Preclusion periods included in employment contracts to assert existing claims keep being the subject of labor court proceedings. In a more recent decision, the Federal Labor Court specified not only the consequences of a lacking exception of the statutory minimum wage and the conditions for legally abusive reference to the forfeiture of claims, but also the requirements to properly assert claims to maintain the first stage of a two-stage preclusion period.

Federal Labor Court, judgment of April 17, 2019 - Case 5 AZR 331/18

The plaintiff was employed by the defendant as Head of the Technology and Application Technology Division from June 1, 2012 to March 31, 2017. The employment ended due to the plaintiff giving notice of termination. The employment relationship was based on a written employment contract dated February 20, 2012, which provided for an annual gross salary of EUR 102,000.00 and a performance-related bonus of EUR 15,000.00. The performance-related bonus was guaranteed until the end of 2013 and had to be paid by March 31 of the subsequent year. In addition, a two-stage preclusion period was stipulated in relation to claims arising from the employment relationship. In the first stage, claims had to be initially asserted in writing against the other party within three months. If claims were not asserted during said period, they expired directly. If the other party rejected the claim, however, the contract specified that the party then had to assert the claim in court within three (additional) months in order for it not to expire. In 2012 and 2013, the defendant had paid the plaintiff gross bonuses of EUR 8,750.00 and EUR 15,000.00. As of 2014, the plaintiff no longer received any bonus. In November 2015, the plaintiff had submitted a list of topics for discussion to the defendant’s general manager. It included the payment of “royalties” for 2014 and 2015. The discussion failed to produce a result in this respect, however. On February 17, 2017, the plaintiff brought an action for (among others) payment of bonuses in 2014 and 2015. He argued that the claims had not lapsed because the preclusion clause in the employment contract was invalid. In any event, the defendant would not, in good faith, be able to rely on the preclusion clause, since the general manager had always put off discussions with the plaintiff in that regard. The defendant initially responded to the demands for bonuses by stating that the plaintiff’s performance had been too poor to be granted a bonus, anyway. In addition, any claims had lapsed anyway due to the contractual preclusion clause. Both the Labor Court and the State Labor Court had dismissed the complaint. The plaintiff also unsuccessful appealed before the Federal Labor Court.

The Federal Labor Court ruled that the claim for bonuses did not exist due to late assertion (due to an effective provision on preclusion periods). With respect to the employment contract, the provisions therein were general terms and conditions, which already arises from the external appearance of the form of the contract. The preclusion period contained in the employment contract would also cover any bonus claims, so that such claims became due by March 31 of the subsequent year. Even if the plaintiff may not have been fully aware of the amount of any such claims at that time, he would in any event have had to assert his claim to the employer exercising the right of establishing the amount pursuant to Section 315 Civil Code in writing on the merits to maintain the first stage of the preclusion period under the employment contract. Consequently, the assertion of claims from 2014 and 2015 in February 2017 occurred too late in any event. Additionally, the Federal Labor Court clarified that such preclusion clauses are subject to a content review in accordance with Sections 305 et seqq. Civil Code. In particular, preclusion period provisions would not violate Section 3 sentence 1 Minimum Wage Act, according to which such agreements would be invalid if the claims were for amounts lower than the minimum wage or restricted or excluded the assertion of claims. The employment contract at issue is an “old contract” concluded prior to the Minimum Wage Act entering into force on August 16, 2014. In accordance with the jurisdiction of the Ninth Senate of the Federal Labor Court (September 18, 2018, 9 AZR 162/18), the absence of an exception to the statutory minimum wage therefore only results in partial invalidity of the preclusion period provision, because a clause that is transparent at the time of contract conclusion does not become intransparent as a result of a subsequent change in the legal situation. Finally, the defendant had not been denied in good faith the right to invoke the preclusion period. By stating that it intended to await the sales figures, it did not convey the impression that it wanted to satisfy the claims even without them being asserted.

Tips for use in practice:

Specifically with respect to the requirements for the proper assertion of claims to maintain the first stage of a preclusion period, the decision is likely to have important practical consequences – even if only for “old” contracts entered into prior to the Minimum Wage Act coming into force on August 16, 2014. If a preclusion period has been agreed in the employment contract, claimants will have to pay special attention to communicating their claims promptly and unambiguously to the other party, even if the exact amount is unknown due to missing information. It should also be borne in mind that preclusion periods regularly commence upon the due date of the claim, even if such due date may be difficult to determine in individual cases. According to the jurisdiction of the Federal Labor Court, a claim is only actually due and payable in the sense of a preclusion period if the creditor is in a position to approximately quantify it (cf. for example, Federal Labor Court, October 27, 2005, Case 8 AZR 3/05). In this respect, the aforementioned decision of the 5th Senate appears contradictory, so that further labor court cases are to be expected about this topic.