Termination agreements: Employees have no right of withdrawal

On February 7, 2019 the Federal Labour Court (docket number 6 AZR 75/18) ruled that employees cannot withdraw a termination agreement even if it was concluded in the private apartment of the employee. In the case at hand, however, the termination agreement might be void if the fundamentals of fair negotiation (Gebot des fairen Verhandelns) have been ignored.

The parties agreed to a termination agreement in the apartment of the plaintiff. The termination agreement comprised immediate termination of the employment without any severance. The reasons and the process leading to the agreement are contested. The plaintiff argued that she was sick and on medicine (and asleep) at the conclusion of the termination agreement. Therefore, she challenged the agreement due to a mistake, intentional deception and illegal coercion; alternatively she withdrew the termination agreement.

The Higher Labour Court of Niedersachsen (docket number 10 Sa 1159/16) dismissed the claim. On appeal, the Federal Labour Court reversed the ruling and referred the case back to the lower court.

According to its press release the Federal Labour Court confirmed that the plaintiff has no grounds to challenge the agreement. Furthermore, there is no legal basis to withdraw it. In general, consumers have a right of withdrawal if the agreement was concluded outside of the business premises. Employees are consumers. But, and this shall be decisive, the legislative authority made crystal clear, that termination agreements are not in the scope of this right of withdrawal, which is based on the European directive 85/577/EWG focussing on the supply of products and services.

In the case at hand, however, the Higher Labour Court did not consider if the fundamentals of fair negotiation were met. These fundamentals are a collateral duty of the employer. They are infringed if one party creates mental pressure limiting freedom of decision, especially if the other party is suffering weakness due to sickness. If the defendant abused the sickness of the plaintiff intentionally pressuring her into the termination agreement, the plaintiff would be entitled to a damages claim. This claim would lead to continued employment. The Higher Labour Court will therefore need to consider the effectiveness of the termination agreement again. So far, it had only stated that the plaintiff was not in a temporary state of mental disturbance (otherwise, her acceptance would have been already void by law).

It remains to be seen if the Federal Labour Court clarifies the requirements of the fundamentals of fair negotiation in its reasoning, in particular which party has the burden of proof etc. The clarification, however, that employees have no right to withdraw a termination agreement is very welcome.