In June 2018, the Federal Labour Court (Bundesarbeitsgericht, BAG) dealt intensively with forfeiture periods. The judgments addressed:

  • The date when the deadline starts to run (07 June 2018; docket number 8 AZR 96/17);
  • The suspension due to settlement negotiations (20 June 2018; docket number 5 AZR 262/17); and
  • The entitlement for statutory minimum wage during the period of incapacity for work despite forfeiture periods under tariffs (20 June 2018; docket number 5 AZR 377/17).

Start of the deadline run (8 AZR 96/17)

In this case, which concerned the disappearance of an unpaid car, the Court held that an employee could successfully invoke a contractual forfeiture period, meaning that all claims arising out of the employment were to expire within three months of their due date, unless they were previously asserted in writing against the other party. The Court ruled that the employer’s decision to sue the customer in court marks the beginning of the forfeiture period. In this case, nothing else could arise with regards to the employer’s duty to limit eventual damages as far as possible or the employer`s contractual accessory obligation, as in the absence of prospects of success, priority claims against the customer were not required.

Suspension of a forfeiture period due to settlement negotiations (5 AZR 262/17)

The Court stated that a forfeiture period due to settlement negotiations can be suspended under sec. 203 sent. 1 Civil Code (Bürgerliches Gesetzbuch, BGB), as long as the parties conduct pre-trial settlement negotiations. In addition, pursuant to sec. 209 Civil Code, the period during which the settlement negotiations take place, should not be included in the forfeiture period. In this case, the defendant rejected the claim, but stressed that he was willing to find a mutual solution.

Entitlement to statutory minimum wage despite tariff forfeiture period (5 AZR 377/17)

The Court also considered whether an employee would be entitled to continued remuneration where they are away from work due to sickness. The Court held that the entitlement to continued remuneration pursuant to sec. 3 para. 1 Continuation of Remuneration Act (Entgeltfortzahlungsgesetz, EFZG), in spite of its indispensability according to sec. 12 Continuation of Remuneration Act, may still be subject to a tariff forfeiture period. However, such a regulation will be ineffective under sec. 3 sent. 1 Act for the Regulation of a General Minimum Wage (Mindestlohngesetz, MiLoG), insofar as it also covers the statutory minimum wage, as the employee must be paid the statutory minimum wage during their incapacity to work.

Conclusion

The purpose of forfeiture periods is to provide the contractual partner with certainty as to when or whether he should expect further claims. Typically, it will be the employer who benefits from forfeiture periods as, in most cases, it is the employee who brings a claim against the employer. However, the ruling on the ‘start of the deadline run’ demonstrates that the employer must also ensure that (damage) claims are brought within the forfeiture period, ie. as soon as an objective view deems that some damage has occurred.

It still remains unclear whether forfeiture periods must expressly exclude statutory minimum wage claims in order to be effective. This long-awaited clarification was gallantly circumvented by the Federal Labour Court by calling on the suspension due to settlement negotiations. Also, the ruling on tariff forfeiture periods cannot be used in this respect, because tariff agreements are treated completely different than employment clauses. For the time being, employers should therefore include an express exemption for essential entitlements, such as the statutory minimum wage, in their forfeiture periods in order to avoid the entire forfeiture clause being null and void.