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Di­a­monds are cre­ated under pres­sure - but also ef­fec­tive ter­mi­na­tion agree­ments?

October 2022 · Estemated readtime: Min

Termination agreements are popular and useful because they allow for a quick and uncomplicated termination of the employment relationship. However, employers must not use any means to conclude such a termination agreement. Rather, the requirement of fair negotiations must also be taken into account. The Federal Labor Court (Bundesarbeitsgericht - BAG) has now had to decide whether this requirement is violated when employers threaten to terminate an employment relationship and press for the conclusion of a termination agreement by filing criminal charges (Case No.: 6 AZR 333/21).

 

The conclusion of termination agreements to terminate employment relationships enjoys great popularity in practice. Termination by mutual consent has the advantage that the parties are not bound to observe notice periods and avoid costly and stressful proceedings for protection against unfair dismissal. However, in order to protect employees from being taken by surprise and to prevent the associated potential for abuse of the termination agreement, such an agreement is subject to the requirement of fair negotiations. In its recent decision, the BAG put this into concrete terms.

 

The facts of the case

The employer held a meeting with the plaintiff. Without informing her of the reason for the discussion, the employer accused her of having unjustifiably manipulated the purchase prices for goods in the IT department in the past in order to simulate a higher sales profit. The plaintiff was then presented with a termination agreement for the amicable termination of the employment relationship. After a break of about ten minutes, during which the parties merely sat silently at a table, the plaintiff signed the termination agreement. A few days later, she challenged the agreement and subsequently sought a judicial declaration of the continuation of the employment relationship.

 

She objected that she had been threatened with extraordinary termination and the filing of criminal charges if she did not sign the termination agreement. In addition, her request for a longer period of reflection had not been granted. Rather, the employer had stated that if she went through the door, even if she only wanted to go to the toilet, the conclusion of the termination agreement would no longer be considered.

 

The requirement of fair negotiation

Whether the objections raised by the plaintiff lead to the termination agreement signed  by her being void is also to be measured against the requirement of fair negotiations. Accordingly, parties must observe a minimum degree of fairness during the negotiations. In an earlier decision from 2019 (6 AZR 75/18), the BAG already stated that a negotiating position

"is to be assessed as unfair if a psychological pressure situation is created or exploited which makes a free and considered decision by the contractual partner considerably more difficult or even impossible (...)."

If, according to these standards, the requirement of fair negotiation is culpably violated, the concluded termination agreement is generally void.

Decision

In its decision presented here, the BAG now emphasizes that the requirement of fair negotiation is only violated in exceptional cases.

 

In the opinion of the BAG, a lack of a cooling-off period does not violate the requirement of fair negotiation. The plaintiff was able to choose between the options of termination agreement and extraordinary termination at any time. She could therefore have ended the discussion at any time without her freedom of will being impaired. The fact that the conclusion of the termination agreement would subsequently have been excluded was considered irrelevant as this merely corresponds to the basic legal principle, according to which offers among those present can only be accepted immediately. Therefore, the defendant was also allowed to submit the termination agreement for immediate acceptance.

 

Also, the threat with an extraordinary notice and a criminal charge does not constitute unfair negotiating. A threat that is not unlawful within the meaning of Section 123 (1) Alt. 2 German Civil Code (BGB) cannot lead to an ineffective termination agreement within the scope of fair negotiations. Threats of (extraordinary) termination and criminal charges are only to be considered unlawful if reasonable employers could not seriously consider such termination or criminal charges. However, this was not the case at present.

 

How much pressure is allowed?

The requirement of fair negotiations is not merely a theoretical corrective to prevent abuse on the way to the conclusion of the contract. When concluding a termination agreement, it must therefore be taken into account that employees are always given the choice of whether or not to accept the offered termination agreement. On the other hand, however, it is not per se inadmissible to

 

  • to offer the termination agreement immediately and without prior notice;

  • to offer the prospect of termination as an alternative (if not completely out of the blue);

  • not granting the employee a cooling-off period.

 

A limit is crossed, on the other hand, if employees are brought to the conclusion of the termination agreement under deliberate false pretenses or if a no-win situation is created. The question of whether effective termination agreements are created under pressure can therefore still only be answered with a clear "yes". Nevertheless, it can be stated after the current decision of the BAG that a violation of the requirement of fair negotiation can only be considered in exceptional cases.

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