The duration of the probationary period may not correspond to the total duration of the fixed-term employment relationship

BAG judgement of 05.12.2024 - 2 AZR 275/23

In its ruling of 5 December 2024, the Federal Labour Court ruled that the agreement of a probationary period corresponding to the total duration of a fixed-term employment relationship is generally disproportionate. However, the invalidity of a probationary period agreement does not affect the possibility of ordinary termination of the employment relationship and merely means that termination is not possible with the shortened notice period of Section 622 (3) BGB. Instead, the notice periods stipulated in Section 622 (1) and (2) apply.

I. Facts of the case

The judgement was based on the following facts:

The plaintiff had been employed by the defendant, which operates a car dealership, since 1st September 2022. Section 1 of the written employment contract dated 22 August 2022 stipulated the following:

§ 1

Start of the employment relationship, probationary period

(1)    The employee will be employed as a service advisor/master mechanic from 01/09/2022.

(2)    Employment is initially on a probationary basis until 28 February 2023. The probationary employment relationship ends without the need for notice of termination. If the employment relationship is continued after the end of the probationary period, it shall be deemed to be established for an indefinite period. During the probationary period, the employment relationship can be terminated in writing by either party with a notice period of 2 weeks.

By letter dated 28 October 2022, received by the plaintiff on the same day, the defendant terminated the employment relationship with effect from 11 November 2022. The defendant did not declare an alternative ordinary termination with effect from the next permissible date.

The Lübeck Labour Court issued a default judgment dismissing the action and upheld this judgment in response to the plaintiff's appeal in a ruling dated 26 April 2023. The Schleswig-Holstein Regional Labour Court dismissed the plaintiff's appeal against this in a ruling dated 18 October 2023.

II. Reasons for the decision of the Federal Labour Court

In the appeal proceedings, the Federal Labour Court ruled that the employment relationship between the parties was not terminated until 30 November 2024 and therefore overturned the judgement of the Regional Labour Court and amended the first-instance judgement of the Lübeck Labour Court accordingly.

In principle, the defendant could terminate the employment relationship by giving ordinary notice. However, such a termination would not be effective with the shortened notice period of Section 622 (3) BGB. This is because the agreement of a probationary period of six months in the employment relationship with a fixed term of six months violates Section 15 (3) TzBfG

1. interpretation of Section 1 of the employment contract

The clause in Section 1 of the employment contract should be interpreted as meaning that a probationary period until 28 February 2023 was agreed between the parties. This follows, on the one hand, from the title of the clause "Start of the employment relationship, probationary period" and, on the other hand, from the wording "after expiry of the probationary period" in Section 1 (2) sentence 3 and "During the probationary period" in Section 1 (2) sentence 3. In particular, the Federal Labour Court clarified that the need to interpret a clause does not automatically lead to its lack of transparency. The clause at issue here was not intransparent.

However, the agreed probationary period of six months was disproportionate within the meaning of Section 15 (3) TzBfG. According to this, the probationary period agreed for a fixed-term employment relationship must be proportionate to the expected duration of the fixed term and the nature of the work. 

a) Interpretation of Section 15 (3) TzBfG in conformity with Union law

The provision in Section 15 (3) TzBfG implements the requirements of the correspondingly worded Art. 8 (2) sentence 1 from Chapter III ("Minimum requirements for working conditions") of Directive (EU) 2019/1152 (so-called Working Conditions Directive) (see BT-Drs. 20/1636 p. 34). However, neither German law nor the EU Directive contain any specifications as to the length of time above which a probationary period in a fixed-term employment relationship is to be categorised as disproportionate. According to the Federal Labour Court, a probationary period agreement is disproportionate within the meaning of Section 15 (3) TzBfG and therefore invalid if the probationary period - as in the present case - covers the entire duration of the fixed-term employment relationship. It follows from the wording of the provision, according to which the duration of the probationary period must be "in proportion" to the duration of the fixed-term contract, that the probationary period may only cover part of the fixed-term contract, but not its entire duration. There is no need for the duration of the probationary period to be "in proportion" to the duration of the fixed term if both could be of equal length. This is also in line with an interpretation in conformity with EU law based on Art. 8 para. 2 sentence 1 of the Labour Conditions Directive. This is because Art. 8 Para. 1 of the Employment Conditions Directive stipulates that the probationary period should generally not exceed six months (i.e. also in an open-ended employment relationship), whereby Art. 8 Para. 3 of the Employment Conditions Directive allows for longer probationary periods in exceptional cases, but does not contain any exceptions for the ratio of the probationary period to the fixed-term period. However, if a six-month probationary period were also possible in an employment relationship with a fixed term of six months, the provision in Art. 8 Para. 2 of the Employment Conditions Directive, according to which the agreed probationary period must be in proportion to the expected duration of the fixed term, would not have been necessary.

b) Purpose of Section 15 (3) TzBfG

The Federal Labour Court bases its interpretation of Section 15 (3) TzBfG not least on the meaning and purpose of the provision. According to this, both contracting parties should no longer be entitled to terminate the employment relationship with a short statutory notice period after a reasonable period of employment during which they have had the opportunity to test the employee's suitability for the position held. If a shortened notice period could be agreed in a fixed-term employment relationship for the entire duration of the fixed term, then the employee would, contrary to the intention of the legislator, be particularly exposed to the uncertainty of a short-term termination of his employment relationship before the end of the fixed term.

c) Dispute about the appropriate duration of the probationary period for fixed-term employment relationships

The appropriate duration of the probationary period in fixed-term employment relationships is left open both in Section 15 (3) TzBfG as well as in the identical EU regulation of Art. 8 (2) of the Labour Conditions Directive. Various opinions are held in the literature. In some cases, a probationary period of regularly 50 per cent of the fixed-term period up to a maximum of six months is considered appropriate, whereby deviations should be possible depending on the individual case due to the "type of activity". Some argue that the duration of the probationary period may only amount to a maximum of 25 per cent of the fixed term. According to another view, the maximum duration of the probationary period for fixed-term employment relationships should be adjusted proportionally, with a maximum duration of six months applying to the probationary period. Still others are of the opinion that a probationary period of six months cannot be agreed across the board for a fixed-term employment relationship with a duration of less than twelve months. Some are also of the opinion that a six-month probationary period is always appropriate, even in fixed-term employment relationships.

2. legal consequences of a breach of Section 15 (3) TzBfG

However, the consequence of a breach of Section 15 (3) TzBfG is not the invalidity of the termination as such, but rather merely that it only terminates the employment relationship upon expiry of the statutory notice periods pursuant to Section 622 (1) or (2) or upon expiry of the notice period agreed in the employment contract (cf. BT-Drs. 20/1636 p. 34).

The possibility of ordinary termination of the employment relationship remains unaffected by the invalidity of the probationary period agreement. The present probationary period agreement is a general business condition within the meaning of Section 305 (1) BGB. A reduction of the clause to preserve its validity is therefore prohibited and the probationary period agreement is invalid as a whole. In the absence of a probationary period agreement, the provision of Section 622 (3) BGB and the shortened notice period contained therein could not be applied. Otherwise, the validity of the employment contract remains unaffected, cf. section 306 para. 1 BGB. If ordinary notice periods have been agreed in the employment contract, the employment relationship can be terminated in compliance with these notice periods. If no ordinary notice periods have been agreed, the statutory notice periods pursuant to Section 622 (1) and (2) BGB apply in accordance with Section 306 (2) BGB. In the absence of a deviating employment contract agreement, the statutory notice period of four weeks in accordance with Section 622 (1) BGB applied in the present case, with the result that the defendant's notice of termination did not terminate the employment relationship until 30 November 2023. This is because Section 1 of the employment contract at least contains an agreement between the parties to the effect that the fixed-term employment relationship can be terminated at all by ordinary notice. The notice of termination is to be interpreted as meaning that it is to apply as of the next possible date, even if this intention was not expressly stated in the notice of termination.

III. Assessment and practical advice

Due to the lack of relevance to the decision, the Federal Labour Court did not have to deal with the controversial question of when the duration of the probationary period and the fixed term are in a reasonable relationship to each other in accordance with Section 15 (3) TzBfG. This decision merely clarifies that a probationary period agreement is disproportionate and therefore invalid if the duration of the probationary period corresponds to the duration of the fixed term. The above-mentioned discussion about the appropriate duration of the probationary period in relation to the duration of the fixed term is therefore likely to remain relevant even after this judgement.

It is to be welcomed that the Federal Labour Court provides some general guidelines in its ruling on the assessment of appropriateness in accordance with Section 15 (3) TzBfG. For example, it clarifies that the assessment must be made separately for each individual case, taking into account the criteria specified in Section 15 (3) TzBfG (duration of the fixed term and type of activity). The meaning and purpose of the provision must also be taken into account. The requirement established by the Federal Labour Court to take into account the circumstances of the specific individual case makes it possible to assess the appropriate duration of the probationary period in relation to the fixed-term period differently for different activities, with the result that a longer probationary period may be appropriate for a more complex activity, even in a fixed-term employment relationship, than for a rather simple activity.

It is also to be welcomed that the Federal Labour Court has remained true to its previous case law, according to which an alternative ordinary notice of termination at the next possible date due to the employer's intention to terminate the employment relationship must generally be included in every letter of termination. In the present case, an alternative termination on the next permissible date was not expressly declared. Nevertheless, the Federal Labour Court assumed that the employment relationship would end on 30 November 2023.

However, even after this judgement, it remains important to expressly regulate the possibility of ordinary termination of the employment relationship a fixed-term employment contract. This is because, as a rule, fixed-term employment relationships can only be terminated by the expiry of the fixed term or, if there is good cause within the meaning of Section 626 BGB, by extraordinary termination. It is true that probationary period agreements in fixed-term employment relationships have so far been interpreted by case law in such a way that they include the possibility of ordinary termination. However, if the probationary period agreement is invalid, this possibility would be blocked, with the result that ordinary termination would be ruled out. Employers are therefore still advised to expressly include the possibility of ordinary termination in fixed-term employment contracts.