Fixed-Term Contracts in Germany, France and Denmark

There are two types of employment contracts a fixed term (temporary) contract and a permanent contract. While the most common practice is to offer permanent contracts to employees, it increases the liability of the employer. Therefore, having a fixed-term contract has its benefits, however it is also subject to some crucial rules. In this blog we are going to review the basic rules of fixed-term contracts in Germany, France and Denmark. 

germany-Oct-21-2020-02-38-39-69-PM Germany

Length of contract 
There are two different types of a fixed-term contract in Germany – with reason (mit Sachgrund) and without reason (ohne Sachgrund) 

Fixed-term contracts with reason or “objective grounds” need to be justified by the employer prior to signing the contract. Objective grounds include temporary increase in the work volume or having to substitute for an employee who is temporarily absent (sick or in maternal leave). There is not a maximum duration stipulated in law in regards to this type of contract, as the point is to fulfill the temporary need of the employer for as long as it exists.  

On the other hand, fixed-term employment contracts with no objective grounds are subject to stricter rules. For example, the consecutive renewal of such contracts is limited to 3 times that cover a span for not more than two years altogether. Employers need to look out for several implications: 

  • Were the employee to continue working after the end of their fixed-term contract and without the employer bringing it up, the court could automatically re-consider the contract as an unlimited one. 
  • It is not legal to provide a candidate with a fixed-term contract without reason if they have previously worked for the same employer.  

Termination of fixed-term contracts 

A fixed-term contract under German law ends automatically at:

  • The end date proposed and agreed on in the contract; 
  • At the end of the second year of employment (ohne Sachgrund - contracts);
  • When the temporary need in the objective ground is fulfilled (mit Sachgrund - contracts).

No notice period is needed, unless exclusively specified in the contract. However, make sure to keep track when the contracts expire in order to prevent assigning work to a temporary employee, whose contract has already ended.

Flag_of_France France

Length of contract 

The use of fixed-term contracts in France is governed by law. In comparison to Germany, this type of contract may only be used provided that there is an objective reason, among which:  

  • Replacing an employee on a leave
  • A temporary increase in business volumes 
  • Seasonal employment (tourism, agriculture, etc.) 
  • Integration of vulnerable individuals 
  • Senior CDD (Contrat à durée déterminée) - for  workers over 57 in order to acquire a sufficient number of years to claim a full pension 

A fixed-term contract may be renewed if explicitly stated by a clause in the contract,  twice for a maximum period of 18 months, unless otherwise provided for in a collective agreement if applicable. 

When the fixed-term contract for a position expires it can only be renewed with due observance of a waiting period, that is decided upon by taking into consideration the length of the employment relationship. This is in case the employer still needs to fill the same or identical position, or offer a second fixed-term contract for the same employee. There are only certain  cases in which this rule can be disregarded, listed in the French labor code, for instance when the contract is for a seasonal job or emergency work, required for security measures. 

Termination of fixed- term contract 

It is preferable to send a written notification by registered post with a notice.  

Neither party may terminate it prior to its end, unless still in a trial period and except in the event of an amicable separation, serious misconduct (“faute grave”), force majeure or if the employee finds alternative employment under an unlimited contract. There are minimum requirements for the duration of the contract. An employee cannot be dismissed if the employee they have been hired to temporarily replace returns prematurely to work. 

Upon dismissal, employers are obliged to pay fixed-term employees an end-of-contract instability of work bonus amounting to 10% of the salary 

denmark Denmark

Length of fixed-term contracts 

In Denmark there is no legal limit for the maximum number of successive fixed-term contracts, however The Confederation of Salaried Employees and Civil Servants in Denmark states that usually 2 successive renewals can be based on objective reasons. More than 2 renewals poses suspicion of breaches of, for example, the Salaried Employees Act, and could be declared null and void by the court unless proven otherwise. The standard maximum duration in practice, but not by law, would be 2 consecutive years. 

 Termination of fixed-term contract 

Unless renewed, fixed-term contracts terminate automatically on their expiry date or upon completion of the specific t asks. Both employer and employee can terminate the contract at any time due observance of any clauses in the contract or following the same rules as in the case of indefinite-term contract. Provisions on termination must appear in the contract, the period of employment and thus the time of termination of employment should be specified precisely. This is also the case for including a section on prematurely ending the contract before the fixed date with a notice period. It is done in order to avoid doubts about notice or reasons for termination.  

Interested to learn more about fixed-term contracts? Please do not hesitate to contact one our of European HR experts! 

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