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(In)valid forfeiture clause

An employer cannot invoke the invalidity of its own contractual provisions (Rhineland-Palatinate Higher Labour Court, decision dated
28.06.2012 – 2 Sa 107/12)

Claims arising from the employment relationship (e.g. salary claims, claims for damages, etc.) are subject to the statute of limitation. The regular period of limitation is three years. This period of limitation is often regarded as far too long. In many cases there is a need to obtain prompt legal certainty. As a consequence, employment agreements often contain forfeiture clauses that provide for significantly shorter periods for asserting claims arising in connection with the employment relationship.

Such preclusive clauses are, however, only admissible if the periods stipulated are at least three months. Employment contracts often provide for two-stage preclusive periods; the first governs the out-of-court assertion of claims, while the second governs the legal action to assert a claim after its rejection by the opposing party. In this case, both periods must be at least three months in duration. If these minimum periods are disregarded, the preclusive clauses are deemed to put the employee at an unreasonable disadvantage and are therefore invalid; in such cases, the general limitation periods apply.

The Rhineland-Palatinate regional labour court recently had to rule in a case in which a company demanded damages from one of its employees owing to a road accident caused by the latter in the company car. The employment contract specified by the company only provided for a one-month preclusive clause. The company only asserted the claim for damages against the employee after this period had expired. While the employee concerned refused payment on the grounds that the claims for damages had expired, the company asserted that the preclusive clause was inadmissibly short and therefore not binding for the company either.

The Rhineland-Palatinate regional labour court concurred with the employee‘s argumentation. It stressed that only the employee is entitled to invoke the invalidity of such a clause, as worded by the employer. By contrast, the employer, which stipulates the employment contract, cannot be put at an unreasonable disadvantage by its own clauses. As a result the employer must assert its claims within the preclusive period specified by it (which may be too short). The employee, however, is not bound by the excessively short period. The employer‘s claims had therefore expired.

Practical recommendations

Preclusive periods make sense, but have to be worded carefully. In particular, it is important to ensure that these periods are not shorter than three months. Otherwise, they are without effect for the employee, while the employer is bound to its own shorter preclusive periods. Furthermore, it is important to ensure that the employee is not subject to shorter preclusive periods than apply for claims of the employer. Preclusive periods may not extend to claims arising from deliberate acts. Claims that have already become nonforfeitable owing to statutory regulations, e.g. certain pension claims, are not subject to the preclusive periods either.

Tobias Grambow
Author:
Lawyer and certified specialist
for labour and employment law
Tobias Grambow
grambow@buse.de

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