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Federal Labour Court: Cancellation agreement and the principle of fair negotiations

A cancellation agreement can be concluded despite a violation of the principle of fair negotiations. Whether this is the case needs to be assessed on a case-by-case basis taking into account the overall circumstances of the negotiations. The fact that the employer makes the conclusion of a cancellation agreement dependent on the immediate acceptance of an offer does not alone constitute a breach of duty under § 311 (2) No. 1 in combination with § 241 (2) of the German Civil Code (Bürgerliches Gesetzbuch, BGB), even if this means that the employee does not have any time to consider the offer or even seek legal advice. This was the tenor of the judgment of the Federal Labour Court (Bundesarbeitsgericht, BAG) of 24 February 2022 (Case No. 6 AZR 333/21).

The dispute involved the continuance of an employment relationship after the conclusion of a cancellation agreement. On 22 November 2019, the managing director and the company’s employment lawyer and later attorney of record for the defendant held a discussion in the office of the managing director with the claimant, who was the sales team coordinator for the building services department. They alleged that the claimant had changed or reduced sales prices in the IT system, without authorisation, in order to simulate a higher profit. After a break of about ten minutes, during which the claimant, the managing director and the lawyer sat silently at the table, the claimant signed the cancellation agreement prepared by the defendant. This provided for the amicable termination of the employment agreement on 30 November 2019. The other details of the discussions remained disputed.

The Claimant brought an action on 29 November 2019 challenging the validity of the cancellation agreement due to unlawful threats. With her claim, the claimant sought to enforce the continued application of the employment agreement after 30 November 2019. She asserted that if she didn’t sign the cancellation agreement, the defendant had promised that it would issue her with a letter of termination of employment without notice and file a criminal complaint against her. Her request for more time to consider and seek legal advice was not granted. According to the claimant, in this respect, the defendant breached the principle of fair negotiations. The Labour Court found in favour of the claimant. On appeal by the defendants, the Regional Labour Court rejected the claim.

The claimant was also unsuccessful in her appeal to the BAG. Even if the reported discussions were taken in her favour, there is no illegality in the claimed threat. A reasonable employer in the current case can seriously consider issuing a letter of termination without notice and filing a criminal complaint. Likewise, in its limited review and based on the measures developed by the BAG in its judgment of 7 February 2019 (Case No. AZR 75/18), the Regional Labour Court held that the defendant had not negotiated unfairly and thus had not infringed its duty under § 311 (2) No. 1 in combination with § 241 (2) of the BGB. The claimant’s freedom of choice was not violated by the fact that the defendant only provided the cancellation agreement for immediate acceptance in accordance with the first sentence of § 147 (1) of the BGB, nor by the fact that the claimant thus had to decide immediately whether to accept the agreement or not.

(Source: Press release of the BAG)