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Prohibition of repeated fixed-term employment contracts not justified by an objective reason is, in principle, constitutional – Judicial interpretation must not override clearly recognisable legislative intent
Press Release No. 47/2018 of 13 June 2018
Order of 6 June 2018 1 BvL 7/14, 1 BvR 1375/14
Pursuant to § 14(2) second sentence of the Law on Part-Time Work and Fixed-Term Contracts (Teilzeit- und Befristungsgesetz – TzBfG), contracts for a fixed-term that is not justified by an ob-jective reason (sachgrundlose Befristungen) that are concluded between the same parties are limited to the first establishment of such an employment relationship; a further fixed-term contract not justi-fied by an objective reason with the same employer is thus prohibited. In principle, this provision is compatible with the requirements of the Constitution. By avoiding successive fixed-term contracts and ensuring that permanent employment contracts remain the regular form of employment (Regelbeschäftigungsform), the state fulfils its duty of protecting employees – who are structurally in a weaker position in the employment relationship – and also satisfies the principle of the social state (Sozialstaatsprinzip). However, this only applies insofar as employees do in fact require protection against successive fixed-term contracts, given the type and scale of their previous employment, and insofar as the permanent employment relationship as the regular form of employment would otherwise be at risk. This is what the First Senate of the Federal Constitutional Court held in an order published today in respect of a constitutional complaint by an employee and an order of referral from a labour court (Arbeitsgericht). The Senate also clarified that an interpretation of § 14(2) second sentence TzBfG – undertaken by the Federal Labour Court (Bundesarbeitsgericht) – to the effect that successive fixed-term contracts not justified by an objective reason concluded between the same parties are always permissible if they are separated by a period of more than three years is not compatible with the Basic Law (Grundgesetz – GG). Judicial development of the law must not override the clearly recognisable intent of the legislature and replace it with its own regulatory con-cept. Here, the legislature had clearly decided against a time limit like the three-year rule.
Facts of the case:
The Court was called upon to decide on labour law actions seeking the conversion of a fixed-term employment contract into a permanent contract. In these cases, the employees claimed that the most recent fixed-term contract not justified by an objective reason was invalid. They argued that a fixed-term employment violated § 14(2) second sentence TzBfG, because they had previously been employed by the same employer. In proceedings 1 BvL 7/14, a labour court referred to the Federal Constitutional Court the question whether that provision of the TzBfG is compatible with the fundamental rights under Art. 12(1), Art. 2(1) and Art 3(1) GG, because it limits fixed-term employment not justified by an objective reason to only one employment contract with the respective employer. In proceedings 1 BvR 1375/14, the employee did not want another fixed-term employment contract but a permanent contract. Yet the labour court applied the case-law of the Federal Labour Court, thus presuming that a new fixed-term contract not justified by an objective reason was permissible after a period of three years. Therefore, his action seeking the conversion of a fixed-term employment contract into a permanent contract was unsuccessful. The employee challenged this decision by way of constitutional complaint, claiming that the Federal Labour Court’s interpretation of § 14(2) second sentence TzBfG violates his rights under Art. 2(1) in conjunction with Art. 20(3) GG, since it exceeds the boundaries of judicial development of the law.
Key considerations of the Senate:
I. In principle, the provision of § 14(2) second sentence TzBfG as interpreted by the referring labour court is compatible with the Constitution. It neither results in the violation of the freedom of occupation on the part of employees nor in the violation of the freedom of occupational and economic activity on the part of employers. However, in specific cases, it may be unreasonable (unzumutbar) to prohibit fixed-term employment not justified by an objective reason on the basis that it is not the first contract with this employer. In such cases, the labour courts can, and must, limit the scope of application of § 14(2) second sentence TzBfG to protect the rights of the parties concerned. This applies where there is no risk of successive fixed-term contracts and permanent employment relationships remain the regular form of employment.
1. The prohibition of fixed-term contracts not justified by an objective reason in cases where an employment relationship had previously existed impairs, in particular, the right of job seekers to freely choose their occupation (Art. 12(1) GG) and the employers’ freedom of occupational and economic activity (Art. 12(1) and Art. 2(1) GG). While this does constitute a serious impairment, the employers’ interest in more flexible conditions is accommodated by means of the alternatives to fixed-term contracts not justified by an objective reason that are available to them. These include fixed-term contracts with an objective reason (mit Sachgrund befristete Beschäftigung), which the legislature allows in several cases.
Also, when balancing the protection of employees in employment relationships against the objectives of social and employment policy enshrined in the principle of the social state (Art. 20(1), Art. 28(1) GG), the provision is, in principle, reasonable. With the provision of § 14(2) second sentence TzBfG, the legislature intends to protect employees, who are structurally in a weaker position than employers, against successive fixed-term contracts and at the same time intends to ensure that permanent employment relationships remain the regular form of employment. In addition, the legislature pursues its employment policy objective to combat unemployment. In this respect, the legislature enjoys wide latitude. If the legislature decides to permit fixed-term employment not justified by objective reasons as a bridge towards permanent employment but to limit it in general, it is not objectionable under constitutional law.
2. However, a general prohibition of fixed-term contracts not justified by objective reasons in respect of repeated employment relationships with the same employer is unreasonable where there is no risk of successive fixed-term contracts that exploit the structurally weaker position of employees and to the extent that this prohibition is not necessary in order to maintain permanent employment relationships as the regular form of employment. In particular, this may be the case where previous employment, dates back a very long time, was of a completely different type or only lasted for a very short period. Such cases may include certain minor part-time jobs taken on while at school and university or during family-related leave periods, student trainees or persons who were employed a long time ago and later went on to pursue a completely new career path. In such cases, the courts can, and must, limit the scope of application of § 14(2) second sentence TzBfG.
II. Yet the Federal Labour Court’s interpretation of § 14(2) second sentence TzBfG is not compati-ble with the Constitution. The court´s assumption that fixed-term employment not justified by objective reasons is always permissible where previous employment dates back more than three years does exceed the boundaries of judicial development of the law, because the legislature clearly decided against any such time period. When courts interpret the law, they must respect fundamental legislative decisions, and must consider legislative documents (Gesetzesmaterialien). These include the explanatory memorandum to the draft act when it is enacted without changes, the related statements by the Bundesrat and the Federal Government, and the statements, recommendations for decision and reports by the legislative committees. In this case, these documents clearly show that fixed-term contracts not justified by objective reasons concluded between the same parties are permissible only once, in the first employment relationship between the parties. The courts must not override this clearly recognisable regulatory concept, and they must not replace it with their own concept.