Statutory notice period versus contractual notice period – which is “cheaper”?

In company practice, there are often termination regulations agreed in individual contracts, the content of which differs from the statutory notice periods of Section 622 of the German Civil Code (BGB). In individual contracts, the legally regulated notice periods cannot generally be shortened at the expense of the employee, but extended notice periods are generally permitted in accordance with Section 622 Paragraph 5 Sentence 2 of the German Civil Code (BGB).

If there is a contractual combination of notice period and termination date, it may be unclear which is the longer notice period within the meaning of the law. For example, if a notice period of 6 weeks to the end of a quarter is agreed and the law applies to a notice period of two months to the end of a calendar month, it depends on the notice date which period is longer. If the termination is given in March, a notice period of six weeks would expire at the end of the quarter at the end of June, while a notice period of two months would expire at the end of the month at the end of May. The longer notice period is then the contractual one. However, if termination is given at the beginning of February, the six-week notice period expires at the end of the quarter at the end of March, while the two-month notice period expires at the end of the month at the end of April. The longer notice period is then the statutory one.
Until now, it was disputed how, in such a collision between individual contractual and statutory notice periods, the longer, i.e. more favorable, period of notice for the employee could be determined. Only if this is the notice period agreed in the individual contract can it prevail over the statutory notice period.
In any case, there was agreement to the extent that an individual contractual regulation of the notice period and termination date should generally be viewed as a unit. In order to compare the favorability between contractual and legal regulations, an overall comparison must therefore generally be made. The Federal Labor Court had already decided this in its judgment of July 4, 2001 (ref.: 2 AZR 469/00). The favorability cannot therefore be determined in isolation for the notice period and the termination date.
However, it was unclear whether it could be assumed that the contract would be more favorable for the employee if the contractual regulation was a longer notice period for the employee for a longer period of the calendar year and only a shorter notice period for a smaller number of calendar months legal regulation. If this were the case, it would be possible that - depending on the time at which the termination was given - the contractual notice period in the specific individual case would fall short of the statutory one.
This question has that The Federal Labor Court has now decided with the current judgment of January 29, 2015 (ref.: 2 AZR 280/14).. In this case, it was a question of comparing the contractual notice period of “six months to June 30th or December 31st of the year” with the statutory notice period of seven months to the end of the month in accordance with Section 622 Paragraph 2 Sentence 1 No. 7 BGB. In this constellation, the contractual notice period granted the employee better protection in eight out of twelve months of the calendar year.
Nevertheless, the BAG has decided that the contractual notice period is not the “more favorable” one for the employee. A contractual notice period can only prevail over the relevant statutory notice period if it in any case leads to a later termination of the employment relationship. The fact that the contractual regulation provides better protection for a longer period of time within a calendar year is not enough. According to Section 622 Paragraph 5 Sentence 3 BGB, individual contractual notice periods should be “longer” and not “usually longer”. The protective purpose of the statutory notice periods would only be incompletely achieved if the application of an individual contractual notice period in individual cases could also lead to a notice period that was less than the statutory minimum.
This means that individual contractual termination regulations only enforce the statutory notice periods if they always lead to a later termination of the employment relationship for the employee.
The consequence of the non-application of the contractual notice period is that it is replaced by the statutory notice period. In the case decided by the BAG, a deadline of 7 months to the end of the month applied. The result, however, is not a combination of the longer notice period (seven months) with more favorable termination dates agreed in individual contracts (“June 30th or December 31st of the year”). This is in line with the principle that has already applied so far that the notice period and the termination date form a unit.
With its current decision of January 29, 2015, the Federal Labor Court clarified a controversial issue that often arises in practice. However, it is still unclear whether a uniform individual contractual notice period that is independent of the length of service can enjoy priority until it ultimately conflicts with a statutory period that is more favorable for the employee. The Federal Labor Court expressly did not decide on this question, but indicated a clear preference for such priority in application. In the case decided by the Federal Labor Court, the contractual notice period (“six months to June 30th or December 31st of the year”) was not to be ignored from the start, but only from the point in time from which the relevant statutory notice period (at least partly) was longer.