Germany: Case-by-Case Assessment Instead of Standard Limit: New Case Law on the Permitted Length of an Agreed Probationary Period in Fixed-term Employment Relationships
There is no standard limit for the proportionality of an agreed probationary period in a fixed-term employment relationship within the meaning of Section 15 para. 3 of the German Part-Time and Limited Term Employment Act (Teilzeit- und Befristungsgesetz – TzBfG). Instead, each case must be considered individually, taking into account the expected duration of the fixed term and the nature of the work.
According to Section 622 para. 3 of the German Civil Code (Bürgerliches Gesetzbuch – BGB), employment relationships in Germany can be terminated during an agreed probationary period with two weeks’ notice. The probationary period may not exceed six months and serves both parties to the employment contract to determine whether the new employee fits well into the company and whether the employment relationship should therefore be continued after the probationary period. The maximum period of six months is aligned with the legally independent waiting period under the Protection Against Unfair Dismissal Act (Kündigungsschutzgesetz – KSchG), which must be fulfilled by the employee in order to be eligible to general termination protection under the provisions of the law.
Background
The Federal Labour Court recently ruled on a case in which the parties’ employment relationship was limited to one year, whereby it could be terminated in accordance with the statutory notice periods. The parties agreed that the first four months of employment would be a probationary period with a two-week notice period.
The employer ultimately terminated the employment relationship within the four-month probationary period, against which the employee filed a lawsuit. She claims that the agreed probationary period was disproportionately long, so that the employment relationship could only end at the earliest with the statutory notice period of four weeks to the 15th or to the end of the calendar month under Section 622 para. 1 of the German Civil Code. The employee argued even further that it could be assumed that, due to the invalidity of the probationary period clause, the agreement on the terminability of the employment relationship pursuant to Section 15 para. 4 of the German Part-Time and Limited Term Employment Act was invalid in its entirety, which would mean the employer would be bound to the one-year term unless there was a reason for a termination for cause.
The lower court considered the probationary period to be disproportionate and argued that a standard limit of 25% of the duration of the fixed term, in this case three months, should be applied.
Key Issues
However, the Federal Labour Court clarified that there is no standard limit of 25% of the length of the fixed term for a proportionate probationary period. Rather, each individual case must always be weighed up, taking into account the expected duration of the fixed term and the nature of the work. In view of the detailed training plan drawn up by the employer, with three different phases lasting a total of 16 weeks, after which the employee should be able to work productively, a probationary period of four months was regarded as proportionate in the present case.
Even if a disproportionately long and therefore inadmissible probationary period had been agreed, the statutory waiting period under Section 1 para. 1 KSchG mentioned above would have remained unaffected.
Practical Points
- The ruling makes it clear that there is no universal standard limit that determines the limit of proportionality for the length of an agreed probationary period in a fixed-term employment relationship. Rather, each case must be considered individually, taking into account the expected duration of the fixed term and the nature of the work. This makes it more difficult for employers to adequately determine the length of the probationary period in a legally certain way.
- The threshold of 25% of the overall contractual duration can still be used as a rule of thumb, however, there is no legal certainty that a probationary period defined in accordance with this rule will uphold in all cases. Employers then need to be prepared to explain the reasoning behind the duration of the probationary period and, in the worst-case scenario, terminations may require a longer notice period. In this context, the careful wording of termination letters is key to ensure a termination takes effect to the next permissible date, even if the probationary period does not uphold.
