About one working contract in ten is temporary. With new recruitments, this is also true, particularly with younger staff and in the service industries. For employees, the fixed term contract presents a great risk: The employer can decide freely if he wishes to extend the employee further at the conclusion of the working contract, without being bound by the strict requirements of the German Unfair Dismissal Protection Act. For this reason fixed-term contracts are only allowable within narrow limits.
In the beginning is the contract
A fixed term working contract must also be concluded in written form, and needs to be personally signed by both parties, the exchange of signatures by fax or email is not sufficient. Furthermore, the contract needs to be signed before the work begins, otherwise it can be deemed that the working contract is in fact open-ended.
Fixed term treated like an extended trial period
Every working contract concluded with newly hired workers may be limited up to a period of 24 months. Within this period, shorter durations of employment can be agreed upon. A fixed term contract limited to six months in the first instance, can be extended effectively for another six months, three times in total. Nevertheless, such an extension contract must be concluded before the end of the fixed-term contract and can only extend the contract duration. Other contractual elements cannot be changed through the extension contract, for example, a reduction or rise in salary.
Fixed term with a factual justification
In cases where there is a factual justification of the fixed term, there is no legal limitation of the number or duration of fixed term contracts. In this instance, a multitude of fixed term contracts can be concluded without the company being obliged to employ the worker permanently. However, the requirements that have to be met when presenting the factual justification are high. When concluding the contract, it must already be clearly recognisable that there will be no further need of the worker, for instance because he or she has been hired to provide maternity cover. Furthermore, the labour courts make sure there is no abuse of this system, for instance with extensive successions of a multitude of fixed term contracts.
What needs to be done when the contract expires?
If there are any indications that the fixed term has not been agreed effectively, proceedings in the labour court can be instigated, and the continuation of the employment can be enforced. An action must be lodged within a period of three weeks upon termination of the employment; after this time, the fixed term can no longer be attacked successfully.
I would be pleased to advise you extensively in all matters concerning fixed term working contracts and in all other employment law matters.