Recently, a German Higher Labour Court had to decide on the following question: Where an employee becomes a member of the works council during his/her fixed term, is or can an employment unlimited in time be created automatically at the end of that fixed term?

Generally speaking, an employer can agree a fixed term for an employee of up to two years without any specific reason. Provided that the legal formalities are met (in particular, the term must be in writing) and the employee is not employed after the expiration of the term, the employment terminates automatically on the agreed termination date.

Of course, the parties may agree on a further employment unlimited in time after the expiration of the fixed term but they are not obliged to do so. In the present case, the employee became a member of the works council during his fixed term and no employment unlimited in time was agreed after the expiration of this initial term. The employee argued that the only reason for not extending the employment relationship was his membership of the works council and therefore his right to represent the employees had been violated by the employer. The employee argued further that an employment unlimited in time had been created automatically or, at least, the employer was obliged to formalise such unlimited employment.

The Higher Labour Court decided, however, that there was no obligation to employ the employee beyond his fixed term. The court decided that such entitlement might exist – but only if the employee could prove that the sole reason for not extending the contract was membership of the works council. As there were numerous other employees whose contracts had not been extended either and who had not joined the works council during their term, the employee lost the case.

This is clearly a topic of interest and discussions as the German Federal Labour Court, the highest labour court in Germany, is due to decide a similar case in June.