"Limited" permanent employment relationship

BAG of November 19, 2019 - 7 AZR 582/17

In its decision, the German Federal Labor Court (BAG) recently distinguished between temporary and "limited" permanent employment contracts. A permanent employment contract limited to a particular season can be valid if there is no need for the position outside the season and if the provision does not unreasonably disadvantage the employee.

Facts of the case

The plaintiff had been employed by the defendant municipality as a lifeguard since July 2000. After his employment contract was terminated in September 2005, the parties entered into a new employment relationship in April 2006. In accordance with the employment contract of April 1, 2006, the plaintiff was to be employed for the season from April 1 to October 31 of each calendar year. The plaintiff would also only be paid during this period. With his claim, he sought to establish that the limitation on the employment relationship was not legally valid and that he was permanently employed without limitation beyond October 31,2016. The lower courts had dismissed the case.

Decision

The defendant’s appeal before the Federal Labor Court was also unsuccessful. The Federal Labor Court is of the opinion that the employment relationship does not comprise a series of temporary employment relationships. Rather, a permanent employment relationship was agreed in which the obligation to provide labor and the obligation to pay remuneration was limited to the outdoor swimming season. The Federal Labor Court found such an agreement to be valid. It should not be interpreted according to the provisions of the German Part-Time and Fixed-Term Employment Act (Teilzeitbefristungsgesetz; TzBfG). The Federal Labor Court draws exclusively on Sec. 307 Para. 1 BGB, i.e. the general terms and conditions test, as the standard for determining validity. In the present case, the Federal Labor Court found that the plaintiff was not unreasonably disadvantaged by the design of the contract, as, at the time the employment contract was signed, the defendant could only have expected a need for the plaintiff’s services during the outdoor swimming season. 

Practical tip

Even though the reasons for the Federal Labor Court's decision have not yet been published, it can already be stated that provisions in seasonal employment contracts, provided they are not temporary contracts, are subject to the general terms and conditions test. If the obligation to provide labor is limited in such contracts to a particular period of time during the year, the provisions of the TzBfG are not pertinent. The reason for this might be that, despite a limited working period, the seasonal employee has a permanent employment contract, and his position is thus not comparable to the tenuous situation of an employee on a temporary contract. Specifically, he need not be concerned about being hired again for the following year. 

In light of the strict ruling of the German Federal Constitutional Court regarding temporary employment (Decision of June 6, 2018 -- 1 BvL 7/14, 1 BvR 1375/14), this appears to be a possibility to employ seasonal employees only during the season without the risk that the limitation is declared invalid.