Maximum duration of successive fixed-term employment agreements and replacement agreements limited to two years
17 Mar 2023
A new act that was voted into law on 16 March 2023 limits the total duration of successive fixed-term employment agreements and replacement agreements to two years unless there has been an interruption attributable to the employee. If this maximum period is exceeded, the rules for open-ended employment agreements will apply.
Background and Constitutional Court’s judgment
The provisions of the Employment Agreements Act limit parties’ ability to conclude successive fixed-term employment agreements to a maximum duration. If parties conclude several successive fixed-term employment agreements – without an interruption attributable to the employee – for a total duration that exceeds two years, they will be considered to have entered into an open-ended employment agreement. The same holds true for successive replacement agreements.
However, the legislator had not provided for such maximum durations in the event of successive fixed-term employment agreements and replacement agreements. In a judgment of 17 June 2021, the Constitutional Court ruled that it is not reasonably justified that the guarantee of permanent employment after two years applies only in the case of either successive fixed-term employment agreements or successive replacement agreements, but not in the case of successive fixed-term employment agreements and replacement agreements.
The legislator takes action
To comply with this judgment, the legislator has ensured that the new act also limits the succession of one or more fixed-term employment agreements and one or more replacement agreements to a total maximum of two years. If this threshold is exceeded without there being any interruption attributable to the employee, the rules for an open-ended employment agreement will apply.
As an exception to this principle, the first replacement agreement that follows successive fixed-term employment agreements, justified due to the nature of the work or other lawful reasons, will be disregarded once for the application of the two-year maximum threshold. However, where this exception is applied, the combination of successive fixed-term employment agreements and the consecutive replacement agreement may not exceed a total duration of three years.
The new maximum durations will apply to all employment agreements concluded after the date of entry into force of the new act. In addition, going forward, for employment agreements concluded before the date of entry into force, these time limitations will also need to be taken into account when determining the two (or three) year threshold.
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