A fixed-term employment contract without justification following a previous home-working contract is valid

On 24 August 2016 the Federal Labour Court (Bundesarbeitsgericht, docket number 7 AZR 342/14) has decided that an employment contract can be limited to a fixed term of two years without any justification even in the event that the employee had worked as a home-worker for the same company prior to the fixed-term employment.

In September 2010 the defendant and the plaintiff agreed on an employment contract limited to one year. Later they agreed on an extension for another year. Prior to this the plaintiff had worked as a home-worker for the defendant for 14 months. Six weeks before the end of the contract the employer informed the plaintiff that she would not be able to continue the employment on the basis of an unlimited home-working contract. The plaintiff then filed action against the fixed-term employment on the grounds that she had previously worked for the defendant for 14 months and argued that home-workers required the same protection as ordinary employees.

The Federal Labour Court refused the appeal and found that the limited duration of the employment contract was valid. Sec. 14 para. 2 cl. 1 of the Act on Part-Time and Fixed-Term-Employment (Teilzeit- und Befristungsgesetz) allows for a limited contract duration of up to two years without requiring the employer to provide a justification for the fixed term. However, sec. 14 para. 2 cl. 2 of the Act clarifies, that such fixed terms are invalid in case of a pre-existing employment relationship between the same parties. These rules are intended to provide for some flexibility on the part of the employers allowing for adaptation to economic changes and to test employees’ skills during a limited period of time while protecting employees from endlessly repeated fixed terms.

The court found that the pre-existing homeworking relationship between the parties did not qualify as a pre-existing employment relationship within the meaning of sec. 14 para. 2 of the Act on Part-Time and Fixed-Term Employment.

Home-working according to the Home Work Act (Heimarbeitsgesetz) in the sense of the case that the Federal Labour Court had to decide should not be confused with what is generally referred to as home office, i.e. when work due in accordance with an employment contract is (temporarily) performed from home. According to sec. 2 para. 1 cl. 1 of the Home Work Act a home-worker is a person who works alone or with family members in a self-chosen place of work on behalf of  a tradesperson, but leaves the utilization of the work results to the tradesperson.

Home-workers enjoy to a large extent the same rights as other employees, e.g. in terms of maternity protection. However, the decision of the Federal Labor Court made clear, that home-workers do not enjoy the same protection as employees, who work in the premises of the employer, when it comes to protection from excessive use of fixed-term contracts because, unlike ordinary employees, home-workers can determine the workplace, extent and manner of their work by themselves and enjoy much more freedom with regard to their time management. According to the court the different treatment was also justified as the employer, in turn, could not test the skills of home-workers in the same way as with other employees.