Objective reasons for a fixed term in case of substitution

Prerequisites for a legal fixed-term (Federal Labor Court, decision dated August 24, 2016 – 7 AZR 41/15)

Employment contracts can generally be concluded for a fixed term as often as desired and for an unlimited amount of periods, as long as there is an objective reason for the fixed term.

The plaintiff was employed as a mail carrier at the defendant’s company since November 2008, based on a total of eight fixed-term employment contracts with brief interruptions. The most recent employment contract dated June 28, 2012, the parties agreed that the employment relationship was to be for a fixed term for the following reason:

“Substitution due to short-term absence of employee H, however no longer than… August 28, 2012.”

At that time, the mail carrier H had already been on sick leave for several months. In March 2012, H informed the employer that she anticipated to be able to commence measures aimed at reintroduction into the workforce in June 2012. In June 2012, she informed the respondent that her recovery would be delayed for several weeks.

The plaintiff was not exclusively assigned as a substitute to Ms. H in the delivery area 11806, but was also assigned as a vacation substitute for mail carrier C in the delivery area 11803.

The plaintiff was of the opinion that the fixed term of her contract was void, and she filed a petition for review of the fixed term before the labor court. The Labor Court dismissed the suit. The Higher Labor Court subsequently denied the claimant’s appeal, after which the claimant filed for an appeal before the Federal Labor Court.

The Federal Labor Court decided that the fixed term agreed in the employment contract dated June 28, 2012 was legally valid. The fixed term was said to be justified due to the objective reason of substitution pursuant to sec. 14 para. 1 sent. 2 no. 3 Act on Part-Time Work and Fixed-Term Employment (TzBfG). In cases of substitution, the reason for the fixed term lies in the fact that the employer is in a legal relationship with a temporarily absent employee and is counting on the return of that employee. Due to the message from Ms. H in June 2012 that her recovery would be delayed for a few weeks, the employer was able to assume when concluding the fixed-term employment contract with the claimant on June 28, 2012 that Ms. H would be resuming her duties after August 28, 2012.

Furthermore, a causal relationship between the temporary leave of absence of the substituted person and the hiring of the substitute worker was said to be necessary. However, this was the case if the employee hired as a substitute for a fixed term was handling the tasks previously performed by the regular employee (direct substitution). The substitution relationship may also be given if the duties of the temporarily absent employee are not performed by the substitute but by another employee or by several other employees, and their duties are assigned to the substitute (indirect substitution). Conversely, if the employee hired for a fixed-term was assigned duties that the substituted employee had never performed, and if there was no indirect substitution either, the requirement of the causal relationship is only met in the event that the employer was legally and actually capable to assign those tasks that he had assigned to the substitute employee to the temporarily absent employee, should he be present. Furthermore, the causal relationship requires that the employer, upon concluding the contract with the substitute, makes his intentions outwardly explicit, i. e. through an appropriate statement in the employment contract. The employer did indeed fulfill these requirements. The plaintiff was hired as a substitute for the letter carrier H and did directly substitute temporarily on her behalf in her delivery area 11806. The assignment in delivery area 11803 was also effective, as the respondent was legally and actually entitled to assign Ms. H to duties in the delivery area 11803. The plaintiff was also explicitly mentioned as the substitute of Ms. H in the employment contract dated August 28, 2012. Therefore, the necessary substitution connection was constituted.

In addition, the employer was not prevented by the principles of institutional abuse of rights from arguing that there were objective reasons of substitution, as the total duration of the employment relationship and the number of fixed-term employment contracts of the plaintiff with the employer in the past (employment of approx. three years and nine months based on a total of eight fixed-term employment contracts) did not cumulatively and repeatedly exceed the thresholds (two-year term of contract for a contractual agreement and three extensions) specified in sec 14 para. 2 sent. 1 TzBfG. Therefore, it was not necessary in this case to evaluate whether there had been an abuse of rights.

Practical recommendations:

The Federal Labor Court confirms and specifies the jurisprudence concerning objective reasons for a fixed term in case of substitution.

If the employee, for whom a fixed term substitute is to be hired, declares that he will not resume work, the employer may not plan on the return of this employee. Agreeing on a fixed-term employment despite of this for the purpose of substitution is invalid and should therefore be avoided.

If the requirements for direct or indirect substitution are not met, an objective reason for a fixed term for the purpose of substitution is also constituted if the employer assigns tasks to the substitute that he could also have assigned to the temporarily absent employee. In addition, the employer, upon concluding the contract with the substitute, must make it explicitly obvious, i. e. in a fixed-term employment contract, that the substitute’s tasks are intended to cover for one or several temporarily absent employees. For this reason, it may be advisable, when choosing objective reasons for a fixed term in a substitution case, to always include in the employment contract the name of the person for whom the substitute is being hired.

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Tags: #Labour law, #Newsletter LL 2/17

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