German Federal Labor Court: Ineffectiveness of liability-limiting exclusion clauses

According to the BAG’s opinion, Art. 202 Sec. 1 BGB covers not only agreements on the statute of limitations, but also agreements on exclusion periods. Accordingly, liability arising from a breach of contractual duty committed intentionally or from tort can no longer be excluded by contractual exclusion periods.

The BAG’s above ruling corresponds to the recent change in the BAG’s case law. Until such change, the BAG only declared exclusion clauses which did not explicitly exclude the application of Art. 202 Sec. 1 BGB to be partially invalid. In view of the characterization of Art. 202 Sec. 1 BGB as a prohibition rule, one now must assume for the entire clause to be null and void.

Facts

The parties are in dispute about the vacation compensation from 2017.

The employment contract stipulated, inter alia:

"The contracting parties must assert claims arising from the employment relationship in writing within three months after they became due and, in the event of rejection by the other party, enforce them by legal action within a further three months.

Otherwise they shall lapse. For claims in tort, the statutory provisions shall remain in effect."

The plaintiff terminated the employment relationship for cause in October 2017. In December 2018, the plaintiff demanded that the defendant compensate him for 25 vacation days from 2017 that could no longer be granted to him due to the employment relationship’s termination. The defendant rejected the claim as forfeited.
The plaintiff considers the contractual exclusion period to be invalid because it covers claims for which, according to statutory provisions, no exclusion periods may be agreed. The exclusion of claims in tort alone does not meet the requirements of Art. 202 Sec. 1 BGB.

The Labor Court dismissed the action and the Regional Labor Court rejected the plaintiff's appeal.

BAG’s decision

The plaintiff's appeal before the BAG was successful.

The BAG first stated that an employee's claim to compensation for vacation as a purely monetary claim can also be subject to the exclusion periods. This would be precluded neither by the indispensable protection of the statutory minimum leave nor by ECJ case law.

However, the employment contract’s exclusion clause violated Art. 202 Sec. 1 BGB as it inadmissibly limited liability due to intent. Consequently, it was invalid. The purpose of Art. 202 Sec. 1 BGB is to provide comprehensive protection against agreed limitations of liability arising from deliberate damage. Art. 202 Sec. 1 BGB also covers agreements on exclusion periods. The exclusion clause agreed by the defendant in the plaintiff's employment contract does not sufficiently exclude liability claims based on deliberate damage from the exclusion clause’s scope of application. From a reasonable contractual partner’s point of view, one could not assume for the clause to not cover claims resulting from a deliberate breach of contract. The reverse conclusion of the reference to "claims in tort" shows that the exclusion period’s scope of application should extend to all claims not listed as excluded.

This violation resulted in the entire clause’s invalidity, as it could not logically be separated. In terms of content and language, it covers all claims arising from the employment relationship without any specific differentiation.

Conclusion

The present decision once again shows how much case law is changing with regard to exclusion periods. Therefore, the current case law must continuously be taken into account when using exclusion clauses. It is now clear that, just like claims under the German Minimum Wage Act, claims under Art. 202 Sec. 1 BGB must also be excluded from the exclusion periods as a whole. Otherwise, there is a risk that the exclusion clause will be invalid.