End of a Fixed-Term Employment Relationship Despite Works Council Election
The question of whether the election of an employee to the works council has an impact on the end of a fixed-term employment contract is a recurring issue in employment law practice. A recent decision of the Federal Labor Court (BAG, Judgment of June 19, 2024 – 7 AZR 50/24) has now provided clarity on this matter and has reaffirmed the legal positions for both employers and employees.
Basic Legal Situation Regarding Fixed-Term Employment Contracts
Fixed-term employment contracts are legally permissible under §§ 14 ff. of the Part-Time and Fixed-Term Employment Act (TzBfG) and automatically end when the agreed term expires, without the need for a separate termination. This fundamentally distinguishes them from permanent employment relationships, where termination is usually brought about by dismissal. Fixed-term contracts provide companies with flexibility but also result in increased uncertainty for employees.
Protection of Works Council Members and End of Fixed-Term Employment
Works Council Membership and Special Protection Provisions
Persons elected to a works council enjoy enhanced protection against dismissal pursuant to § 15 of the Protection Against Dismissal Act (KSchG) as well as other employment law regulations. However, under current law, this special protection only applies to ordinary—and under certain conditions, extraordinary—dismissals, not to the agreed-upon end of a fixed-term employment relationship.
Key Statements of Recent Case Law
In its recent decision, the BAG emphasized that mere membership in a works council does not render a fixed-term employment contract invalid or lead to automatic contract extension. The fixed-term contract concluded with the employer remains fully effective until its expiry. This applies even when the employee assumes a works council position during the contract term.
Reasoning and Legal Evaluation by the BAG
No Automatic Contract Extension
The court makes it clear that the legislator has not enacted any regulations to protect works council members that go beyond the standard protection against dismissal—specifically, there is no provision for automatic extension of fixed-term employment contracts. This decisively strengthens the legal position of the employer in terms of planning security and flexibility. At the same time, the principle of minority protection is maintained, as exercising the mandate and participation rights remain unaffected during the contract term.
Impact on the Mandate in the Works Council
When the employment relationship ends as agreed, membership in the works council also automatically ceases in accordance with § 24 Works Constitution Act (BetrVG), since only existing employment relationships entitle participation in the election and exercise of the mandate. Thus, the exercise of this honorary office is naturally limited by the continuation of the underlying employment relationship.
Weighing of Interests and Possible Implications
Corporate Interests and Compliance
For companies, this legal situation provides a clear basis for action with respect to the use of fixed-term contracts, even when an employee is elected to the works council. It is advisable to document fixed-term agreements transparently and comprehensibly to avoid any allegations of discrimination related to works council activities.
Employee Interests and Perspectives
Affected employees may still apply for judicial review in the event of non-renewal or renewed fixed-term arrangements, provided there are concrete indications of unlawful discrimination. However, the current case law once again affirms the clear distinction between dismissal and the automatic end of a contract.
No Impact on the Validity of the Works Council
The departure of a works council member due to the expiry of a fixed-term employment contract does not automatically invalidate the works council body. Instead, the BetrVG provides for replacement member rules in such cases, so the works council always remains operational.
Outlook
Whether the now-confirmed legal situation will remain unchanged in the future is uncertain given potential political initiatives to expand the protection of works council members. At present, however, it can be assumed that the regulations in place offer legal and planning certainty in workplace practice.
If you have further questions regarding fixed-term employment contracts in connection with works council mandates and their possible employment law consequences, the lawyers at MTR Legal are happy to assist you.
