Time-limitation and prior employment: Clarification by the Federal Constitutional Court

The Federal Constitutional Court recently clarified that the interpretation of the Federal Labor Court regarding a prior employment as to time-limited employment contracts not being based on justifying reasons is unconstitutional.

The German Part-Time and Limited-Term Employment Act (Teilzeit- und Befristungsgesetz, TzBfG) requires the fulfilment of various prerequisites, in order to validly limit an employment relationship in time. Should, e.g. a justifying reason for a time limitation not be given, a limitation without justifying reason is only permissible (sec. 14 para. 2, 2. sent. TzBfG) if no previous employment relationship existed between the parties.

Since 2011, the Federal Labor Court interpreted the aforementioned regulation in a way that the newly time-limited contractual relationship was permitted if for three preceding years no relationship was given.

The Federal Constitutional Court ruled on June 6, 2018 (1 BvL 7/14, 1 BvR 1375/14) that this jurisdiction developed the law unconstitutionally, whereas the general prohibition of a prior employment was considered as legally binding.

Although the Federal Constitutional Court refers to the general possibility that a certain limitation of the prohibition regarding a prior employment could be considered, this statement does not constitute any certainty or legal security.

Consequences

It has always been necessary to draft and use time-limitations carefully, as the requirements set by the TzBfG, regardless as to whether a justifying reason existed or not, are strict.

Until a final decision with a view to the interpretation of the prohibition of a previous employment by the Federal Labor Court respectively a clarification by German legislation is made, entering into a time-limited employment relationship is not advisable if the employer has knowledge that the employee was previously employed.