Fixed-term contract of employment with Works Council without factual reason

Employment contracts of members of the Works Council can also be for a fixed term, without factual reason and without an entitlement to extension of the contract.

The parties in a legal dispute argued about the effectiveness of an agreement on a fixed term. The Claimant employee, who  was simultaneously a member of the Works Council, was employed by the Defendant employer on a fixed-term basis without a factual reason. Shortly before the expiry of the fixed-term employment relationship, the employer informed her that the contract would not be extended. The employee filed legal action for annulment of the fixed term clause and requested continued employment on an indefinite basis. She claimed recourse to the fact that the company regularly extended fixed-term contracts of employment or annulled the fixed term clause. The only reason why this had not happened in her case was because she was a member of the Works Council.

Fixed term without factual reason as per Section 14 Subsection 2 TzBfG

The Federal Labour Court agreed with the previous instances and dismissed the legal action. Under the Law on Part-Time and Fixed-Term Employment (TzBfG), contracts of employment for new employees can be limited for a maximum period of two years without the need for a factual reason (Section 14 Subsection 2 TzBfG). Within this maximum period and given a shorter time limitation, the calendar-limited contract of employment can also be extended a maximum of three times. As confirmed by the Second Senate in its judgment, this also applies to fixed-term employment contracts with members of the Works Council. 

Holding office as a member of the Works Council does not stand in the way of employment for a fixed term

Holding of office as a member of the Works Council does not stand in the way of employment for a fixed term. The special protection against dismissal, provided for in Section 15 KSchG and according to which members of the Works Council can only be dismissed without notice in exceptional circumstances and given the presence of an important cause, is likewise not circumvented by the conclusion of a contract of employment that is for a fixed term only. 

Disadvantaging as a result of involvement on the Works Council inadmissible

The decision to extend a fixed-term employment relationship or to take over a fixed-term employee into an indefinite employment relationship is the sole responsibility of the employer. If the employer refuses to continue the employment relationship, this is only inadmissible if the reason for not offering the employee a follow-on contract is precisely because of his/her involvement on the Works Council. Because this would constitute inadmissible disadvantaging of the employee on the basis of his/her position of office.

Burden of proof lies with the employee

In litigation, the burden of proof for the claimed disadvantaging lies with the employee. In this respect, however, it is sufficient if the member of the Works Council can present evidence indicating disadvantaging as a result of involvement on the Works Council. The employer must address this matter specifically and invalidate the evidence. If the member of the Works Council succeeds in proving the claimed disadvantaging, he/she has a judicially enforceable claim to conclusion of an indefinite contract of employment.

Summary

Employers are not obliged to extend fixed-term employment contracts – not based on factual reasons – with members of the Works Council, or to convert them into indefinite employment relationships due to their position of office. A member of the Works Council can only invoke annulment of the fixed-term clause if he/she can provide evidence indicating disadvantaging due to the involvement on the Works Council, and the employer is unable to invalidate this evidence.