Germany’s Federal Minister of Labour, Hubertus Heil, wants a new law to be adopted to limit the possibilities for using fixed-term employment contracts. This law would implement a plan laid down in the coalition agreement. In particular, the Federal Minister of Labour has his sights set on reducing the use of fixed-term employment contracts for which there is no objective reason, and of successive fixed-term contracts. As envisaged in the coalition agreement, the aim of this bill is to return to a situation where fixed-term employment contracts are only used in exceptional cases in Germany.
To this end, the maximum duration of fixed-term employment contracts entered into without an objective reason is to be reduced from currently 24 months to only 18 months in the future, and only one renewal is intended to be possible up to this total duration in the future, instead of currently three renewals. Furthermore, for employers with more than 75 employees, the use of fixed-term contracts for which an objective reason does not exist is intended to be limited to a maximum of 2.5 per cent of the workforce.
In addition, it is planned that the law will also include provisions preventing large numbers of successive fixed-term contracts. According to these provisions, fixed-term employment contracts with the same employer that are based on an objective reason are to be limited to a maximum duration of five years. If the fixed-term employee was previously hired by the same employer from a temporary employment agency, such previous temporary employment, as well as any previous fixed-term employment, shall be counted towards this maximum duration, provided it did not take place more than three years ago.
An exception to the maximum period of five years applies if the fixed term concerns an agreement to terminate the employment relationship upon the employee reaching the statutory retirement age according to Sections 35 sentence 2, 235 of Book VI of the German Social Code (SGB VI).
According to Heil’s plans, the law is to come into force on 1 January 2022.
Fixed-term contract law, which is full of pitfalls for employers today, will remain a minefield: with the intended changes, it will be even more difficult for employers to validly agree a fixed term. Particularly in view of the intended quota for fixed-term contracts entered into without an objective reason and the fact that previous employment periods will be counted towards the maximum period, the law will be almost impossible for employers to handle in practice.