29. Jul 16

Fixed-term employment contract: Assignment should be precisely defined

When it comes to fixed-term employment contracts linked to a specific assignment, employers need to take care and precisely define when the assignment in question has been fulfilled. Temporary employment can otherwise turn into a permanent position.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: One of the purposes of employment law is to regulate the application of fixed terms to employment contracts. In cases involving fixed-term employment contracts linked to a specific assignment, it is important for the employer to precisely define when the assignment has been fulfilled. Otherwise, it is possible for a temporary contract to quickly turn into a permanent one, as happened in a case that came before the Arbeitsgericht Potsdam [Labour Court of Potsdam] (Az.: 1 Ca 62/15).

The Court’s ruling was based on the following facts and circumstances: An employee was hired in connection with a particular project. The employment contract provided that the employment relationship was to come to an end as soon as the project was finished. However, when the employer took the view that the stated goals had been achieved and thus the project completed, the employee lodged a legal action against the decision to terminate the employment contract. The Arbeitsgericht Potsdam granted the action. The Court justified its ruling by stating that it needs to be possible to identify when the assignment has been fulfilled and the employment relationship has thus come to an end on the basis of clear and verifiable facts in cases involving temporary employment contracts linked to an assignment. In the instant case, the employer had simply determined that the assignment had been fulfilled without unequivocally establishing and explaining this decision.

There needed to have been verifiable criteria with reference to which it would have been clear when the assignment in question had been fulfilled. The Amtsgericht Potsdam went on to say that in the absence of appropriate arrangements, a fixed-term employment contract linked to a specific assignment turns into a permanent employment relationship. As a result, the statutory or collectively agreed termination notice periods then apply.

An employment contract regulates the central aspects of an employment relationship, including, as the case may be, applying fixed-terms to employment contracts. In addition to the application of fixed-terms, the employment contract should also be thoroughly prepared and set out in detail provisions regarding all other aspects to prevent any unpleasant surprises or disputes pertaining to employment law from arising at a later date. Lawyers who are competent in the field of employment law can advise employers on drafting employment contracts as well as with respect to any other relevant issues.

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