Probationary period in a fixed-term employment contract - how long can it be?

In fixed-term employment relationships, the question of how long a probationary period may be in order for it to be effective arises time and again. The Berlin-Brandenburg Higher Labor Court recently dealt with this question in a lawsuit against unfair dismissal concerning the validity of a contractually agreed four-month probationary period for a fixed-term employment relationship of one year. As a result, the Higher Labor Court considered this probationary period to be too long and therefore invalid.

Legal situation: Probationary period must be in proportion to the expected fixed term and type of work

According to Art. 622 (3) of the German Civil Code (BGB), the employment relationship can be terminated with two weeks' notice during an agreed probationary period (of no more than six months). It is undisputed that a probationary period of up to six months can be effectively agreed upon in a permanent employment contract.

For fixed-term employment relationships, Art. 15 (3) of the German Part-Time and Fixed-Term Employment Act (TzBfG) provides for a special provision, which was incorporated into the law with effect from August 1, 2022. According to such provision, a probationary period that is agreed for a fixed-term employment relationship must be in proportion to the expected duration of the fixed term and the nature of the work. The law does not specify when this requirement is met. 

This raises the question of whether and for how long a probationary period can be agreed for each fixed-term employment relationship in order to fulfill the requirements of Art. 15 (3) TzBfG and in order to be effective.

Case law: Probationary period must not exceed 25 percent of the agreed contract term

The Schleswig-Holstein Higher Labor Court already dealt with this question in 2023. In its decision at the time (Schleswig-Holstein Higher Labor Court, decision of October 18, 2023 - 3 Sa 81/23), it considered a probationary period of half the duration of the fixed term to be appropriate and compatible with the provisions of Art. 15 (3) TzBfG. In the case of a one-year fixed-term contract, a probationary period of six months would therefore be permissible.

The Berlin-Brandenburg Higher Labor Court did not follow this view: in its decision (Berlin-Brandenburg Higher Labor Court, decision of July 2, 2024 - 19 Sa 1150/23), the court took the position that, in the case of a fixed-term employment relationship, a reasonably proportionate probationary period exists if the probationary period is no longer than 25 percent of the agreed, fixed-term contract duration. In other words: a ratio of 25 percent is to be assumed as a reference point for the appropriateness of a probationary period in accordance with Art. 15 TzBfG.

Accordingly, the Higher Labor Court concluded in its decision that a four-month probationary period is invalid for a fixed-term employment relationship of one year.

Plaintiff contested validity of termination due to excessively long probationary period

In the underlying case, the parties had concluded a fixed-term employment contract from August 22, 2022 to August 21, 2023. They had also agreed a probationary period of four months, during which the employment relationship could be terminated with two weeks' notice. The employer terminated the employment relationship by letter dated December 9, 2022, received on December 10, 2022, within the probationary period, which lasted until December 21, 2022, with effect from the next possible date. The employee filed an action for unfair dismissal and argued that the agreed probationary period of four months was disproportionate in view of the fixed term of one year and therefore invalid. This would consequently lead to the invalidity of the dismissal as a whole and to the continuation of her employment relationship until the expiry of the fixed term.

In the first instance, the Berlin Labor Court ruled that the employment relationship did not end due to the short notice period of two weeks during the probationary period because the agreed probationary period was too long in relation to the fixed term and was therefore invalid. However, it had been effectively terminated with effect from January 15, 2023, in compliance with the statutory notice period under Art. 622 (3) BGB.

Both parties appealed against this first-instance decision. From the employer's point of view, the employment relationship ended in December 2022 due to the short notice period during the probationary period; in the employee's view, the termination during the probationary period of December 9, 2022 could not be reinterpreted as a termination in compliance with the statutory (longer) notice periods pursuant to Art. 622 (3) BGB, but was invalid overall.

Berlin-Brandenburg Higher Labor Court rejected appeals – termination effective in accordance with statutory notice period

The Berlin-Brandenburg Higher Labor Court rejected both appeals and confirmed the Berlin Labor Court’s decision. The benchmark for a reasonable proportion between the duration of a fixed-term contract and the probationary period is a ratio of 25 percent. In the case of a one-year fixed-term contract, a probationary period of three months is therefore appropriate, whereas a probationary period of four months is not. Accordingly, a four-month probationary period is invalid for a one-year fixed-term contract. According to the Higher Labor Court, a different view only applies if the employer can exceptionally prove that the nature of the work justifies a ratio other than 25 percent. In the specific case decided, the employer did not provide any evidence in this regard; consequently, this exception does not apply, and the agreed probationary period is therefore invalid.

However, in the Higher Labor Court’s opinion, the agreed probationary period, despite its invalidity, clearly indicates that the parties generally wanted to allow ordinary termination even during the fixed-term period. Therefore, the employer was able to effectively terminate the employment contract in compliance with the ordinary notice periods pursuant to Art. 622 (3) BGB. In the Higher Labor Court’s opinion, the ineffective termination during the probationary period is therefore to be regarded as an effective ordinary termination, which effectively ended the employment relationship before the expiry of the fixed term.

Practical advice: Be careful when concluding fixed-term contracts

Even if the Berlin-Brandenburg Higher Labor Court’s decision has provided a little more clarity on the question of how to effectively agree probationary periods in fixed-term employment relationships and has created a reference point for the assessment at 25 percent, many questions remain unanswered. Other courts (such as the Schleswig-Holstein Higher Labor Court, see above) consider other standards to be appropriate. The Federal Labor Court has yet to reach a supreme court decision on this issue. In this respect, it remains to be seen where the journey will take us and whether the standard set by the Berlin-Brandenburg Higher Labor Court will prevail.

In practice, it is important to be aware of the problem of a possible probationary period’s length when concluding fixed-term contracts and to ensure that it is not too long. The ratio of one to four (25 %), as determined by the Berlin-Brandenburg Higher Labor Court, appears to be at least a safe minimum, but does not necessarily rule out a longer probationary period.

Furthermore, the fixed-term contract should clearly stipulate that the fixed-term contract can be terminated with due notice.  

We will be happy to advise you on how to design your fixed-term employment contracts.

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