No right of withdrawal after entering into a termination agreement

BAG, ruling dated February 7, 2019 - 6 AZR 75/18

A termination agreement under labor law cannot be withdrawn pursuant to consumer protection regulations (Sec. 312(1) in combination with Sec. 312g, Sec. 355 German Civil Code (Bürgerliches Gesetzbuch; BGB)) only because it was concluded in the employee’s private home. In its ruling dated February 6, 2019 (Ref. No. 6 AZR 75/18), the German Federal Labor Court (Bundesarbeitsgericht; BAG) thus continues its case law regarding the legal situation applicable until mid-June 2014. However, such termination agreements may be null and void if concluded in violation of the “fair treatment principle.”

The plaintiff had been employed by the defendant as a cleaning aid since July 1, 2014. On February 15, 2016, she entered into a written termination agreement in her private home. According to the termination agreement, the employment would be terminated with immediate effect without any severance payment. The circumstances under which the agreement was concluded are disputed. The plaintiff stated that she was ill on the day on which the agreement was entered into, and that she signed the contract while under the influence of medication. According to the defendant, the plaintiff herself requested by phone on the morning of that day that a termination agreement be entered into. The plaintiff contested the termination agreement due to misconception, willful deception, and unlawful threats, and, alternatively, withdrew it. In her lawsuit, she requested that it be determined that her employment did not end as a result of the termination agreement. The Labor Court of Celle dismissed the case. The appeal lodged against this decision with the Regional Labor Court (LAG) of Lower Saxony was dismissed.

The BAG revoked the decision made by the LAG and referred the case back for a new hearing and ruling. The option to file an appeal was denied in the previous instance and was no longer the object of the appeals proceedings.

The BAG confirmed the opinion presented by the previous instance, namely that a termination agreement under labor law cannot be withdrawn pursuant to Sec. 312, Sec. 312g BGB. The decisive factor was whether the termination agreement was deemed a consumer contract, which has as its object a service provided by the entrepreneur against payment. However, interpretation of Sec. 312(1) BGB showed that the scope for a legal right to withdraw pursuant to Sec. 312, Sec. 312g BGB would not apply to termination agreements, also when based on the legal regulations applicable since mid-June 2014. This follows from the systematics of the law. The regulations whose applicability is subject to Sec. 312 BGB mostly do not have any reference to termination agreements under labor law in terms of content. For example, these regulations refer to distance contracts (Sec. 312 c) BGB) or continuing obligations (Sec. 312 h BGB).

Furthermore, the BAG states that the legislator - as shown in the legislative justification of the law - assumed that a termination agreement under labor law would not be deemed a consumer contract within the meaning of Sec. 312(1) BGB despite the fact that it would be possible to include such contract in the definition of the term consumer contracts as per Sec. 310(3) BGB due to the employee’s status as the consumer. However, Sec. 312 serves the purpose of implementing the consumer directive. The purpose of protection in this underlying directive, however, would only be fulfilled if a business owner committed to deliver a good or render a service, and the consumer committed to pay a remuneration. Also, the German legislator specifically did not exercise the option to expand the scope in the national regulations.

Thus, an employee cannot withdraw his/her consent to a concluded termination agreement pursuant to Sec. 312(1), Sec. 312g(1), Sec. 355 BGB, regardless of the location at which the agreement was entered into.

However, the LAG did not verify whether the employer violated the so-called fair treatment principle prior to concluding the termination agreement. Said principle is an incidental obligation arising from the employment and could be violated if, for example, one party created such psychological pressure that it would be significantly harder for the other party to make a free and deliberate decision regarding the conclusion of a termination agreement. This could be the case in particular if an illness-related weakness of the plaintiff was deliberately taken advantage of. In this case, the plaintiff would have to be put in the same position as if she had not entered into the termination agreement. This would result in the continuation of the employment. The LAG should consequently rule again on the effectiveness of the termination agreement in light of this aspect.

Conclusion

The BAG ruling provides legal certainty since it sets its ruling in line with previous case law in that termination agreements under labor law cannot be withdrawn under the law applicable since mid-June 2014 merely due to the fact that they were entered into outside the employer’s business premises.