Unfounded fixed term (“previous employment”)

Federal Labor Court (Bundesarbeitsgericht; BAG) dated January 23, 2019 – 7 AZR 733/16

The unfounded limitation of the term of an employment contract, when an employee is employed again by the same employer, is only permissible when and if the application of the prohibition of unfounded fixed-term employment under Sec. 14(2) s. 2 Part-Time and Fixed-Term Employment Law (Teilzeit- und Befristungsgesetz; TzBfG) would be unreasonable for the parties. Thus, the BAG agrees with the ruling of the Federal Constitutional Court (Bundesverfassungsgericht, BVerfG) dated June 6, 2018.

Facts of the case

After working as an assembly worker for the defendant in 2004 and 2005, the plaintiff was once again employed by the defendant in 2013 as a skilled “production and logistics” worker. Pursuant to Sec. 14(2) TzBfG, the second employment relationship was an unfounded fixed-term relationship. After the expiration of the fixed term, the plaintiff’s employment was not made permanent. He therefore filed suit in order for the court to determine that the employment was not terminated due to the limitation in time.

In the first instances, the plaintiff was successful.

Decision

The defendant’s appeal before the BAG was equally unsuccessful. The BAG is of the opinion that an unfounded fixed term pursuant to Sec. 14(2) TzBfG when the same parties enter into a new employment agreement is only permissible when and if a prohibition of the unfounded fixed term would be unreasonable. Thus, the BAG explicitly abandoned its 2011 ruling where it deemed an unfounded fixed term permissible after a three-year grace period.

According to the new BAG ruling, which confirms the decision by the BVerfG dated June 6, 2018, the prohibition of an unfounded fixed-term employment in case of a previous employment relationship between the employee and employer is unreasonable if there is no risk of a repeated fixed-term employment taking advantage of the subordination status of the employees, and the prohibition is also not required to maintain the permanent employment relationship as a standard. It is only in this scenario that there is a reason to limit the scope of Sec. 14(2) s. 2 TzBfG by way of interpretation in accordance with constitutional law. Unreasonableness can persist in particular if the previous employment existed a long time ago, was of an entirely different nature, or existed only for a very short period of time. Whether this is the case must be assessed on a case-by-case basis. The BVerfG and BAG consider the following cases potential exceptional cases: minor spare-time jobs during school or study program terms, student workers and studying workers in a vocational training program, as well as forced or voluntary disruption of career paths.

In the case in question, the previous employment was eight years prior. The BAG believes, however, that this is not a “very long” period and thus excluded the potential interpretation as an unfounded fixed term of the new employment relationship. Also, the plaintiff’s tasks, compared to the previous employment, are not entirely different in nature. An employment term of one and a half years does not meet the requirements of a very short employment period either. However, neither the BAG nor the BVerfG provide any other assistance in the definition of different type of tasks, a very long grace period, or very short previous employment.

Furthermore, the BAG denies the defendant’s argumentation of legally protected reliance on the previous 2011 Senate ruling. In this respect, it states that the relevant decisions had been highly criticized directly after being made and thus the defendant could not rely on the prevalence of said ruling.

Practical notes

It remains unclear exactly when the exceptions from the basic prohibition of unfounded fixed-term employment in case of previous employment with the same employer as listed by the BVerfG and the BAG apply. To err on the side of caution, employers should refrain from any unfounded fixed term for an employment relationship if the employee in question has been employed previously.