Implicit renewal of a fixed-term employment contract

Mutual tacit extension of contract according to Section 625 BGB exists for many types of contracts, such as subscription contracts, membership contracts or even fixed-term employment contracts. But what does this actually mean?

From fixed-term employment contracts to permanent employment contracts

According to the current legal situation, a fixed-term employment contract is usually automatically converted into a permanent employment contract if, by mutual consent, the work is carried out beyond the contractually specified period without further restrictions. Because according to Section 15(6) TzBfG, an employment relationship is considered to be extended for an indefinite period once the business relationship continues beyond the period for which it was entered or after the purpose has been achieved by the employer, if the employer does not immediately object or the employee does not report the fulfillment of the purpose to immediately.

§ 15 Paragraph 5 TzBfG takes precedence over § 625 BGB in its field of application. In the event that the business relationship continues after the end of the period for which it was entered (meaning the time limit) and after the purpose has been fulfilled or after the occurrence of a subsequent situation, i.e. in all cases of a fixed-term employment relationship, Article 15 (5) TzBfG shall apply. However, according to the case law of the Federal Labor Court, Section 625 BGB retains its importance for the continuation of the employment relationship after a termination, appeal or termination agreement (BAG Judgment of 03.09.2003-7 AZR 106/03- NZA 2004, 255). Section 15 (5) of the TzBfG also applies via Section 21 of the TzBfG to employment relationships subject to a later provision.

Fixed-term employment contract requirements

It is also important to note that the restrictions on employment relationships pursuant to Article 14, Paragraph 4 of the TzBfG, must be in writing in order to be effective. Only a verbal determination is void pursuant to Article 125 Paragraph 1 BGB. If the employment contract is limited only verbally, then in reality it is a permanent employment relationship from a legal point of view.

According to the case law of the Federal Labor Court, it is also not enough that an employment contract is agreed only orally and only then in writing after the start of work. After all, the written record of the contract does not lead to the validity of the restriction that was initially agreed upon and is therefore ineffective. The Federal Labor Court agrees that a subsequent written limitation does not imply a subsequent determination of a previously unlimited employment contract, nor a confirmation of an invalid restriction within the meaning of § 141 BGB (BAG Judgment, 01.12 2004 – 7 AZR 198/04) . In order to comply with the written form, it will be sufficient if one of the contracting parties offers to conclude a fixed-term contract in a letter signed by him to the other contracting party and the other contracting party accepts this offer by also signing the letter (Federal Labor Court Judgment, 26.07.2006-7 AZR 514/ 05).

work continues

Primarily § 15 Abs. 5 TzBfG regulates the tacit extension of labor relations independent of the will of the parties in the form of an indisputable legal presumption. Thus, this is a case of categorical conduct by virtue of legal fiction (Federal Labor Court ruling of September 28, 2016).

On the part of the employee, Article 15 Clause 5 TzBfG requires the effective continuation of the employment relationship immediately upon the expiration of the time limit. However, an employee can only achieve the statutory Section 15 (5) TzBfG score by actually performing a job. If an employee takes leave after the employment relationship ends or is unable to work due to illness after the end of the time limit, the case law of BAG does not constitute fact (BAG judgment of 02.12.1998-7 AZR 508/97- ​​New Zealand 1999, 482).

Written confirmation

In principle, the conversion of a fixed-term employment contract into an open-term contract does not require written acknowledgment from the employee or the employer. However, in accordance with Section 2 of the NachwG, the employer is obliged to issue to the employee written evidence of the change in the employment contract, in which the essential parts of the contract mentioned in Clause 2 NachwG are recorded.

Objection possibility

If you as an employee or employer do not intend to have a permanent employment relationship, you still have the option of an immediate objection. According to current case law, such an objection can also be made tacitly and also before the end of the business relationship. The legislator requires that an objection by the employer must state that he does not intend to continue working after the end of the service period as part of a permanent employment relationship. The inconsistency can also lie in the fact that before the end of the fixed-term employment contract the employer indicates in writing the expiration of the fixed-term employment contract and, if necessary, makes an offer of another fixed-term employment contract.

If you have any other questions, please don’t hesitate to contact me!

Leave a Comment