employment relationships were to be classified as unlimited. The Italian courts thus were confronted with the question of whether Italian law allowing for such fixed-term contracts was compliant with the framework agreement of 18 March 1999 attached to the directive 1999/70/EC of 28 June 1999 on fixed-term work and, in particular, whether the framework agreement permitted a repeated renewal of fixed-term employment contracts.

The European Court of Justice held, as a first step, that the framework agreement applied to all employees both in the private and public sector. Under the agreement, member states are obliged to take effective measures to limit the use of fixed-term contracts. This can be done eg by requiring an objective reason for the renewal of fixed-term contracts, or limiting the total duration or the number of renewals of said contracts. Examining the measures taken by Italy, the European Court of Justice found that they fell short of the obligations under the agreement. While replacing workers temporarily may be an objective, justified reason, the court held that this was not the case if the actual application of the practice leads to a misuse of successive fixed-term employment contracts. The court also highlighted that budgetary considerations in themselves do not constitute an objective reason.

While the case is set in Italy, this judgment may also have an influence on fixed-term contracts under German law. In Germany, the principles set forth might especially become relevant with regard to fixed-term contracts to temporarily replace staff and fixed-term employment in the public sector or for employers whose receive part of their budget from public funds. Currently, sec. 14 para. 1 (3) of the Part-Time and Fixed-Term Employment Act (Teilzeit- und Befristungsgesetz, TzBfG) allows for a fixed-term contract if the employer needs to temporarily replace staff. Also, sec. 14 para. 1 sentence 1 (7) of the Part-Time and Fixed-Term Employment Act allows a fixed-term contract if the employee’s salary is paid for out of the public purse. It remains to be seen whether these provisions will in the future be sufficient to justify a fixed-term contract, especially if the fixed-term contracts are often renewed.