German Federal Labor Court Finds Invalid Termination Remuneration Risk Stays With Employers

Quick Hits

• The Fifth Senate of Germany’s Federal Labor Court clarified that remuneration in the event of default of acceptance (Section 615 sentence 1 BGB) cannot be contractually excluded in advance in the event of an invalid termination by the employer or a termination that only takes effect later.
• Although the provision can in principle be contractually amended, this does not apply to the protection of livelihood.
• Remuneration is a typical economic basis of life and as such is specially protected.

Inquiry by Second Senate of the BAG Into Case Law of the Fifth Senate of BAG

As recently as March 2023, the Fifth Senate of the BAG ruled that employees could not demand remuneration for work not performed in the meantime following an invalid termination by the employer (BAG, March 29, 2023 – 5 AZR 55/19). Section 615 sentence 1 BGB, which upholds the claim to remuneration in the event of default of acceptance by the employer, had been effectively excluded in the employment contract for this case. In June 2025, the Second Senate asked the Fifth Senate whether it would uphold its previous ruling (decision, June 18, 2025 – 2 AZR 91/24).

Decision of the Fifth Senate of BAG: Section 615 sentence 1 BGB can in principle be amended, but not in the case of protection of livelihood

In its decision of January 28, 2026 (Ref. No.: 5 AS 4/25), the Fifth Senate of the BAG confirmed the fundamental possibility of excluding Section 615 sentence 1 BGB, which regulates the obligation to continue paying remuneration in the event of default of acceptance, in advance by means of a clause in the employment contract. This results from a review of the systematics and legislative history of Section 615 sentence 1 BGB.

In deviation from its previous case law, the Fifth Senate also clarified that the fundamental exclusion of Section 615 sentence 1 BGB finds its limits in the protection of livelihood. In the event of an invalid or only later effective termination, the remuneration for default of acceptance secures the financial livelihood of employees for the period of release following termination. The exclusion of remuneration for default of acceptance in the employment contract in the event of an invalid termination by the employer or a termination that only takes effect later (due to an incorrect notice period) is therefore not possible and is void under Section 134 BGB.

The Fifth Senate justified this change in case law with the concept of protection against dismissal, the systematics of labor law, and the importance of remuneration for economic livelihood.

Takeaways

The change in case law by the Fifth Senate strengthens protection against dismissal and the rights of employees. Employment contract clauses that exclude the right to remuneration in the event of invalid termination by the employer are not tenable. For employers, this means that they continue to bear the risk of invalid termination themselves. Actions for protection against dismissal become more financially attractive for employees because their remuneration entitlement remains secure during the court proceedings.

Kerstin Swoboda is a senior associate in the Munich office of Ogletree Deakins.

Niklas Thiel, a law clerk in the Munich office of Ogletree Deakins, contributed to this article.

Image created with Adobe Firefly