No Automatic Extension: Fixed-Term Contract Ends Despite Works Council Election

Case Facts

The plaintiff had been employed by a logistics company under a fixed-term contract since early 2021. Initially concluded for a one-year term, the contract was subsequently extended until 14 February 2023. In the summer of 2022, he was elected to the works council. When the contract expired, he was not offered a permanent position.

The plaintiff argued that the employer’s failure to convert his fixed-term contract into a permanent one was unlawful discrimination based on his works council activity. This was particularly the case given that, unlike other members of the works council, he had run as a candidate on the trade union’s list. The employer denied this, citing objective reasons such as inadequate job performance. Additionally, the employer claimed that there were personal factors weighing against the continuation of the employment relationship. The employee’s involvement in the works council was not a decisive factor in the decision not to extend his employment.

Decision

Both lower courts confirmed the validity of the fixed-term contract and found no indications of unlawful discrimination against the claimant. The appeal was also unsuccessful. Accordingly, the BAG reaffirmed its established case law (judgments of 5 December, 2012 – Ref. No.: 7 AZR 698/11 and 25 June, 2014 – Ref. No.:7 AZR 847/12), which states that the election of an employee on a fixed-term contract to the works council does not in itself render the fixed-term agreement invalid.

No obligation to continue employment arises under either national law or European Union law, as has now been confirmed again. Rather, the BAG considers that § 78 sentences 1 and 2 of the Works Constitution Act (Betriebsverfassungsgesetz – BetrVG) provide sufficient protection for the activities of works council members. This provision clearly states that works council activities must not be impeded or obstructed.

In the present case, the Regional Labor Court had plausibly determined that the employer’s decision not to offer the claimant a permanent follow-up contract was not motivated by his works council activity. Consequently, there was no discrimination within the meaning of § 78 BetrVG. The factual findings and legal assessment by the Regional Labor Court were not open to challenge.

Outlook

The election of an employee on a fixed-term contract to the works council does not, in principle, oblige the employer to offer continued employment after the expiry of the fixed term. A fixed-term employment relationship that has been validly agreed under the German Act on Part-Time Work and Fixed-Term Employment (Teilzeit- und Befristungsgesetz – TzBfG) generally ends upon the agreed date – even if the employee has meanwhile been elected to the works council.

However, employers must strictly observe the prohibition of discrimination under § 78 sentence 2 BetrVG: if the refusal to convert a fixed-term contract into a permanent one is based on the employee’s works council activity, this may give rise to a claim for damages. To mitigate this risk, employers should ensure that any decision not to continue the employment is based on objective grounds and carefully documented. This enables the employer to demonstrate in case of dispute that no unlawful discrimination has occurred.

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