The principle of fair negotiationThe employer may make the conclusion of a termination agreement conditional on the immediate acceptance of its offer

In a recent decision dated 24 February 2022 – 6 AZR 333/21, the Federal Labour Court (Bundesarbeitsgericht – BAG) clarified that a termination agreement is not concluded in breach of the principle of fair negotiation if the employer makes the conclusion of a termination agreement dependent on the immediate acceptance of its offer.

The Federal Labour Court was faced with the following case:

The employee was employed by her employer as a sales team coordinator. On 22 November 2019, the managing director held a meeting with the employee in his office, which was also attended by the employer’s lawyer.

The managing director and the employer’s lawyer alleged that the employee had manipulated purchase prices in the EDP without authorisation in order to simulate a higher sales profit.

The employee signed the termination agreement submitted by the employer after a break of about ten minutes, during which the three persons sat silently at the table. The termination agreement provided for a mutually agreed termination on 30 November 2019. The details of the preceding discussion, however, were disputed between the parties.

The employee challenged the termination agreement in a declaration dated 29 November 2019 on the grounds of unlawful threat.

In her action, the employee asserted the continuation of the employment relationship beyond 30 November 2019 and claimed that she had been threatened with extraordinary termination and the filing of criminal charges if she did not sign the termination agreement. The employer had not complied with her request to be given a longer period of reflection and to be able to seek legal advice. In doing so, the employer had violated the requirement of fair negotiation.

The plaintiff’s appeal before the BAG was unsuccessful. The court found that the employer had not violated the principle of fair negotiation. Even if it is assumed in favour of the plaintiff that the employer did not want to allow a longer period of reflection or to obtain legal advice, the employee’s freedom of choice had not been violated. On the one hand, the employer had been allowed to seriously consider the declaration of an extraordinary termination and also the filing of a criminal complaint; on the other hand, the employer had not negotiated “unfairly” and thus violated its duties arising from the contractual relationship. The submission of a termination agreement for immediate acceptance was not objectionable in the present case.

The BAG’s ruling is to be seen as positive and creates a degree of legal certainty for employers, at least in part. Until now, due to the case law of the BAG of 07.02.2019 – 6 AZR 75/18, employers were partly reluctant to submit termination agreements for immediate acceptance and also agreed to a longer reflection period in order to prevent a challenge of the termination agreement – which, after all, is considered a legally secure and low-risk means of terminating employment relationships.

The case law of the BAG of 07.02.2019, according to which termination agreements can be invalid due to “unfair” negotiation, had caused uncertainty and made the creation of pressure situations a risky course of action. Ultimately, the case at that time also involved the submission of a termination agreement for immediate acceptance, which, however, was concluded in the private residence of an employee who had fallen ill.

However, the current ruling of the Federal Labour Court of 24 February 2022 states that the submission of a termination agreement for immediate acceptance and the associated failure to grant a cooling-off period does not in principle lead to a violation of the principle of fair negotiation.

On the basis of this case law, the employer’s demand for immediate acceptance of a termination agreement offer is likely to be permissible even without a prior announcement on the topic of discussion and may well be a means of quickly creating clear conditions. Ultimately, this is also in line with section 147 (1) sentence 1 of the German Civil Code, according to which an offer made among those present can only be accepted immediately.

A violation of the requirement of fair bargaining can thus only be assumed in exceptional cases. After all, the employee can also simply reject the offer and defend himself against a subsequent dismissal. However, since according to the BAG ruling it is always a case-by-case decision, a residual risk cannot be completely ruled out. Special overall circumstances could also lead to a contestability of the termination agreement.

In the case of such termination agreement offers, the employer should comprehensively document all accompanying circumstances and ideally conduct the talks with the assistance of a witness (e.g. personnel manager) in order to be able to counter any inaccurate allegations by the employee with regard to the actual course of the talks.

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