On 14 April 2021, the Federal Ministry of Labour and Social Affairs (Bundesministerium für Arbeit und Soziales – BMAS) presented a draft bill to amend the German law concerning part time and limited employment (Teilzeit- und Befristungsgesetz TzBfG). It provides for a further tightening of the law on fixed-term contracts, especially with regard to unlimited employment contracts and chain fixed-term contracts. Here is an overview of the most important planned changes
Restriction on unfounded fixed-term contracts
- Unfounded fixed-term employment contracts are to be permissible only for a maximum of 18 month (previously 24 month) and up to this total duration there is to be only one possibility of extension (previously three extensions possible).
- By collective agreement, a maximum duration of up to 54 month (previously no maximum duration) and/or a maximum of three possible extensions (previously no maximum number) can be agreed.
- Employers who generally employ more than 75 employees shall in future only be able to conclude unfounded fixed-term employment contracts for a maximum of 2,5 % of their employees (the number of employees on the first calendar day of the preceding quarter shall be decisive). If there is an employee representation, the employer must inform it on the first calendar day of each quarter about the proportion of unfounded fixed-term employment contracts.
- Introduction of a citation requirement (“Zitiergebot”). This means that in future it must be stated in the written fixed-term agreement whether the fixed-term is based on section 14 (2), (2a) or (4) of the TzBfG. It is then no longer possible to invoke that the fixed-term is justified by a material reason, although a material reason exists.
Restrictions on fixed-term contracts with a material reason
- The limited duration of an employment fixed-term contract with a material reason shall only be permissible as long as the total duration of fixed-term contracts with the same employer does not exceed a maximum of 5 years. Periods during which the employee was assigned to the same employer as a temporary worker shall also be taken into account. Only if there are more than 3 years between fixed-term employment relationships or temporary work assignments a renewed fixed-term with a material reason would be possible again.
- Exceptions to the maximum duration shall continue to be possible if one of the following material reasons exist
- if the nature of the work justifies the fixed-term, section 14 (1) sentence 2 no. 4 TzBfG, or
- if the fixed-term is based on a court settlement, section 14 (1), sentence 2 no. 7 TzBfG
- Exceptions to the maximum duration shall also apply in the case of agreements to terminate the employment relationship upon reaching the standard retirement age and in special cases of leave of absence of civil servants (so-called “In-Sich-Beurlaubung”).
- The material reason of so-called “Haushaltsbefristungen” of public law employers is to be abolished.
According to the draft bill of the BMAS, these changes are to come into force on 01.01.2022.
Although the amendment of the law of fixed-term contracts was already included in the coalition agreement between the SPD and the CDU/CSU, it is questionable whether the draft bill of the BMAS will be passed during the current legislative period. This is currently still being discussed within the government. We will of course keep you informed about the development of this draft law.
Employers should bear in mind that even under the current legal situation caution is advised when concluding fixed-term employment contracts. This is because an invalid fixed-term employment contract leads to a permanent employment contract, which can be difficult for the employer to terminate. ZIRNGIBL’s employment law team will be happy to answer your questions and assist you with specific fixed-term projects.
Anna-Julia Quarg Theresa Dörnemann
Lawyer / Senior Associate Lawyer
Specialist Lawyer for Employment Law