BAG: Fixed-term employment contract without objective justification

It is possible even in the absence of an objective reason to apply a fixed term of two years to an employment contract if there had previously been work-from-home arrangements. That was the verdict of the Bundesarbeitsgericht (BAG), Germany“s Federal Labour Court.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: Employment law stipulates that applying a fixed term to an employment contract requires an objective justification or the fixed term cannot exceed two years. There are, however, exceptions to this rule, as demonstrated by a ruling of the Bundesarbeitsgericht from August 24, 2016. The Court held that a fixed term of up to two years can be applied to an employment contract even in the absence of an objective reason if there had previously been a work-from-home arrangement between the parties (Az.: 7 AZR 342/14).

In the case in question, the worker had initially been engaged by the company as a homeworker for a period of approximately one year and was subsequently employed for a year within the framework of a fixed-term employment contract. The employment relationship was then extended by one year by means of a supplementary agreement. The plaintiff later sought to establish that the employment relationship had not come to an end as a result of the fixed term.

Her legal action was unsuccessful before the BAG as it had been before the courts of lower instance. The 7th Senate of the Bundesarbeitsgericht ruled that the application of a fixed term to the employment relationship had been effective, reasoning that it had been possible to apply a fixed term of up to two years to the employment contract without an objective justification. The Court went on to say that while applying a fixed term without an objective reason is not possible if there has previously been a fixed-term or permanent employment relationship with the same employer, work-from-home arrangements do not constitute an employment relationship in terms of sec. 14 para. 2 of the Gesetz über Teilzeitarbeit und befristete Arbeitsverträge (TzBfG) [Act on part-time work and fixed-term employment contracts]. For this reason, the employment relationship had effectively come to an end with the expiry of the fixed-term employment contract.

However, unlike in the present case, applying a fixed term to an employment relationship can also be impermissible in a lot of cases. That is why detailed and thorough preparation is always important in relation to an employment contract, and this does not only concern fixed terms. Employers can turn to lawyers who are versed in the field of employment law.

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GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

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