If an employer wishes to apply a fixed term to an employment contract, it needs to have an objective justification or the fixed term cannot exceed two years. A recent ruling of the Court of Justice of the European Union (CJEU) underlines this.
GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: According to German employment law, it is possible to apply a fixed term to an employment contract if there is an objective reason for doing so or the fixed term does not exceed two years. If there is an objective justification, multiple fixed-term employment contracts can be consecutively arranged. One such objective justification is if there is merely a temporary need for additional workers. If, however, this develops into a constant need, fixed-term employment contracts cannot be used as a long-term solution.
That was the verdict of the Court of Justice of the European Union in its ruling of September 14, 2016 (Az.: C-16/15). The CJEU held that it is not acceptable to cover an ongoing need for labour with recourse to multiple, successive fixed-term employment contracts, as this is contrary to European Union law. Moreover, the relevant provisions of European Union law preclude the application of contrary national regulations. The Court also clarified that temporarily standing in for an employee is one example of an objective reason which could justify applying fixed terms to successive employment contracts, whereas the contracts cannot be extended for permanent solutions.
In addition to restricting employment contracts on the basis of a fixed term, it is also possible to restrict them for the purposes of achieving a specific objective, i.e. the contract does not come to an end following a fixed period of time but instead after a particular purpose has been fulfilled. Aside from there being only a temporary need, other objective justifications for applying a fixed term include, for instance, having someone stand in for a sick employee, following an apprenticeship or training course, or to determine whether the worker is suited to the workplace.
If an employer concludes a fixed-term employment contract with an employee, it is important for there to be an objective reason for doing so or for the fixed term to not exceed two years. Otherwise, the fixed term may be invalid. To prevent any nasty surprises from occurring at a later stage, employment contracts should always be prepared thoroughly and in as much detail as possible. This applies to more than simply fixed terms. Employers can turn to lawyers who are versed in the field of employment law.
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